EY's audits on Noble unit under review
Singapore
THE audits conducted by accountants from the Singapore arm of EY on a subsidiary of commodity trader Noble Group for five financial years from 2012 to 2016 have come under review in a criminal probe.
The Commercial Affairs Department (CAD) and the Monetary Authority of Singapore have directed EY (Singapore) to produce documents in relation to the audit of Noble Resources International Pte Ltd (NRI), the two authorities said in a joint statement with the Accounting and Corporate Regulatory Authority (ACRA).
ACRA added that it has notified EY (Singapore) that it is commencing inspection on the audits on NRI for the financial years ended Dec 31, 2012 to Dec 31, 2016.
NRI is the business unit that handled most of Noble's coal trading activities.
The investigation into Noble was announced last week as the trader was about to wrap up a US$3.5 billion debt rescue plan that will hand control of its business to a group of creditors.
MAS, CAD and ACRA have been working since 2015 to review allegations by various parties against Noble.
In a Nov 20 joint statement, the three authorities cited a review into substantial write-downs announced by Noble in late 2017 and early 2018 and other information as providing the basis for starting overt investigations into potential breaches of Singapore law. Noble recorded a net loss of nearly US$5 billion for 2017.
MAS assistant managing director Lee Boon Ngiap added in a follow-up statement on Wednesday: "We follow up on all information and leads that come to our attention.
"Information from Iceberg Research was treated no differently. We were looking also at other information to try and verify the information from Iceberg."
Iceberg had criticised Noble for its accounting practices and warned of, among others, more writedowns for the firm's investment in Yancoal Australia.
Mr Lee noted that EY had been giving Noble "a clean bill of health" for three years before there was a substantial write-down.
Such large accounting adjustments would warrant closer scrutiny of the accounts, he said.
As a consequence of the announced probe last week, however, the listing of an otherwise restructured New Noble could not happen as scheduled on Nov 27. Instead, the restructuring effective date has been pushed back by two weeks to no later than Dec 11.
Seeking to clear the air following the backlash from announcing the probe three years after Iceberg's call on the writedown contributing to Noble's collapse, Mr Lee said: "Professionals are expected and trusted to perform their roles. For regulators to step in when the professionals have given the 'all clear', it would swing too far the other way.
"Before the authorities can move in, you need to collect enough information and connect enough dots to be able to take the case forward.
"There needs to be reasonable basis for an investigation as these actions can have far-reaching implications for the companies and their shareholders."
Mr Lee added that it is premature to conclude that charges will be issued. "We are still (at) investigation stage and are gathering evidence."
