MAC: Mines and Communities

"Leave us and leave our land" - indigenous community tells Bumi

Published by MAC on 2013-06-28
Source: Statement (2013-06-26)

”Leave us and leave our land” indigenous community tells Bumi

Down to Earth, London Mining Network and the Indonesian Mining Advocacy Network (JATAM) Press release

26 June 2013

London - Much of the talk at today’s Bumi plc AGM will centre on the company’s deep financial and governance woes, but it is the people most directly affected by Bumi’s coal-mining operations that need to be heard.

Similar to the communities affected by the operations of Berau Coal (85% owned by Bumi plc), the communities living near the giant KPC mines in East Kalimantan, Indonesian Borneo, are opposing the takeover of their land. They are also facing violence and intimidation.

The social, environmental, human rights and health impacts of massive-scale open-cast mining are continuing to blight the lives of communities in Kalimantan, including the indigenous Dayak Basap Keraitan Segading, who face eviction from their homes for the third time to make way for KPC operations.

This mega-mine is controlled by PT Bumi Resources, the Indonesian company which in turn is 29% owned by London-listed Bumi plc. It produces over 40 million tonnes of coal per year, which is exported mainly to markets in China and India.

Villagers living near the mine have a long experience of forced evictions, livelihood loss, pollution, and company collusion with State security forces.

At the end of 2012 a farmer was found lying covered in blood, after an attack by a person the victim identified as a company man. The local customary leader said the company had forbidden them from farming on land within the KPC concession.

A plan to move the community to another village prepared by KPC is opposed by some community members who don’t want to have to start again from zero. The Indonesian Mining Advocacy Network (JATAM) is calling for a halt to the relocation plan and the return of the forests around the village to the community, forests which the community relies upon for their livelihood.

They want KPC to stop all acts of violence against local people and to investigate the attack allegedly carried out by a company employee. They are urging all shareholders investing in this company to immediately withdraw their funding.

Andrew Hickman of Down to Earth, who met with community members earlier this month, said: “Bumi’s shareholders should shift their focus from London to Indonesia and consider the impacts of their company’s investments on people’s lives there. Concerns about human rights and local livelihoods should rank higher than how low the company share price has fallen.”

Richard Solly, Co-ordinator of London Mining Network, said: "Bumi stands out among London-listed mining companies for the conflict and controversy that accompany it. But it also stands out for its appalling impacts on the ground. Investors should pull out of Bumi, and Bumi should pull out of Kalimantan."

Contact: Andrew Hickman 0750 4738696 indonesiandrew[at]yahoo.com

For more background on KPC and Bumi see: http://www.downtoearth-indonesia.org/campaign/coal


Bumi's directors may be criminally liable for poor records, claims Pirc

By Alistair Osborne, Business Editor

Telegraph (UK)

19 June 2013

All of Bumi's 11 directors may have committed a "criminal offence" by failing to ensure that the coal mining group's Indonesian businesses keep proper accounting records, shareholder lobby firm Pirc has claimed.

In its advice to shareholders ahead of next Wednesday's annual meeting, Pirc draws attention to the opinion of auditor PriceWaterhouseCoopers, which found that "adequate accounting records have not been kept" in relation to Bumi's Indonesian assets. Bumi owns 85pc of Berau Coal, where earlier this month it found a $201m (£128m) black hole, and 29pc of Bumi Resources.

Pointing out that such failure constitutes a breach under Section 387 of the 2006 Companies Act, Pirc said the contravention "amounts to a criminal offence for every officer in default, subject to defences". Each of Bumi's directors, as well as company secretary Paul Vickers, are classed as officers.

It is the first time Pirc, which recommends voting down the annual report, has highlighted such a breach in a pre-AGM report.

The advisory group also pointed to the black hole at Berau - described by Bumi as "expenses without business purpose" - a $550,000 loan to former director Rosan Roeslani and the unsubstantiated $3.2m he charged the company for the use of his private jet.

Pirc noted how "incomplete flight records made the validation of associated flight costs impossible", and added: "This level of related party transaction being unresolved raises some serious concerns over the internal control of the company's subsidiary."

