Muddy Olam Call Spurred by Rule Accountants Call Ambiguous

Short-seller Carson Block’s Muddy Waters LLC says that believing commodity trader Olam International Ltd.’s accounting requires a “leap of faith.” The ambiguity lies with the rules as much as the company.

A global accounting standard introduced in 2003 forces companies every three months to value living things from wheat crops to cattle, or so-called biological assets. As Singapore-based Olam branched out from being the world’s second-largest rice trader and acquired dairy farms and almond plantations, the company began to apply the rules that accountants themselves say are riddled with subjective assumptions on future prices, inflation, production and costs.