January 14, 2011 5:06 pm
King Nat’s mines
By Christopher Thompson and Anthony Deutsch
http://www.ft.com/cms/s/2/3a8cd690-1ebd-11e0-a1d1-00144feab49a.html#axzz2IwVHhzrp
http://www.911forum.org.uk/board/viewtopic.php?p=163538#163538
On an overcast morning last December at the Four
Seasons Jakarta, nearly two-dozen dignitaries
arrived at the outlying steel gates. Security
agents, armed with M-16 rifles, moved diligently
along the sides of the assembled cars checking
for explosives via a curved mirror. Waved on, the
visitors ascended the driveway then walked to a
basement room. The setting chosen to announce one
of Indonesia’s biggest ever resource deals
resembled a home counties conference centre:
sliding walls, beige patterned carpet and a
prefabricated bouquet of roses sitting on a
makeshift desk next to the projector. Only the
air conditioner whirring overhead, battling 34°C
heat outside, gave a clue as to the tropical location.
Like his surroundings, the blue-suited speaker –
who described his family business as “banking and
wine” – kept a low profile, gliding in without
greeting, the only indication of his presence a
discreet sign in the lobby directing invitees to
the Vallar presentation. The journalists –
clustered around white-clothed tables, their
chairs draped with creme-coloured organza in what
resembled wedding preparations – took out pens
and notebooks. Nathaniel Rothschild, 39, and the
future Baron Rothschild, laid out his plans to
create one of the world’s biggest coal producers
from Vallar, a £707m “cash-shell” he had founded
six months earlier. In so doing, he hopes to make
his mark on the considerable family name.
Twenty-four hours later, Rothschild stepped off
his jet to inspect Kaltim Prima Coal (KPC), the
world’s largest thermal coal-producing mine.
Accompanying him were the FT, his closest adviser
and a recent friend: a fund manager with a metal
ear stud and an Elvis-style quiff. “We met at a
party in Wiltshire,” he said by way of
explanation. The present environs could not have
been less temperate. Sweating on a remote jungle
airstrip on the island of Borneo, Rothschild cut
an unlikely figure. Dressed in a monogrammed
shirt and suede shoes he made a beeline for the
air-conditioned welcome room. It was the closest
Rothschild had been to any of the assets for
which he had paid $3bn four weeks earlier.
Sitting down to a buffet lunch, which he didn’t
touch, he explained why. “Coal mines all look the
same, they’re just bigger or smaller.”
Moving mountains
In the Rothschild case, they’re definitely
bigger. Kalimantan, the mining region located on
the Indonesian part of Borneo, is central to a
new Great Game for Asia’s energy resources.
Abundant coal deposits – formed when rotting
plants were pressed into long, hard seams 200
million years ago – have made it ground zero of the global coal industry.
As a result, the island’s topography has been
transformed. Entire hillsides have been razed and
new valleys dug to expose giant crevices of black
carbon. In turn, new forest has sprung from the
earth dumped nearby, much of it adjoining
craterous blue-green lakes formed from collected
rainwater. In some cases the fissures in the
earth are so vast that the rising water vapour
coalesces above them to form clouds. From
Rothschild’s helicopter, trucks can be seen
carrying 330 tonnes of coal each, scurrying up
and down like beetles, ferrying their load to
steaming knolls where colossal steel probosci
scoop and deposit it on to a conveyor belt. From
there it is taken to the end of a pier extending
2km out to sea where half-a-dozen ships bearing
Korean and Hindi lettering wait to deliver the
fuel to East Asia’s insatiable furnaces.
In the process the island has become rich, if at
the cost of widespread deforestation. From the
air, you can spot brown-black earth foundations
being dug by the island’s local nouveaux riches
to support their California-style condos.
The KPC mine is, according to the manager, the
“biggest earthmoving operation in the world”,
shifting a billion tonnes of dirt each year. It
also forms the basis of Rothschild’s plans to
create a new “international coal champion”. The
new company hopes to produce 140m tonnes by 2014,
which would make it the world’s largest producer
of thermal coal. The plan is to list it on the FTSE 100 by this summer.
