Tag Archives: boardroom

Bumi’s bitter boardroom battle

21 February 2013 Last updated at 19:40 GMT By Karishma Vaswani BBC News, Jakarta A boardroom battle for the control of an Indonesia coal firm is heating up ahead of a crucial shareholders’ meeting.

It was a financial battle that pitted one of Asia’s most powerful families against one of Europe’s oldest financial dynasties.

But it came to a close on Thursday when shareholders in Bumi decided in favour of the Bakrie family, part of Jakarta’s political and business elite, to control the London-listed coal mining firm.

Their main rival, Nat Rothschild, whose family have been in banking for centuries, was defeated in his attempt to oust Bumi’s board of directors, including the chairman and chief executive, and rejoin a company he had helped found.

The battle for Bumi, which controls coal mining assets in Indonesia, was played out across two continents, seen allegations of fraud and internet espionage, and cost shareholders and investors millions of dollars in lost returns.

For those of you who do not know the Bakries, their name is synonymous with power in Indonesia.

Aburizal Bakrie Aburizal Bakrie is running for president of Indonesia next year

The family-run company has some 200 holdings in businesses ranging from mining to media.

The current patriarch of the Bakrie clan, Aburzial Bakrie, is running for president in 2014 and has served in previous government cabinets. He is also the head of one of the biggest political parties in the country, Golkar, which former President Suharto also belonged to.

But while they wield significant influence, the Bakries have also had their fair share of controversy to deal with.

In recent weeks, the company has been criticised for the time it has taken to pay compensation to victims of a mud-flow disaster in Lapindo, East Java.

The group has also had to fight off allegations of tax evasion, and during the Asian Financial Crisis in 1997, there was even speculation that the group could collapse.

But each time, the Bakries have managed to emerge from their difficult times.

The beginning

The Bumi saga started in 2010 when Mr Rothschild saw an opportunity to create a company which would offer international investors the chance to buy into natural resources assets in emerging markets, but also ensure they were protected by UK market rules.

The terms of the deal were simple – the Bakries would hand over a stake in their coal assets in Indonesia, Mr Rothschild would roll them into a cash shell called Vallar, now known as Bumi Plc, and list the firm on the London Stock Exchange.

However, some were sceptical about the move right from the beginning.

Continue reading the main story
If we had done something wrong we would have been afraid of it coming out. We’re not afraid”

End Quote Chris Fong Bakrie Group “A lot of analysts and politicians actually saw it as an attempt by the Bakries to sell their assets to foreigners,” says Rendi Witular, the managing editor of the Jakarta Post who has covered the various twists and turns of story.

“And there was suspicion that a foreign entity might be able to take over Indonesia’s valuable resources.”

The turning points

When the deal was struck, Mr Rothschild or the Bakries congratulated each other on pulling together such a sophisticated, and what they thought, would be an immensely lucrative arrangement.

But then three things happened that changed everything.

First, coal prices slumped dramatically as a result of the global slowdown.

Second, it became increasingly apparent that the two sides had very different ways of conducting business.

And third, arguably the most damaging of the factors, Mr Rothschild issued a public letter late in 2011 in which he made damning allegations about “financial irregularities” in PT Bumi Resources, the Indonesian coal asset of the Bakries in which Bumi Plc owns a stake.

He called for a radical clean-up of the firm, something his Indonesian partners said was not necessary.

Bumi's Nathaniel Rothschild and Bakrie Brothers Chief Executive Officer Bobby Gafur Umar Relations between Mr Rothschild and the Bakrie group have soured since the deal was signed in 2010

“We didn’t do anything wrong,” Chris Fong, spokesman for the Bakrie group, tells the BBC.

“We knew London had a certain standard before we went into business with him [Mr Rothschild]. If we had done something wrong we would have been afraid of it coming out. We’re not afraid.”

Mr Fong also said that Nat Rothschild was playing games and trying to get publicity so as to oust the Bakries.

“He was making accusations about us and he knows who we are in Indonesia,” said Mr Fong. “He knows that this was going to get a lot of publicity, and that is what he wanted.”

The allegations Mr Rothschild made were that around a billion dollars worth of funds had gone unaccounted for at the Indonesian coal miner.

The Bakries have denied that there were any such financial irregularities.

Bumi was also keen to point out that “the unwillingness of key parties to be interviewed and provide information” meant it could not prove the allegations.

The way Mr Rothschild claimed to have learnt about the alleged irregularities was also significant.

Mr Rothschild said he had received the information from a whistleblower, but did not disclose the name of his source.

However, Bumi said that an investigation carried out on its behalf by London law firm Macfarlanes revealed that the information had been “obtained illegally by email hacking”.

Mr Rothschild, who stepped down from the Bumi board late last year, has denied any suggestions he acted illegally or unethically.

