Serious What Happened to Singapore's Corporate/Public Governance?

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An honorable member of the Coffee Shop Has Just Posted the Following:

FIRST PRC COMPANIES SCAM, LOCAL TOKAY ALSO SCAM, SEMI-GLC (SINGPOST) ALSO POSSIBLE SCAM, NOW SGX LISTED ANGMO MANAGED COMPANY ALSO SCAM?

Resignation of Noble Group’s CEO, Yusuf Alireza
May 31, 2016 · by Iceberg Research · in Uncategorized · 3 Comments

Mr Alireza was recruited four years ago by Noble. His first day as CEO of this large physical trader was his first day in the commodity business. The learning curve has been a painful experience for the company’s shareholders: the share price fell by 76%. Noble dramatically underperformed traders that can be short or long commodities. The trader even underperformed some producers that are structurally long.

Mr Alireza is not responsible for all the accounting issues at Noble. The dubious mark-to-market did not start with him. The level was already suspiciously high under the previous CEO, Ricardo Leiman. Mr Alireza also found Noble in poor shape after his predecessor made investments in sugar assets at the very wrong time. This would plague Noble’s performance for years.

But Mr Alireza could have walked away from a company increasingly dependent on accounting alchemy to hide bad results. Instead, he embraced the system. And why not? The auditor, Ernst and Young, allowed Noble to discreetly exploit every accounting loophole to give a fundamentally misleading representation of its profitability and of its balance sheet. Noble was able to “manage” its profitability, something CEOs dream of. The board of directors, the passive institutional investors, etc did not seem much of a hassle. Alireza received not less than 75 million stock options.

Problems started in February 2015 with our reports. Mr Alireza vigorously defended his company, hired infamous spin doctors Bell Pottinger, and embarked on a campaign against “malicious” researchers and short sellers.

Capital markets watched this awkward show for one year: a former Goldman Sachs working in a trading firm who complained that the market was unable to value things correctly. Yancoal overvalued by 48 times its market value on Noble’s balance sheet? No problem: it’s because it is illiquid. The commodity contracts suddenly impaired by $1.1b while the company had been immune to impairments? No this does not mean they were overvalued, absolutely not…

For the journalists who were asking critical questions, Noble had an answer: a letter from its legal department. Even an NGO received legal threats. For the press, it has been very difficult to cover this company normally. Mr Alireza claimed he wanted to defend shareholders against Iceberg. In reality, he wanted to stifle free speech and the open discussions of ideas. If Mr Alireza cared about his shareholders, he would have disclosed his remuneration. Noble does not comply with the Singapore Governance Code’s recommendation to disclose individual remuneration of senior management.

We do not think Mr Alireza is done with Noble. Some statements made by the former CEO create legal exposure for him. From misleading declarations on the financials to defamatory statements about us, we have always been surprised by how careless Mr Alireza was when he spoke in public.

The departure of Mr Alireza was long overdue. However, this does not solve the financial crisis at Noble.


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