Bumi share price plummets after financial probe announced

Sep 25, 2012

Almost a year after a warning by investor Nat Rothschild, coal-mining group announces investigation

THE SHARE price of coal-mining group Bumi plummeted further yesterday after it announced an independent investigation into the firms' activities. But investors are no clearer to how hundreds of millions of dollars destined for infrastructure projects and an oil development programme may have been diverted from the firm.

The Daily Telegraph reports that investigators probing "potential financial irregularities" at Bumi are looking at how $500m of loans and investment has been spent.

The paper says the revelations at Bumi will be deeply embarrassing for the financier and scion of the Rothschild banking dynasty Nathaniel Rothschild, who brought Bumi, then called Vallar, to stock market as a cash shell in 2010.

The Daily Mail says Rothschild might be feeling vindicated, albeit a little less wealthy, because he warned last November that Bumi Resources, in which his Bumi plc owns a 29 per cent stake, needed a "radical cleaning up" of its debt-laden balance sheet and corporate culture.

Rothschild is said to blame JP Morgan and Credit Suisse, who were assigned to do due diligence on the £1.8 billion deals for the two subsidiaries.

The Financial Services Authority is looking at why Bumi's share price tumbled 19 per cent last Friday, before the probe was disclosed to the market. If the new inquiry reveals evidence of market abuse, "it will add yet another layer to what is increasingly looking like a festering cesspool of malfeasance" says the paper.

Forbes says the debacle doesn't look good for the reputation of the Rothschild family. "Nat Rothschild's latest adventure comes close to being the worst major IPO ever in London. There's always been a certain sense, based on a couple of centuries' experience, that if there's a Rothschild in a deal then it's a good one. A reputation that's taking a certain amount of pain about now."

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