“We have global aluminium companies, global gold
companies but no international coal champion. It
makes sense to consolidate the coal industry,” said Rothschild.
His partners in ambition are Indonesia’s Bakrie
family, a business dynasty in their own right,
whose debt-ridden Bumi company owns the KPC coal
mine and is now the largest single shareholder in
Vallar. In fact, Vallar will be renamed Bumi Plc
– or “earth” in Indonesia’s Bahasa language –
after a share exchange later this month. The
Bakries will take a 43 per cent stake and their
business partner, Rosan Roeslani, a local private
equity tycoon, 25 per cent. That leaves
Rothschild with an 11 per cent stake in his own London-listed company.
“Let us be under no illusions – the Bakrie family
and Roeslani will be the biggest shareholders,”
said Rothschild, who put $180m of his own money
into what he described as “a merger” and stands
to make hundreds of millions of dollars. “You
have to make hay whilst the sun shines.”
Nat Rothschild at the Tanjung Bara airport, East
Kalimantan, Indonesia, December 2010
Trading on a name
Given his descent from a family that was at the
forefront of Europe’s New World expansion, in a
sense Rothschild’s venture to make his own name
in Asia is well-trodden ground. A century earlier
at the same location the family bank played a key
role in the birth of south-east Asia’s oil
industry – a legacy today preserved in the
christening of the Amata pseudextensa Rothschild,
a female tiger moth ubiquitous in Borneo’s undulating rainforest.
In the late 19th century, British engineer Marcus
Samuel landed on the island’s east coast with a
single aim: to find an alternative to the
Rothschilds’ Russian oil. Short of equipment and
relying on imported Chinese coolies – the local
headhunter tribes were not eager for wage labour
– he cut a four-mile path through virgin jungle
to a place where, reportedly, oil seeped up from
the ground. The “Black Spot”, as the site became
known, formed the base for the Shell Transport
and Trading Company, a precursor to Royal Dutch
Shell, in which the Rothschilds became the largest shareholders in 1912.
It’s hard to square the air-conditioned clubhouse
and multibillion-dollar infrastructure of
Rothschild’s venture with that of the intrepid
Samuel. Yet if the risks from Rothschild’s point
of view are less clear then, conversely, the
attraction to his Indonesian partners is equally
obvious. It can be summed up in a piece of advice
given to Samuel by his business partner a century
ago as they debated letting the Rothschilds in on
their new venture: “If this chance has slipped,
we shall never get it again. Once we are combined
with the Rothschilds everybody knows that we hold
the future, but we cannot do without their name.”
Heir apparent
Nathaniel Philip Rothschild (more commonly known
as Nat) is the youngest of four children and the
only son of Jacob Rothschild, 4th Baron
Rothschild. He is also the bearer of a name that
links him indelibly with the 19th-century founder
of the eponymous family bank: the buccaneering Nathan Mayer Rothschild.
Established in London via a Frankfurt ghetto,
Nat’s Georgian ancestor built his fortune by
shipping bullion to Wellington’s army in Portugal
and Spain. In doing so, he cemented an image of
savvy financier which has been associated with
the family ever since. Legend has it that Nathan,
on receiving news of Napoleon’s defeat in advance
of the British government, sold stocks to cause
market panic before buying them back on the cheap.
Despite such an auspicious heritage – or perhaps
because of it – Nat Rothschild’s early years were
problematic. Educated at Colet Court, a London
private school, alongside the current chancellor,
George Osborne, Rothschild moved on to Eton where
he was remembered as a quiet boy who seemed to resent authority.
Persistent troublemaking saw him assigned to a
schoolmaster whose job it was to try to tame him.
It didn’t work. Moving on to Oxford, where he
read history at Wadham, Rothschild is remembered
for driving around in a blue Porsche and throwing
lavish parties. He was also a member of the
hard-drinking Bullingdon Club, an arcane ¬society
whose establishment members – including the
current prime minister, David Cameron – were
infamous for vandalising the ¬restaurants they dined in.
