Nat Rothschild Falls From Grace.

Rothschild who crashed to earth: How the bank dynasty heir’s City reputation is in tatters after a £700m investment scheme blew up in his face

By Geoffrey Levy and Richard Kay
PUBLISHED: 17:13 EST, 19 October 2012 | UPDATED: 08:40 EST, 20 October 2012

Even at 76, with untold wealth and the holder of a rare Order of Merit from the Queen, Lord Rothschild has continued to dream.

It is a father’s dream: that his only son Nat might one day lead the world’s most enduring banking dynasty to new heights, repairing an old family schism and burnishing its blue-chip image to even greater brilliance.

Today Jacob Rothschild is a bitterly disappointed, even angry man, as his son and heir fights to save his own dwindling reputation and, with it, the first soiling of the proud Rothschild name in centuries.

Nat himself can hardly believe what has happened. A mere tick of the dynastic clock ago he was widely seen to be on course to be the richest of all the Rothschilds.

Helped by the pulling power of his name, he was hailed as a financial genius, a young man — once a wild child but now drinking nothing stronger than Coca-Cola — with a unique networking ability to bring billionaires together to make deals.

 His private £5 million Gulfstream was criss-crossing the globe for 750 flying hours a year. That was before he decided to raise £700 million from investors — ‘big players only’ he airily informed one relatively minor figure who expressed interest — to plough funds into an Indonesian coal-mining company called Bumi that a City contact had drawn to his attention.

By July, 2010, Bumi’s £10 shares had been absorbed into his own  FTSE-quoted cash vehicle, a shell company called Vallar, which was then renamed Bumi plc.

For Rothschild’s new Indonesian partners, the Bakrie family (one of whom is currently standing for election as president of the country), the deal offered the back-door prestige of being quoted on the London Stock Exchange — quite a prize to businessmen in a part of the world not noted for the transparency of its corporate culture.

Yesterday, after acrimonious disagreements and accusations in the Bumi boardroom, and Nat Rothschild having dramatically stood down as a director, his investors were showing a loss of three quarters of their money with the share price slumping to around £2.50.

Nat Rothschild’s fierce letter of resignation from the board arrived on Monday from an address in St Peter Port on the low-tax Channel island of Guernsey, where one of his corporate offices is registered.

Meanwhile, an internal investigation into allegations of financial impropriety at Bumi has expanded to include alleged threats and the hacking of email systems to snoop on exchanges of messages at boardroom level.

The company chairman Samin Tan claimed that Rothschild indicated he’d had ‘access’ to his emails and had been reading them.

Rothschild’s response was to declare that the allegations were ‘untrue and defamatory.’ Attention has also been drawn to the level of expenses paid to directors.

And he did not just fall out with the Bakrie family. Senior British industrialists he installed as independent directors to safeguard UK shareholders’ interests also had their disagreements with him.

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Crumbling Deal Exposes Clash of Wealthy Family Dynasties

By MARK SCOTT
October 17, 2012, 7:22 pm
 
Bakrie & Brothers, via ReutersNathaniel Rothschild, left, with Bobby Gafur S. Umar, the chief executive of Bakrie & Brothers, announced a $3 billion deal in November 2010 to create Bumi, a mining company.

For more than two centuries, the Rothschild name has stood for a deft touch in European cross-border finance, as well as representing great wealth and influence.

Today, the family name, one of Europe’s banking dynasties, has become ensnared in a nasty dispute after a powerful family in Indonesia appears to have outmaneuvered Nathaniel Rothschild, the five-times great-grandson of the dynasty’s founder.

After an inauspicious start as a young investment analyst at Gleacher in Manhattan in the mid-1990s, Mr. Rothschild’s rise as a moneymaker in his own right has been fairly rapid. He was co-chairman of the hedge fund Atticus Capital before striking out on his own and engineering a series of international deals.

In late 2010, he announced what was expected to be his most ambitious project yet, a $3 billion deal with the Bakrie family, an Indonesian dynasty whose vast interests include both mining and politics, to create the London-listed mining giant Bumi.

“We’ve announced the creation of an Indonesian coal champion,” Mr. Rothschild said at a news conference at the time.

Enny Nuraheni/ReutersSamin Tan, an Indonesian mogul and chairman of Bumi.

That partnership now lies in ruins.

Mr. Rothschild, a 41-year-old British financier, has resigned from Bumi’s board amid allegations of financial misconduct at some of the company’s Indonesian subsidiaries. The owners have been caught in a yearlong feud over the running of the company. And questions have been raised about the corporate governance that allowed Bumi to trade on the London Stock Exchange.

In the latest round of infighting, Mr. Rothschild — a descendant of Nathan Mayer Rothschild, who helped finance the British victory over Napoleon at Waterloo — has accused Samin Tan, Bumi’s chairman, of not protecting the rights of minority shareholders.

“I have lost confidence in the ability of the board to stand up for investors,” Mr. Rothschild, who owns roughly a 12 percent stake in the company, said in a letter announcing his resignation from Bumi’s board.

In response, the Bakries said Mr. Rothschild should return his shares and other financial benefits connected to the mining company.

“What a disappointment Mr. Rothschild has been to us,” said Christopher Fong, a spokesman for the Bakrie family.

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Read more: http://dealbook.nytimes.com/2012/10/15/rothschild-resigns-from-board-of-mining-company/

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