Noble Embraces `Lesser of Two Evils' With Transparency Drive

  • Most rivals are private and don't face same scrutiny, CEO says
  • Noble less exposed to attacks with transparency, Alireza says

The head of Noble Group Ltd. said he should have been more forceful in pushing Asia’s biggest commodities trader to boost transparency as the company fended off attacks over its accounting practices and battled a share-price slump.

Yusuf Alireza, chief executive officer of the Singapore-listed company, said being open was a challenge as it gave competitors a peek into its business. Most of Noble’s rivals are private and didn’t face the same scrutiny, said Alireza, a former executive at Goldman Sachs Group Inc.

“It’s the lesser of two evils,” Alireza said at a forum in Singapore arranged by the local directors’ association to examine Noble’s recent troubles and its response. “In hindsight, I should have been more forceful with the board about supporting more transparency because I think if we had more transparency up front we’d be less exposed.”

Noble’s stock has lost more than half of its value since mid-February when a group calling itself Iceberg Research criticized its accounting practices. Others including short-seller Muddy Waters LLC joined in the scrutiny. Investors have also been deserting companies linked to commodities as faltering demand in China, the biggest buyer of metals and energy, sent prices of raw materials plunging.

Always Challenged

“We are always challenged as a firm because most of our competitors are private,” Alireza said. “We can provide less transparency and be confident that our competitors will not know more about our business. On the other hand, if we don’t provide the transparency, we can expose ourselves to this kind of attacks.”

The Hong Kong-based trader has defended its accounting methods, publishing a report from PricewaterhouseCoopers LLP in August that said it complied with international rules in valuing long-term contracts.

Shares in Noble closed 1.1 percent higher at 47.5 Singapore cents on Wednesday after advancing as much as 3.2 percent. The stock’s 58 percent slump this year made it the worst performer on the benchmark Straits Times Index.

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