PwC's qualification of the group accounts on the grounds that Bumi Resources' management "refused access to the working papers" of that company's auditors - Mazars Indonesia - was another reason for shareholders not to approve the annual report.

Pirc said investors should also vote against the re-election of chairman Samin Tan, who was "not independent", adding that Bumi's problems could not be resolved "with Mr Tan or any other related parties remaining on the board".

Mr Tan has already said he will step down once Bumi finalises a "divorce" from the Bakries, the Indonesian family with whom financier Nat Rothschild struck his ill-fated $3bn deal in 2010 to create Bumi. Pirc also advises investors to abstain on the re-election of chief executive Nick von Schirnding.

A spokesman for the Bakries said: "We support Samin Tan. He has been clear and decisive during a turbulent period."

A company spokesman for Bumi said: "There is no basis for the suggestion in the PIRC report that criminal offences were committed by any of the current officers of Bumi plc. There has been no failure to provide auditors with information and no failure to carry out statutory duties.

"When irregularities were discovered within a subsidiary company, Berau, the board acted immediately to conduct a full investigation, and there have been subsequent changes to the management at Berau.

"The current officers of Bumi plc acted appropriately and honestly and the process of dealing with the accounting information has been transparent".

Mr Rothschild said: "We applaud the PIRC report, but do not think it goes nearly far enough in its criticisms of Bumi's independent non-executives."


The float of Bumi has become one of the great City scandals

Black holes can be OK in the coal mining business - as long as they're the type pored over by geologists rather than accountants.

Telegraph (UK)

31 May 2013

Sadly, it's the latter that Bumi has specialised in since the London-listed business was formed in 2010 via Nat Rothschild's ill-fated $3bn (£1.98bn) tie-up with Indonesia's Bakrie family.

Buying Indonesian coal mining assets to feed a customer in China looked a promising bit of business on paper - as shareholders suckered into the deal at £10 a share now know to their cost. But, with the shares suspended at a quarter of that price, it's clear what the float of Bumi has become - one of the great City scandals that has damaged the reputations of just about everyone involved.

Already $1bn has vanished out of the company - chiefly at the 29pc-owned Bumi Resources, a business controlled by the Bakries.

Bumi has reclassed that as an investment - and a pretty lousy one too having written it down by $1.39bn on Friday - after finally working out that it is "no longer able to exert any significant influence" over the business. It's never had any influence.

But, arguably, an even more alarming turn of events is the latest shocker from Bumi's other main asset, Berau Coal, now written down by $815m. Bumi owns 85pc of this business and was meant to control it. Yet $201m has gone walkabout under its previous management, led by Rosan Roeslani, a former main board director who used to own 13.4pc of the group. That's on top of $75m that mysteriously vanished via the so-called Chateau fund.

Roeslani is no stranger to controversy. Last December he was outed by the Takeover Panel as being part of an undisclosed shareholder concert party with the Bakries, who jointly own 47.6pc of Bumi with the company's chairman Samin Tan. Roeslani subsequently sold his shares, the buyers of which ensured the failure of Rothschild's attempt to oust the board at February's EGM.

Bumi is preparing a legal case against Roeslani, who also failed to disclose his pay from Berau or account for the $3m he charged the company for the use of his private jet.

But he is not the only senior figure on a sticky wicket. So is Tan. He became Bumi chairman last March and put his own men into both Berau and Bumi Resources. As the supposed custodian of shareholder interests, how does he explain how money vanished out of Berau on his watch?

It was Tan who produced a due-diligence document prior to taking his stake in Bumi in November 2011 that goes into gory detail on a host of dubious transactions at both Indonesian assets. It is implausible for him to argue that he did not have any idea of what was going on. So why did he fail to put a stop to it?

What too of Lord Renwick, the JP Morgan Cazenove vice chairman who heads Bumi's audit committee? He is stepping down at June's AGM, having been in post to witness $1.2bn of accounting irregularities, while failing to get anything back. It's hard to think he'll be missed.

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