Bumi row threatens presidency bid of Indonesian tycoon

JAKARTA, Indonesia – Once Indonesia’s richest man, Aburizal Bakrie is keen to show his common touch as he eyes presidential polls in 2014, but an explosive row with the powerful Rothschild family could yet derail his bid.

On a recent tour of one Jakarta district, he arrived in a $220,000 Lexus but quickly swapped to a colorful, beaten-up hire car as he burnished his “man of the people” image.

“I started as a small businessman, selling what they sold, bags and T-shirts,” he told AFP, in a nod to the local artisans working in the area.

“Ever since I was the social welfare minister I was close to them, I was close to the people.”

Dressed simply in a white linen shirt and trousers, the trim 65-year-old received a warm welcome on the visit as he was accompanied by his wife and bodyguard, who was given the task of carrying her Louis Vuitton handbag.

It was one of 40 such trips he has made across Indonesia’s main island of Java in recent months as he seeks to get a head start in an election for which he is so far the only declared candidate.

His task, however, has been made more difficult by a row between his family and British financier Nathaniel Rothschild over coal venture Bumi Plc.

Even though he gave up day-to-day control of the family business when he entered politics in 2004, analysts say the row could damage him, especially given previous controversies.

One notable scandal that still overshadows the family is the claim that one of its companies triggered a “mud volcano” in 2006 on Java that engulfed villages, even though the Supreme Court has cleared the firm of any wrongdoing.

“In politics, everything is about association,” survey institute head Kuskridho Ambardi told AFP, adding that people would likely link him to the row and ask “how can he run a country if he can’t run his company?”

Observers say the feud over Bumi, which was founded by Rothschild and the Bakries but has been beset by boardroom squabbles, threatens not only his support base but also his campaign finances.

According to the Indonesian Survey Institute, a local pollster, he has the support of between nine and 11% of voters.

Bakrie would not be drawn into talking about the row when asked about it during his Jakarta tour in late October, in fitting with his attempts to stay out of the family businesses.

The visit, part of an early vote-seeking drive well before official campaigning gets under way, was generally greeted with enthusiasm.

And although he had a privileged upbringing and inherited a fortune from his father, his attempt to portray himself as down-to-earth seemed to resonate with many in a country where almost half the population survives on under $2 a day.

Neneng Sulastri, a 36-year-old hawker, chased Bakrie down the street and declared her intention to vote for him.

“A political leader has never visited us before, and I got the impression he is a man of the people,” she said, after he bought a pair of sandals from her for 100,000 rupiah ($10), four times the normal price.

His wife, Tatty Bakrie, also dressed simply in shirt and trousers, was greeted enthusiastically, hugging people who approached her.

Bakrie declared his candidacy in July for the presidential race, becoming the first and as yet only person to do so, and will run for the Golkar Party, a partner in the current ruling coalition.

President Susilo Bambang Yudhoyono is constitutionally barred from running for a third term and no clear front-runner has yet emerged to replace him.

Bakrie has previously served as chief economic minister and social welfare minister — he was appointed to both posts by the president — and is currently Golkar Party chairman.

Bumi Resources, Indonesia’s largest coal miner, was founded by his family and is now part-owned by Bumi Plc.

Simmering tensions escalated in September when the Bumi Plc board ordered a probe into potential financial irregularities, backed by Rothschild, with a major part of the probe focusing on Bumi Resources.

The Bakries have now offered to give up their 23.8% stake in Bumi Plc, which was founded last year, and pay about $1.2 billion for its mines, with the board due to decide on the offer in the coming weeks.

The deal would leave Bumi Plc, which has seen its shares plunge more than 70% since they listed, with cash but few assets and prompted Rothschild to quit the board last month.

Rothschild has now launched a counter-bid, although the details are unclear.

A financial analyst, who declined to be identified, said the controversy would make it harder for the family to get loans, needed to pay their companies’ debts and to finance their offer to split from Bumi.

Bakrie has already seen his fortune shrink from $5.4 billion in 2007, when he was the richest man in Indonesia, to $890 million last year, according to Forbes, as the price of coal slips amid weaker demand from China.

Zainal Bintang, a senior Golkar Party official, conceded the situation could impact negatively on Bakrie’s chances of persuading people to vote for him in 2014, however much he tries to polish his common man image.

“Bumi Resources is affecting Aburizal’s financial situation… He is not as free as before to spend cash to boost his popularity.” – Agence France-Presse