Tony Hayward’s Genel keeps close eye on Rothschild’s Bumi

David Hellier
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FINANCIER Nat Rothschild’s very public rows with Indonesia’s Bakrie family have been discussed with the other founders of his second publicly-listed stock market vehicle, Genel Energy, City A.M. has learned.

According to sources close to the Genel Energy board, former BP chief executive Tony Hayward, who is spearheading the management team with Julian Metherell, was concerned last year when Rothschild wrote a letter of complaint about the management by the Bakrie family of his part-owned company Bumi.

In the letter Rothschild called for a radical clean up of the Indonesian operations.

“Having the chairman of a company castigating his chief executive officer in such a public manner was a very unusual thing to do and there were concerns at Genel (then called Vallares) that there might be a spill-over there, especially since the company then was at a very formative stage,” said a source close to Genel.

This week’s revelations of accounting irregularities at a Bumi subsidiary, which has flattened the Bumi share price, have revived the debate, the sources say, with the Genel board forced to consider whether there might be a contagion effect from Bumi to Genel because of Rothschild’s major involvement in setting up both vehicles.

So far Genel’s shares appear to have been unaffected by the problems at Bumi, whose stock has fallen from a peak of £14 to around 150p. Genel’s shares were trading at 757p yesterday, having been issued last year at 1,000p.

Those close to the group argue its investor base was as much attracted by Hayward’s expertise in the oil sector as by Rothschild’s name and also argue that it has an experienced and strong board.

“If we ever thought there would be a contagion effect from what is happening over at Bumi we would take whatever action is necessary to ensure it does not affect Genel,” somebody close to Genel said.