Rothschild Chides Bumi for Ex-Director’s Inter Milan Deal

Nathaniel Rothschild said the investment in soccer club Inter Milan by a former Bumi Plc director who is due to return $173 million to the coal producer demonstrates the company’s inaction in recovering missing funds.

Bumi said in June it had agreed with Rosan Roeslani, a former board member and ex-chief executive officer of unit PT Berau Coal Energy, on the repayment in return for waiving any potential claims against him. A group led by three Indonesian investors including Roeslani this week bought a 70 percent stake in Italian Serie A team, FC Internazionale Milano SpA.

“Roeslani only has the funds and freedom to do this because Bumi’s board have failed to take any legal action whatsoever to date against him,” Rothschild, 42, said in a phone interview. He owns 21 percent of Bumi voting rights.

Rothschild, scion of a centuries-old British banking dynasty, quit the Bumi board in October last year amid a dispute with fellow founders the Bakrie family of Indonesia. Roeslani departed in December and stepped down from Berau Coal in January. Italian newspaper Corriere Della Sera reported last month that an Inter Milan stake sale had been agreed on for about 300 million euros ($411 million).

It’s “illogical” to make any link between the Inter Milan investment and the situation at Bumi as they are “completely different,” Roeslani said in comments e-mailed to Bloomberg News.

‘Full Commitment’

“We have an independent investment committee to identify investment opportunities as well as risks,” Roeslani said. “The Bumi issue is an old topic that was addressed already and promptly, with full transparency and of course full commitment.”

Roeslani agreed in June to return the cash and assets by Dec. 26, Bumi said yesterday in an e-mailed statement to Bloomberg News. “Real value will be recovered for Berau through the implementation of this agreement, which the company has therefore been working towards as rapidly as possible.”

Edoardo Caldara, a spokesman for Inter Milan, said the club wouldn’t be commenting beyond an Oct. 15 statement announcing the sale to the Indonesian group.

Bumi’s agreement with Roeslani to return the assets states he has made no admission of wrongdoing or liability, the company said in June.

In May, an internal review of Berau Coal’s finances found $201 million of spending with “no clear business purpose.” A month later Roeslani agreed to transfer $173 million of assets and cash back to Bumi in a dispute that was also brought to the attention of the U.K.’s Serious Fraud Office.

Infighting, Probes

Since its inception Bumi has been plagued by board-infighting, hurt by a slump in coal prices and been the subject of fraud investigations. That’s culminated in the stock falling more than 80 percent in three years since the initial public offering of Rothschild’s Vallar Plc, the precursor to Bumi. The coal producer reported a net loss of $2.3 billion for 2012.

Rothschild said Bumi’s board, led by independent director Julian Horn-Smith, commented in January that litigation for some of the missing funds, known as the Chateau investment, would begin immediately.

“Nothing has happened and more astonishingly another $207 million went missing through the end of 2012 for a total of $282 million,” he said. “I call again on U.K. regulators to act decisively because the board is unwilling or incapable of doing so.”

Rothschild has previously criticized Bumi’s board as being “slow to act” on reclaiming the funds and repeatedly called for chairman Samin Tan to resign.

Pursue Remedies

Bumi “has continued to pursue legal remedies in relation to the Chateau investment in accordance with a litigation strategy approved by its Litigation Committee,” it said yesterday. “It would be highly inappropriate and potentially damaging to comment on the details of that strategy at this stage.”

International Sports Capital, indirectly controlled by Erick Thohir, Roeslani and Handy Soetedjo, agreed with majority Inter Milan shareholder Massimo Moratti to purchase the stake through a capital increase reserved for them. The club didn’t disclose financial details of the deal.

Thohir, who is based in Jakarta, is founder and president of Mahaka Group, a media and entertainment business, according to the Inter statement. He is co-owner of U.S. Major League Soccer team D.C. United.

The Moratti family has long ties to Inter, a team founded in 1908. Massimo Moratti’s father Angelo presided over the best period in the club’s history when it won back-to-back European Cups half a century ago.

Jose Mourinho

The younger Moratti spent millions trying to emulate him. Inter lost 500 million euros during the three seasons before eventually winning the European Cup again in 2010 under its former Portuguese coach Jose Mourinho.

Since then, the club has fallen down the standings as it pared back spending. Last season’s 9th-place finish was Inter’s lowest under Moratti’s ownership and worst since the 1993-94 season, when it ended 13th.

Roeslani is an investor in PT Idea Karya Indonesia. PT Idea and Bloomberg LP are partners in Bloomberg Television’s Indonesian-language service.

Before it's here, it's on the Bloomberg Terminal.