Iceberg Research launched fresh criticism of Noble Group yesterday, accusing the embattled commodities trader of ordering a financial review simply to buy time.
The little-known outfit also said that sooner or later, Noble would have to recognise that its books have been manipulated for years.
Noble issued a short reply reiterating that it has a robust accounting process and the support of its stakeholders. It added that its auditing process is well within the official framework. In a 2,028-word blog titled "Confidence in Noble is clearly eroding", Iceberg said accountancy firm PwC will work on the valuation framework, rather than the valuation of the portfolio itself.
The blog said regulatory bodies should address the problem with the help of independent specialists before the crisis spreads .
"PwC... will answer the question that Noble wants them to answer: Does Noble formally respect the letter of the law?" the blog post said.
S&P's downgrade of Noble from stable to negative has been the company's most important development in recent weeks , the Iceberg blog said.
"PwC will not answer the question that investors and creditors want them to answer: Does Noble violate the spirit of the law?"
Standard & Poor's downgrade of Noble from stable to negative has been the company's most important development in recent weeks, the blog said, adding that an investment-grade rating by credit agencies is the main reason Noble performs "a magic show" every quarter with its financial reporting.
The attacks were the first since Iceberg's last update on April 16, when it urged shareholders to challenge Noble's management on accounting and governance issues at its annual general meeting.
These alleged issues were first highlighted by Iceberg in February.
Since then, Noble has been under public scrutiny, and its share price has plunged 43 per cent in that period. Noble has announced nine rounds of share buybacks since last month, spending about $75 million.
Noble chief executive Yusuf Alireza and founder Richard Elman widened the scope of their financial reporting in the first quarter, and mounted a lawsuit against Mr Arnaud Vagner, the person allegedly behind Iceberg. But they have failed to fully silence critics.
Last month, former Morgan Stanley banker Michael Dee released an open letter that questioned the ethics and competence of Noble's management, calling on Mr Elman to resign.
Noble appointed PwC this month to review its term contracts, valuations and the relevant corporate governance framework.
Noble said in a statement yesterday: "Our accounting is robust, we are supported by our stakeholders, and the third-party Assurance Review of our term contracts by PwC, overseen by an independent board committee and carried out in accordance with the Singapore Standard on Assurance Engagements, offers further transparency to the market." Iceberg said Noble will need a white knight - one with deep pockets who is willing to invest in a firm with cash outflows and growing debt.
There are compelling reasons to be pessimistic about Noble, the blog said. "It took nine months for Enron to collapse, a period during which Enron's CEO, Jeff Skilling, denied the reality and aggressively attacked his critics."
Noble's share price fell 1.5 cents to 66.5 cents yesterday.