Rothschild coal venture lists fraud among IPO risks

* New Vallar parent company Bumi to list June 28
* Lists risks including bribery, tax official's allegations
* Retains consultant to review Bumi Resources procedures 

Bumi Plc, the renamed venture founded by Nat Rothschild and majority-owned by Indonesia's Bakrie family, has detailed fraud and allegations of graft among risks to investors eyeing its shares when they list next week. 

Bumi has published its prospectus ahead of a listing of the company's shares on the premium segment of London's official list, the first step in the path to a spot in the FTSE index . 

"It may not be possible for the group to detect or prevent evey instance of fraud, bribery and corruption in every jurisdiction," Bumi said. 

Prospectuses for companies operating in some of the world's more difficult geographies often detail fraud risk. 

However, the involvement of the politically connected Bakrie family has generated increased interest in Bumi's listing documents, not least because of the perceived lack of disclosure among Bakrie-linked companies. 

The potential catapulting into the FTSE of one of Indonesia's best-known political families, delays to the listing and the complexity of the deal have added to pressure on the company. 

So too have concerns surrounding other miners majority-owned by emerging markets investors, particularly Kazakh miner ENRC which has been damaged by a boardroom split.

Bumi, which disclosed risks to investors over 20 pages, said Indonesia, where its activites are focused, ranks 110 out of 178 countries in Transparency International's 2010 Corruption Perceptions Index. 

It also highlighted allegations made by an Indonesian tax official at the centre of a high-profile corruption trial, Gayus Tambunan, who said subsidiaries Bumi Resources, KPC and Arutmin paid him $3 million to settle tax disputes. 

Tambunan was convicted in January for bribery and abuse of power and faces a new trial over fake passports. 

Bumi said Indonesia police had found insufficient evidence to file charges against Bumi Resources, and internal investigations found the allegations "groundless". 

But the company has retained a third-party consultant to review procedures for cash payments and said that corruption allegations "even if untrue, could harm the group's reputation". 

"They are being ultra-cautious," said one source familiar with the listing process, referring to anti-corruption policies.

PREPARING FOR FTSE

Bumi Plc shares, which will begin trading on June 28, replace existing shares in Vallar , Rothschild's original venture for investment in the mining sector. 

The listing of Bumi is the final step in Vallar's major transformation, which began last year with the Bakrie Goup and Rothschild joining forces for Vallar to take a 25 percent stake in coal miner Bumi Resources and a 75 percent stake in Berau Coal Energy. 

Bumi Plc has since said it aims to increase its stake in miner Bumi Resources, Asia's biggest thermal coal exporter, to up to 50 percent. 

It will also own a 75 percent stake in Bumi Resources Minerals after completion of a shake-up announced last week. BRM's main asset is an 18 percent economic interest in Newmont Nusa Tenggara, the company that owns the Batu Hijau mine.

Rothschild, who will be co-chairman of Bumi alongside Indra Bakrie, will own 5.6 percent of Bumi voting capital after the listing. James Campbell, former director of Anglo American and co-founder of Vallar, will have 0.2 percent.

Local private equity tycoon Rosan Roeslani will own 17.4 percent and is joined on the register by Abu Dhabi Investment Council, which will own a 5.5 percent stake.

Indra Bakrie is the younger brother of tycoon Aburizal Bakrie, chairman of Golkar, part of Indonesia's ruling coalition.

Aburizal Bakrie is not involved in the day-to-day running of the family's financial ventures, which were pulled out from under heavy debts by the Rothschild deal.

The Bakrie family's voting rights will be frozen at 29.9 percent, despite a total holding of 55 percent. Source: Reuters