There were several minor scandals. These included
a year-long driving ban after being pulled over
and failing to provide a specimen for analysis to
the police and allegations made by an escort that
he ordered drugs and call girls to Waddesdon
Manor, the family’s stately home in
Buckinghamshire, which Rothschild strongly denied.
He went straight to work after graduating in 1994
– first at Lazard Brothers, a private bank that
competes with the Rothschild bank, and then
Gleacher Partners, the New York investment advisers.
The circumstances of a marriage in his early
twenties in Las Vegas to Annabelle Neilson, a
model he met on a beach in India, did little to
change his wild-child media image. The
relationship ended after three years with a
confidentiality agreement and an out-of-court settlement.
In his mid-twenties, Rothschild performed a
U-turn of sorts, partially precipitated by the
suicide of his uncle Amschel in a Paris hotel
suite in 1996. Tragedy dogs the Rothschilds: his
cousin, Raphael de Rothschild, died of a heroin
overdose on the streets of New York five years later.
Nat himself relocated to New York from London,
but swapped alcohol and partying for days
dedicated to networking and business. Like his
ancestors, money has since come to define his life.
After swapping Cristal for Coca-Cola, Rothschild
joined Atticus, a hedge fund named after Atticus
Finch, the lawyer in To Kill a Mockingbird, where
he worked feverishly for the next decade. At its
peak it managed $23bn until its main fund was
disbanded in the credit-crunch amid heavy losses.
Rothschild maintained those investors who got in early “did very well”.
Peter Munk, the octogenarian chairman of Barrick
Gold, the world’s biggest gold producer, first
met Rothschild in his mid-twenties when the
latter’s reputation was still more playboy than
business patron. He did so because he was asked
to by Lord Jacob, Nat’s father and a close friend
who was concerned about his son’s “issues”. Munk
ended up becoming a sort of surrogate father
figure for Rothschild in the investment world and
persuaded him to move to Klosters, the Alpine ski
resort in Switzerland where Rothschild is now based.
“It began as a favour and yet I ended up becoming
an investor, a follower of his career,” said
Munk, who described Rothschild as one of the most
internationally mobile businessmen he knows,
something attested to by the 700 hours a year
that he spends on his private jet, “N4T”.
Along the way he courted politicians and business
tycoons, his surname usually enough to open
closed doors. Yet despite being a friend to the
likes of Lord Mandelson, the former Labour
minister, and Russian oligarch Oleg Deripaska,
Rothschild prefers, like his father, to keep a low profile.
This facade has cracked just once – in 2008 –
when Rothschild became angry with his schoolboy
contemporary George Osborne, then in opposition,
for breaching the confidentiality of a summer
party. Revenge was swift: Rothschild wrote a
letter to The Times alleging that Osborne had
sought a donation from Deripaska while on the
Russian’s yacht – an allegation which Osborne vehemently denied.
The dealmaker
On a freezing night in mid-November I met
Rothschild at the family owned Spencer House, the
last Georgian mansion to overlook Green Park in
London. Next door are the Vallar offices, an
unremarkable former town house given to the company by a hard-up client.
In an austere oak drawing room, surrounded by
classical portraits, and after two days without
sleep, Rothschild sat with his gangly frame
hunched forward as if the weight of the family
expectations lay on his shoulders. He had just
flown in from Singapore where his
multibillion-dollar deal – for three weeks based
only upon a handshake – was formally sealed. “I
met the Bakrie family face to face a month ago;
so one has to be decisive when opportunities
present themselves,” he said in his softly spoken
voice – a characteristic which comes across as alternately shy and aloof.
The original Vallar proposal was nearly a
father-and-son double act. RIT Capital Partners,
the investment trust owned by Nat’s father, Lord
Jacob Rothschild, had some $2bn in capital. Nat
wanted to invest it in his position as successor
at RIT – a de facto stepping down for Lord Jacob.
“He didn’t go for it – he didn’t want to retire,”
said a person who knows both men. “So Nat said,
‘I’ll raise the money on my own then.’”
