Indonesia’s PT Bumi Starts Probe After London Investigation

Indonesia’s PT Bumi Resources (BUMI), the nation’s biggest producer of power-station coal, said a South Jakarta court approved an independent investigation into its financial accounts dating back to 2010.

The probe was prompted by the company’s audit committee “in view of the public notifications by a shareholder, Bumi Plc, and various reports, both in international and local media,” the Jakarta-based coal producer said today in an e- mailed statement. Reports are due to the Chief Justice of District Court of South Jakarta within 90 days of the appointment of an auditor, it said.

PT Bumi is part-owned by the Bakrie family and is at the center of a feud involving London-listed Bumi Plc, owner of 29 percent of the Indonesian mining company, and Bumi Plc co- founder Nathaniel Rothschild. Bumi Plc, which has lost 70 percent in trading this year, in September started an urgent inquiry into “potential financial and other irregularities” at its Indonesian operations, PT Bumi and PT Berau Coal Energy (BRAU) Tbk.

The so-called forensic audit will focus on the accounts for the financial years of 2010 through 2012, PT Bumi said. The Indonesian company referred to funds from unit PT Bumi Resources Minerals that are invested in United Overseas Bank Ltd. (UOB) without giving further details of the probe.

London-based Bumi said in statement today it noted the announcement and “has no further information on the matter at this time.”

The Indonesian investigation comes as Bumi Plc studies alternative proposals for its assets from two of the key parties who founded it in 2010, Rothschild and the Bakrie Group.

Morgan Stanley

Rothschild, 41, has appointed Morgan Stanley as an adviser and held talks with potential new investors as well as current holders of Bumi, a person familiar with the matter said last week.

An offer from the scion of a centuries-old banking dynasty would counter a $1.2 billion proposal from the Bakries for Bumi Plc (BUMI)’s stakes in two coal producers -- its holding in PT Bumi and the 85 percent it has in PT Berau Coal Energy.

The Bakries made their offer last month to help resolve “irreconcilable differences” with Rothschild. The financier has described the Bakries’ offer as not being in the interests of investors.

Bumi advanced 1.2 percent to close at 276.9 pence in London trading. Bumi Resources was unchanged at 650 rupiah today in Jakarta and Berau Coal Energy was also unchanged at 220 rupiah.

Bumi Plc said Sept. 24 it was starting a probe into potential financial “irregularities” at its Indonesian investments. The probe is linked to a $637 million writedown of development funds and exploration assets in Bumi’s Dec. 31, 2011, year-end financial statement.

London-listed Bumi won’t make a recommendation on any possible transaction until the investigation is “appropriately advanced,” the company said Nov. 5.

To contact the reporters on this story: Jesse Riseborough in London at jriseborough@bloomberg.net; Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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