EY audits under inspection as part of probe into Noble Group

Allegations against Noble first came to light after a report by Iceberg Research over three years ago which claimed that the trading house's long-term contracts were probably overvalued.
Allegations against Noble first came to light after a report by Iceberg Research over three years ago which claimed that the trading house's long-term contracts were probably overvalued.PHOTO: REUTERS

SINGAPORE - Authorities here are inspecting the work done by accountants EY (Singapore) as part of an ongoing probe into the embattled Singapore-listed Noble Group.

On Wednesday (Nov 28), the Commercial Affairs Department (CAD) and Monetary Authority of Singapore (MAS) said that they have directed EY to produce documents relating to the audit of Noble Resources International (NRI), a wholly-owned subsidiary of Noble Group.

In addition, the Accounting and Corporate Regulatory Authority (Acra) said it has sent a notification letter to EY about the start of its inspection on audits of NRI for the financial years ended Dec 31, 2012, to Dec 31, 2016.

This comes about a week after the three agencies said Noble, which was once Asia's top commodity trader, is being investigated for suspected false and misleading statements and breaches of disclosure requirements.

Apart from possible breaches by the Noble Group, the agencies had earlier announced they are also looking into potential non-compliance with accounting standards by NRI.

The trading of the company's shares have been suspended amid its restructuring, and on Sunday (Nov 25), it had moved the deadline for its US$3.5 billion (S$4.8 billion) debt restructuring back by two weeks to address regulators' concerns.

Allegations against Noble first came to light after a report by Iceberg Research over three years ago which claimed that the trading house's long-term contracts were probably overvalued. It triggered a US$10 billion collapse in Noble shares and its market valuation shrank to a mere S$107.5 million.

While questions were raised on why investigations had not commenced sooner, MAS' Assistant Managing Director (Capital Markets), Mr Lee Boon Ngiap, said EY had been giving the company a clean bill of health for the previous three years, and there was a substantial write-down later.

He added that authorities were looking into the issue and "there needs to be reasonable basis for an investigation as these actions can have far-reaching implications for the companies and their shareholders".

However, he added that it is still "premature at this point" as to whether charges will be filed, given that the authorities are still gathering evidence.