But, having just climbed out of the worst
commodity depression in a generation, capital was
scarce, even among investors of Rothschildean
calibre. So Rothschild opened his considerable black book.
“Nat is unique in his international contacts –
there’s no one he doesn’t ski, sail or party
with,” said Munk, who added that weeks before the
Vallar deal Nat was climbing mountains in Nepal
with the head of the China Investment
Corporation, the country’s sovereign wealth fund.
As a result Vallar raised £707m in a stock market
flotation last July, a war chest with which to go shopping for assets.
At Rothschild’s side during this coup was Daren
Morris, a former industrials banker at UBS who
races catamarans around the Isle of Man in his
spare time. He is Vallar’s business partner –
along with the company’s co-founder James
Campbell, former head of coal at the mining giant
Anglo-American – in a relationship with
Rothschild formed during their days flat-sharing at Oxford.
One of the company’s first investors was a
Russian friend who lives near the Israeli embassy
in Kensington, London. Not unlike a couple of
door-to-door salesmen, Rothschild and Morris
turned up at the Russian’s house and, after
talking through a proposal for a natural resource
fund, walked away with a £50m pledge.
Other investors included the Abu Dhabi Investment
Authority and Schroders bank; the latter,
according to someone familiar with the situation,
after Mr Rothschild paid a surprised Bruno
Schroder, the owner, a visit while he was
lounging on a sunbed in the Turks and Caicos
Islands. Mr Rothschild said he solicited the
investment from Schroder’s “head of equities”.
“Chief executives love that approach, striking
while the iron’s hot,” said Morris. “Nat will
call an investor up and ask, ‘Where are you?
Doing business in China? Will you be there
tomorrow? Right, see you there then,’ and he’s off.”
Asset hunt
Over the summer of 2010, N4T had a busy flight
schedule. With the money raised, Rothschild went
in search of the asset that would make his name,
descending on the runways of gold, iron ore and
coal mines in Brazil, Colombia, Russia and Canada
as well as the financial centres of four continents.
For reasons of both economy and ambition, Vallar
was looking to buy on a grand scale.
“I wanted to do a transaction sufficiently large
so that the shareholders of Vallar have a
platform on which to go and build a company which
is a FTSE 100 entrant. We will be,” said Rothschild.
There was an Oedipal element too. More than
Rothschild’s desire for money is the wish to forge a legacy.
“He wants to make a mark as the Rothschild of his
generation,” said Sir Julian Horn-Smith, a former
chief executive of Vodafone and currently a non-executive director of Vallar.
Ever since Atticus closed, the jury of executive
opinion had been hung on whether Rothschild would
emerge from the shadow of his father. “After
Atticus Nat felt his reputation was still a
question mark … he felt like he didn’t get the
credit for its early success. Vallar is
unequivocally his,” said one reliable source.
When Lord Jacob hadn’t acceded to his son’s
earlier proposal, Nat had managed to raise his
own money. Now he had to prove what he could do with it.
Then, in late October, Vallar got a phone call
from Ian Hannam, a banker at JPMorgan well-known
in the natural resource sector.
“There are some coal mines in Indonesia you
should look at,” said Hannam. The first was
Berau, Indonesia’s fifth-largest coal producer. A
35 per cent stake was being sold by Roeslani, now
a partner with Rothschild, to pay off a loan from
Credit Suisse. The second bigger mine was owned
by the controversial Bakrie family through Bumi
Resources, one of Indonesia’s biggest companies
and also one of its most debt-laden, dogged by
accusations of tax evasion and corporate misgovernance.
Fortunately Hannam knew both owners. During the
Asian currency crisis of the late 1990s, he had
advised the Bakries on reconfiguring their
business empire and he knew that the family had
been something of a patron to Roeslani, who had
acted as an adviser to them on several previous
business acquisitions. Perhaps Vallar, Hannam
suggested, with its golden carrot of a London
listing, could help out both companies?