The final episode? Protestors hold banners against the Bakrie group outside their office The Bakrie group has seen its fair share of controversies over the past years

The saga has cast a shadow over Indonesia’s corporate image.

“It has made Indonesia look like a hostile place to do business in,” says Mr Witular of the Jakarta Post.

Mr Witular says that over the past few years, Indonesia has done a lot to eradicate the practice of cronyism that was rife during the reign of former Indonesian President Suharto, who ruled the country with an iron fist for more than three decades.

However, critics say that although Indonesia is now a vibrant and flourishing democracy, some big business tycoons still operate with a remarkable lack of transparency.

The fear is that the Bakrie saga may make some foreign investors nervous about doing business in Indonesia.

And that is something that does not bode well for any of the parties involved.

Monkeying around in the boardroom

21 October 2012 Last updated at 16:19 GMT By Katie Prescott Business reporter, BBC News  Do your boss and this monkey have something in common? Monkey business might mean mucking around, but some companies are finding inspiration in the chimp world.

Chester Zoo has started opening its cages to local businesses so they can observe the beasts, then ape it in the boardroom in the first management course of its kind in the UK.

Leading a group of business people around the zoo, Dutch biologist-turned-leadership expert Patrick van Veen explains they are taught how primitive behaviour is still alive and well in the workplace.

By observing monkeys and apes, the premise is that they will start to understand their colleagues better, he says.

And as Chester plays host to one of the world’s largest and most successful groups of zoo chimpanzees, there is a lot of material to work with.

Mr Van Veen already runs successful courses in Germany, Belgium and Holland – and says that attitudes towards management can vary across Europe.

“It’s very easy to talk about behaviour in the Netherlands, but very difficult in Belgium,” he says.

“When you are in Germany, they are extremely hierarchical, so you have to use special words to address the boss and name him properly – you always have to use a proper title.

“But in Germany they are very open-minded about changes in management style. In the Netherlands they are not.”

Serious science  Patrick van Veen explains how animal behaviour can apply to people

Mr Van Veen started the business because he felt that he had really benefitted from his background training in primate behaviour in his first job, working for an insurance company.

Understanding monkeys helped him get a handle on relationships between people at work, he says.

He was particularly inspired by his boss, who reminded him of a gorilla.

“He was about two metres tall, he was huge, and he had small glasses,” Mr Van Veen recalls. “When you entered his office, he’d stare at you over them. He really was a gorilla.”

Ape Management combines Mr Van Veen’s two passions. “I love to study primates and I also love to study humans,” he says. “There was no company doing that, so I had to start my own”.

It might be a new idea for a business, but the theory behind it is well known.

“There’s only a 1.4% difference in genetic material between humans and chimpanzees,” Sonya Hill, a research officer at Chester Zoo, points out.

“It has a serious scientific backing. It’s so important that it’s got a fun side, but that it’s based on good science in terms of chimp behaviour.”

Ms Hill says she has always noticed the similarity been human and chimp behaviour, also in terms of grooming.

“It’s a really important behaviour for primates and, of course, humans are primates too,” she says.

“We groom each other socially, communicating with your friends and making sure in a work environment that you find out about your colleagues. By watching your colleagues, you can start to understand how you interact with one another, how you use communication in the workforce to get on better”.

Who is grooming whom?  “There’s only a 1.4% difference in genetic material between humans and chimpanzees,” Sonya Hill says

The mainly female audience of business people attending the course nod violently when Mr Van Veen describes how most offices have a set of dominant males, who slap each other’s backs, stamp their feet and draw themselves up tall.

He says that humans can learn from monkeys “when power works, when hierarchy works – and when dominance is not effective”. We often make assumptions about one another, without trying to understand why a colleague is behaving in a certain way, he says.

The business people on the course certainly see similarities between the chimps and people they know.

“I found it really fascinating,” says Sandra Bruce who works for bank NatWest.

“I think one of the things I really took away was how, when we see different behaviours, how we put those into categories instead of just watching the behaviour and trying to understand it.

“We put people into little niches as to how we think they’re going to behave.”

Ms Bruce plans to put some of the theory into practice. “When I go back to the workplace, it’s really about observing people more and not immediately putting them into boxes,” she says.

“The organisation is about people and they’re the most important part, so it’s really about understanding the people that work for you.”

Watching the monkeys grooming one another, Mr Van Veen emphasises the importance of this kind of supportive behaviour at work.

“We spend a lot of time in chit-chat, drinking coffee with each other,” he says. “That’s grooming behaviour, like primates do.”

He says managers might neglect to do this sometimes, but it is a vital part of keeping a happy workplace environment.

Watching this interaction can give you an understanding of the politics at play. So next time you want to see who is really King Kong in your office, play close attention to just who is grooming whom.