Noble Group hires second auditor to review accounts after attacks by Iceberg Research, Muddy Waters

Noble Group Ltd’s hiring of a second auditor to review its accounts marked a change of heart for a company that has defended its accounting practices for months, but its top brass felt compelled to draw a line under the problem, according to a person with direct knowledge of the matter.

Hit by a critical report in February from little known Iceberg Research and later echoed by short-seller Muddy Waters and others, the board of Asia’s biggest commodity trader became convinced that detailed rebuttals and reassuring words were not enough to soothe market qualms.

Noble, accused of inflating assets by billions of dollars, faced two main choices: get a new Big Four auditor or find an investor to buy a stake in its commodity assets at a price that would validate its accounting methods, the person said. The company chose the less complicated option.

"This is really the way of just saying, ’enough is enough, put a line behind this’," he told Reuters.

With sales of US$86 billion last year, Singapore-listed Noble is one of Asia’s largest firms to find itself in a reputational battle over accounts where consequences can be long-lasting.

Noble has lost 43 per cent of its market value or $2.6 billion since Iceberg’s report. Commodity trader Olam International Ltd, whose accounts were attacked in 2012, was bought out last year by a consortium led by Singapore state investor Temasek Holdings.

Noble’s CEO Yusuf Alireza told a board meeting last month he was spending 40 per cent of his time reassuring stakeholders and he wanted to return to running the business full-time, the person said.