Business with the Bakries
Vallar chairman Indra Bakrie sits down with the FT, Jakarta, December 2010
Vallar chairman Indra Bakrie sits down with the FT, Jakarta, December 2010
Shortly before the trip to the mines, I entered a
basement wine bar in downtown Jakarta. The scene
looked like an east Asian adaptation of Miami
Vice. Beckoning me in was the new chairman of
Vallar, Indra Bakrie, the younger brother of clan
head Aburizal and the middle of the three
brothers who run the family businesses.
Surrounded by dimly lit bottles of Meursault and
flanked by two consiglieri he held court from an
oversized armchair, his stout body sporting a floral Indonesian shirt.
Indra is one scion of a family business that
began when his father traded pepper and coffee
under Dutch colonial rule in the 1940s. The
resulting conglomerate continued to expand into
virtually every sector of the economy under
Indonesia’s former dictator, Muhammad Suharto.
“During Suharto the government was criticised for
giving too much power to the Chinese business
community [so] Suharto used Bumi as a symbol of
the ‘Indonesian’ businessman being successful. It
was a balancing act, Bumi was a counterweight,”
said Sofjan Wanandi, head of a Jakarta-based
business lobby group who has known the Bakrie family for four decades.
Since Suharto, the Bakrie bank balance has
suffered. The 1997 collapse of the rupiah nearly
bankrupted the empire. An economic boom after
2000 allowed the family to re-accumulate a
majority stake and invest in a new headquarters:
a phallic tower of steel and glass rising
irresistibly from Jakarta’s business district.
Then came the subprime lending crisis. Hundreds
of millions of dollars of value were wiped off
the Bakrie companies, sparking fears that they
were again teetering on the brink of bankruptcy.
Their current debt stands at some $4.4bn.
Enter Rothschild. Indra Bakrie, a man whose
family is decried by critics as “untouchable” and
whom supporters liken to “the Indonesian
Rothschilds”, is remarkably frank about the
Vallar deal. “Everybody knows the debt that Bumi
has is not a cheap deal with the lenders.
Vallar’s job is to try to decrease [our] debt,
decrease the cost of funds and to help the capital expenditure.”
“When we met the first time, what I see from Nat
Rothschild, for someone to go IPO (initial public
offering) without any assets and get £770m – I
thought this must be somebody,” said Bakrie. “So
my brothers and I decided this is what we’re looking for.”
Others agree that this deal adds to the Bakries’
considerable clout. “He (Aburizal Bakrie) is a
kind of shadow president [of Indonesia] and the
Vallar deal makes his shadow bigger,” said Drajad
Wibowo, an outspoken government critic and deputy
head of the opposition National Mandate party.
“Maybe, if one day he becomes president, he will
have to thank the Rothschilds.”
The new Vallar deal may also help to rehabilitate
the Bakrie reputation. The 2006 Lapindo mudflow
disaster, in which a drilling hole operated by
the family oil and gas company began gushing
noxious mud and gas, displaced tens of thousands of people.
More recently, the Bakries have faced allegations
of dodging more than a billion dollars in taxes
as well as corruption charges against three
Bakrie-owned businesses, including Bumi. The
Bakries deny the charges and claim their
businesses are among Indonesia’s largest corporate taxpayers.
“The perception about Bakrie is bad; I talked to
the family and said we need to rectify this,”
Indra Bakrie said, explaining that Bumi had been
looking to list on a western market for three years.
“For me as a Muslim [the deal] is God’s will. We
have the assets, Rothschild has the money – it’s a marriage just like that.”
Next stop China
Rothschild closed the deal with the Bakries after
meeting them once in Los Angeles and again in
Singapore – two meetings spread over just three
weeks. “It will raise eyebrows in the City,” said
one London-based mining analyst of the
partnership. Another added that Bumi had governance issues “across the board”.
Back at the KPC mine Rothschild was unconcerned.
He told me that speed was the reason for the
deal’s success. “I think the fact we’ve done
something quickly is heartening to the people who
put money in Vallar.” He was also sure he and the
Bakries would get along fine, regardless of the
size of their respective shareholdings or alleged
misdemeanours. His attention turned back to his
BlackBerry where he was busy trading texts with
Niall Ferguson, the historian and biographer of
the Rothschild family, who was staying at his house in Switzerland.
