Noble's CEO and critic slug it out

Research outfit Iceberg claimed in February that Noble inflated the value of Australian mine Yancoal in its balance sheet.
Research outfit Iceberg claimed in February that Noble inflated the value of Australian mine Yancoal in its balance sheet.PHOTO: NOBLE GROUP
Research outfit Iceberg claimed in February that Noble inflated the value of Australian mine Yancoal in its balance sheet.
CEO Yusuf Alireza
Investment banker Michael Dee
Investment banker Michael Dee

At issue: Firm's accounting method and call for its founder to resign

EMBATTLED commodity trader Noble Group and investment banker Michael Dee engaged in a war of words yesterday over claims and counterclaims about the company's accounting methods and asset valuations.

Mr Dee, a former senior managing director of Temasek Holdings, sparked the exchange when he wrote an open memo late last month demanding that Noble founder Richard Elman resign while also urging the company's staff to question top manage-ment's actions.

Noble chief executive Yusuf Alireza hit back at what he called "false" claims in an open letter to Mr Dee filed with the Singapore Exchange (SGX) yesterday.

WAR OF WORDS

You seem to have taken the inaccurate and misleading accusations of an anonymous blogger at face value without researching those accusations yourself.

- CEO Yusuf Alireza to Mr Michael Dee, referring to Iceberg Research blog posts, which Noble later identified as being the work of former employee Arnoud Vagner, who it said was a bottom 10 per cent performer 

As for Iceberg, stop your silly lawsuit against him (Mr Vagner). You are a multibillion-dollar company and you are suing a guy for saying what you can't disprove with facts... It is striking that a bottom 10 per cent performer in the freight department has now got the attention of the global financial markets. Perhaps you underestimated his abilities.

- Investment banker Michael Dee, in response to Mr Alireza's open letter to him

"Up to now, I have chosen to ignore your ill-informed opinions.

"However, your recent call for the resignation of our founder and chairman is a step too far," Mr Alireza said. "You seem to have taken the inaccurate and misleading accusations of an anonymous blogger at face value without researching those accusations yourself."

This remark was in relation to an allegedly poor-performing former Noble employee - identified by Noble earlier as Mr Arnaud Vagner - who is said to be behind the maverick research outfit Iceberg that raised concerns about Noble's books back in February.

Yancoal, an Australian mine, is at the centre of claims by Iceberg that Noble inflated its value to spruce up its balance sheet.

Iceberg's remarks have triggered a 43 per cent fall in the stock since then.

Mr Dee responded later in the day in an e-mail sent to The Straits Times, among others, that challenged Noble to come clean "fully and professionally" for its stakeholders.

He also called on the firm to stop its legal action against Iceberg.

Mr Dee, who said he had no economic interest in Noble, said the firm should release the full model of Yancoal's book value "both before and after you recently wrote it down 40 per cent".

"Let the market decide if your assumptions that it is worth 30 to 50 times the market value are realistic and if Yancoal is worth what you say," he said.

Mr Alireza said in yesterday's letter that valuation of the Yancoal stake is "consistent with practice in the mining industry and accounting policies".

Mr Dee also said in his e-mail that investors like Invesco bought 1.8 million shares one day and sold more than 12 million the next, while Goldman Sachs downgraded the stock from "buy" to "neutral", along with a reduced target price of 77 cents from $1.30,

"This is a 40 per cent decline. Does any of this show confidence?" Mr Dee asked.

He also asked Noble to stop its "silly lawsuit against him (Mr Vagner)". "You are a multibillion-dollar company and you are suing a guy for saying what you can't disprove with facts.

"It is striking that a bottom 10 per cent performer in the freight department has now got the attention of the global financial markets. Perhaps you underestimated his abilities." Mr Dee was referring to a claim by Noble that Mr Vagner was an underperforming employee.

Mr Dee also reiterated that it is time for 75-year-old Mr Elman to step down.

"He has my respect for what he built, but not for how he has run it for the last five years," Mr Dee wrote. "The company is in decline, its credibility in tatters... this is under his leadership... It is time to move on and get a new chairman and auditor."

Mr Elman said in a public letter to shareholders on June 11 that the company is battling against rumours and inaccurate statements and pledged to "right the damage" to its share price.

The company has bought back more than 62 million shares, or 0.9345 per cent, of the issued capital, for nearly $40 million in three batches since that statement.

The company's bond yields have increased by 125 basis points over the past month on credit-related concerns.

Noble shares closed 0.5 cent lower at 71.5 cents yesterday.

rupsk@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on June 18, 2015, with the headline 'Noble's CEO and critic slug it out'. Print Edition | Subscribe