ASEAN KEY DESTINATIONS
Fraud warning in Bumi prospectus
Bumi 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 every 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 activities are focused, ranked 110 out of 178 countries in Transparency International’s 2010 Corruption Perceptions Index. It also highlighted allegations made by a former tax official at the center of a high-profile corruption trial, Gayus Tambunan, who said subsidiaries Bumi Resources, Kaltim Prima Coal 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 falsifying a passport. Bumi, meanwhile, said 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 anticorruption policies.
The trial is ongoing.
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