Soon after lunch, having spent no more than a few
hours at the site, Rothschild returned to his
jet, leaving the remaining analysts to
number-crunch in his absence. With his entourage
he flew to Bali to stay at Roeslani’s villa. “It
rents out for $15,000 a night and is popular with
celebrities and former dictators,” said one
colleague. From there it was on to Beijing and a
meeting with the China Investment Corporation.
Treading in the footsteps of his predecessor
Nathan, he wanted to discuss finance for a
possible $1bn acquisition, the ink having barely dried on the Bumi deal.
“His pleasure is making money and Vallar is his
vehicle for doing it,” according to one of
Rothschild’s friends, who also invests with him.
“Some people are saying he may have bitten off
more than he can chew – but Nat is here to make a mark. It’s a big call.”
This story is subject to a correction and clarification.
Christopher Thompson is an FT UK companies
reporter and Anthony Deutsch is Jakarta correspondent
..................................................
A banking dynasty
The Rothschild dynasty was founded by Mayer
Amschel Rothschild in the Jewish ghetto of
Frankfurt in the late 18th century, writes
Richard Dennis. What began as trading in coins
and commercial papers soon turned to private
banking. Mayer sent four of his five sons to
establish banks in London, Paris, Naples and Vienna.
His fourth child, Nathan Mayer Rothschild,
founded the London branch in 1809 and became
fundamental in the Napoleonic Wars when, in 1814,
he was commissioned by the British government to
raise funds. This involved co-ordinating agents
and couriers, and transporting gold and information around Europe.
The next generation of Rothschilds continued to
refine the family business. Most notable among
them was Lionel Nathan Rothschild, son of Nathan,
who became the first Jew to be elected to the
House of Commons, in 1858. In 1875, he was able
to raise £4m within hours to make the British the
principal stockholders in the Suez Canal. His
son, Nathan Mayer Rothschild, became the first
Jewish member of the House of Lords. Since then,
the Rothschild dynasty has been responsible for
funding such commercial operations as the
creation of diamond dealers De Beers in 1887, and
the London Underground in 1926.
Jacob Rothschild (b. 1936) was chairman of N.M.
Rothschild before retiring in 1980. Since then he
has chaired the National Heritage Memorial Fund,
providing £1.2bn in lottery grants and became
deputy chairman of BSkyB. In 2009 his personal
fortune was estimated at £360m by The Sunday Times Rich List.
The Rothschild family interests are not
restricted to banking. Dame Miriam Louisa
Rothschild (1908-2005) was a natural scientist,
vegetarian and teetotaller who became a leading
authority on fleas – The Rothschild Collection of
Fleas is part of the Natural History Museum collection.
One of the most notable family eccentrics was
Phillippe de Rothschild (1902-8, who was a racing
driver (winning the Burgundy Grand Prix in 1929),
a film producer (making one of the first French
“talkies”) and vineyard owner. He took over the
Château Mouton Rothschild vineyard in the 1920s and had huge success with it.
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"The maintenance of secrets acts like a psychic
poison which alienates the possessor from the community" Carl Jung
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Fear not therefore: for there is nothing covered
that shall not be revealed; and nothing hid that
shall not be made known. What I tell you in
darkness, that speak ye in the light and what ye
hear in the ear, that preach ye upon the housetops. Matthew 10:26-27
Die Pride and Envie; Flesh, take the poor's advice.
Covetousnesse be gon: Come, Truth and Love arise.
Patience take the Crown; throw Anger out of dores:
Cast out Hypocrisie and Lust, which follows whores:
Then England sit in rest; Thy sorrows will have end;
Thy Sons will live in peace, and each will be a friend.
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Please consider seriously the reason why these elite institutions are not discussed in the mainstream press despite the immense financial and political power they wield?
There are sick and evil occultists running the Western World. They are power mad lunatics like something from a kids cartoon with their fingers on the nuclear button! Armageddon is closer than you thought. Only God can save our souls from their clutches, at least that's my considered opinion - Tony
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