8126/2018 | Was Cheated’ - Tales From the Collapse of a Commodly Giant - Bloomberg
Business
“| Was Cheated! - Tales From the Collapse of a
Commodity Giant
By Krystal Chia and Andrea Tan
August 26,2018, 12 AMGMT+8
Francis Tay feels cheated.
The former Singapore civil servant says he’s lost almost $50,000 ($36,600) in the implosion of
Noble Group Ltd., the commodity trading giant. He also says shareholders like him have been let
down by regulators whose job it is to protect them from the sort of crisis that’s brought the
company to the brink.
Yet, the 71-year-old says he still plans to vote in favor of a debt-for-equity restructuring at a
shareholder meeting in Singapore on Monday that will hand control to senior creditors, diluting
existing stockholders. He sees no other option. Chairman Paul Brough paints the deal as do-or-
die, and it already has the backing of the biggest investors, including founder Richard Elman.
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“Iwas cheated of my hard-earned savings,” said Tay, who still owns a small amount of shares.
“How can a giant company collapse?” he said in an interview earlier this month in the run-up to
the shareholder vote, adding: “What message does that send to the world about Singapore’s
reputation?”
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Tay and other retail investors have been among the hardest hit, although institutional investors
as well as buyers of the company’s bonds when they were issued have also seen steep losses.
Noble Group has shredded billions in value since 2015 as the once $12billion company was
reduced to a rump by untenable debt, losses and allegations it deceived investors with
accounting tricks. The Singapore -listed trader, which has always defended the integrity of its
accounts, didn’t respond to a request for comment.
Orderly and Transparent
As Noble’s troubles mounted, the role of Singapore's regulators has come under scrutiny. In
addition to running the exchange, S ¢ oversight and
responsibility for maintaining fair, orderly and transparent markets as well as following up with
companies to investigate allegations of irregularities. It’s backed by the Monetary Authority of
Singapore, the de facto central bank of a city state that’s also a global financial center with a
hard-earned reputation for probity.
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In the case of Noble Group, allegations have come thick and fast, led by Iceberg Research, which
says profits were inflated. The group ~ whose claims are rejected by Noble ~-is led by Arnaud
Vagner, a former credit analyst at Noble in Hong Kong, where the trader was based before it
moved to London, who recently dropped his self-imposed cloak of anonymity.
‘Policeman Without a Gun’
“The SGX is a policeman without a gun,” said Tay. “Layman investors like us only have access to
on-the-surface information, such as company releases or news repor
‘The SGX defended itself by setting out a summary of the actions it’s taken over the past three
years as Noble suffered blow after blow. The tally includes frequent contact with the company,
queries for more detail on its results and its demand that Noble appoint an independent
financial adviser__ to assess the debt-for-equity plan that Tay and others are about to vote on.
“Questions ought to be asked about whether the SGX board has adequately prioritized investor
protection,” said Mak Yuen Teen, an associate professor of accounting who specializes in
corporate governance at the National University of Singapore Business School. There are also
questions on whether the board has given sufficient resources to SGX RegCo, he says, referring
to the arm of the SGX that discharges its regulatory functions.
Audits and Review
After Iceberg’s first report, “we required the issuer to appoint a Singapore auditor to do an
independent review, and took a series of actions to ensure the issuer’s auditor addressed the
issues of concern in every single year-end audit since FY2015,” an SGX spokesperson said.
“Notwithstanding that both the audits and review were clean, we continue to do our part to
investigate matters that are within our remit. We are committed to holding issuers and
professionals responsible for their actions and opinions. If there is any evidence of wrongdoing,
we will refer it to the appropriate authorities.”
‘The SGX spokesperson added: “In terms of whether our resources are adequate, we are
accountable to both the SGX RegCo board and the MAS.”
It’s the second time that a major trading company based in the city state has run into trouble.
Olam International Ltd., one of the world’s largest food commodities traders, came under attack
from Muddy Waters LLC in 2012. The short-seller raised doubts about its finances, compared it to.
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