Proxy advisory firm ISS criticises Noble Group on audit committee

[SINGAPORE] Influential proxy adviser Institutional Shareholder Services (ISS) has criticised the composition of Singapore-listed Noble Group's audit committee, weeks after the commodity trader denied claims of improper accounting made by Iceberg Research. "In light of the allegations made by Iceberg, it is imperative that the company's audit committee be comprised entirely of non-executive directors, chaired by a director who is not overcommitted so as to help restore investor confidence in the company's auditing and financial reporting practices," ISS said in a report.

Noble did not immediately provide a comment on the ISS report, which was issued this month ahead of its annual shareholders' meeting due in Singapore on Friday. A copy of the report was obtained by Reuters.

ISS is the largest proxy adviser for institutional investors and its recommendations can have a noticeable impact on how shareholders vote.

China Investment Corp, Templeton Investment, Eastspring Investments, Orbis Investment and INVESCO cumulatively own 30 percent of the company, Thomson Reuters data, based on recent public filings, shows.

ISS said that though Noble had refuted Iceberg's claims, Noble's executive chairman and the largest shareholder, Richard Elman, is on the audit committee. It is chaired by a director who also chairs a number of audit committees and serves on seven public companies' boards, the advisory firm said.

Noble has rejected anonymous research outfit Iceberg's claims made in mid-February that it inflated asset values by billions of dollars through aggressive accounting. It has linked Iceberg to an employee it fired in 2013 and started legal action against him in Hong Kong.

Like last year, ISS is also recommending that shareholders vote against four resolutions, including those linked to share options and equity issuance. ISS is recommending shareholders vote in favour of adopting Noble's financial statements.

Shares in Noble, one of Asia's biggest commodities traders, have slumped as much as a third, or S$2.56 billion ($1.87 billion), since mid-February after Iceberg's claims and following weak quarterly results. US investment research firm Muddy Waters unveiled a short position on Noble last week.

Noble has pledged to improve transparency about its business but noted that many of its competitors were privately held and released very little public information.

REUTERS