Noble Group promises more transparency after attack on accounting

[SINGAPORE] Embattled commodity trader Noble Group Ltd pledged to provide more disclosures and issued a strong rebuttal on Thursday to claims of improper accounting made by an anonymous research firm.

The Singapore-listed group, one of Asia's biggest commodity traders, has seen US$1 billion wiped off its market value since Iceberg Research said last month Noble's accounting methods inflated the value of its assets - a claim Noble has rejected and blamed on a disgruntled former junior employee.

"Noble has come a long way over the last few years in terms of that transparency, but more is required," the company's Chief Executive Officer Yusuf Alireza, said on Thursday in a 11-page statement.

"Most of our competitors are private and release very little public information, but our experience over the last two weeks is a strong message, that as a public company, we need to accelerate down our current path of increased transparency," he said.

Pressure on Noble exacerbated when the company last week unexpectedly reported its first quarterly loss in three years, hit by nearly US$440 million in writedowns after a second report from Iceberg. Hong Kong-based Noble has said the two issues were unrelated.

In its statement on Thursday, Noble rebutted all claims made by Iceberg. Noble said its fair values on the assets were not overstated and the methodology was based on International Financial Reporting Standards.

"Net fair values are based on robust internal processes, a clear valuation methodology, continually updated inputs and valuations, thorough review, and back testing against actual realisation." Iceberg had claimed that the fair value gains were overstated by at least US$3.8 billion and should be impaired.

Iceberg's reports have raised investor concern about how much leeway commodity traders have in valuing their assets, with some brokers downgrading their ratings on Noble's stock.

Noble is the second major Singapore-listed commodity trader to have its accounting practices challenged by a research firm. Olam International Ltd was criticised by Muddy Waters in late 2012, sending its shares falling and prompting state investor Temasek to take majority control.

Noble said Iceberg released its reports through a blog and the company that registered the blog was a Seychelles special purpose vehicle.

It said the contact person for the company behind the blog is a former credit analyst who mainly covered chartering. The person joined Noble in 2011 until his employment was terminated in June 2013.

In an email to Reuters after Noble's statement, Iceberg said it would not provide details about its members but would issue a response later.

On Thursday, Noble's shares ended up 0.5 per cent in a weaker market, still down 17 per cent since Iceberg's first report.

REUTERS