Singapore trader Noble Group has been issued with a record fine by local authorities ending a 45-month probe into the company’s spectacular collapse.
The Monetary Authority of Singapore (MAS) imposed a civil penalty of SGD 12.6m ($9m) for what it described as “publishing misleading information”.
An MAS spokesperson told Bloomberg that it was the largest such fine in the city-state’s history.
Singapore’s Accounting and Corporate Regulatory Authority (ACRA) has also issued stern warnings to two former directors of Noble Resources International (NRI), which was Noble Group’s wholly owned subsidiary in Singapore at the material time, for failing to prepare and table annual financial statements in compliance with the prescribed accounting standards.
Once Asia’s largest commodity trader with a market value of more than $10bn, Noble Group was forced to restructure after years of losses and accusations of improper accounting, which the company denied.
The investigations, which started in November 2018, found that Noble Group, through NRI, entered into long-term marketing agreements with mine owners and coal producers to either assist them to build a brand name for their mines, or act as a salesperson for the commodities produced from the mines.
Under these marketing agreements, Noble Group would not take delivery of the commodities produced but would earn fees based on a pre-determined percentage of the counterparty’s sales value.
The investigations revealed that Noble Group and NRI had applied an incorrect accounting treatment to these marketing agreements by classifying them as financial instruments instead of service contracts, and by recognising future fees from these agreements before rendering the services.
The MAS said this “inflated” Nobel Group’s reported profits and net assets.
“Noble group’s publication of materially misleading financial statements from 2016 to 2018 were likely to have induced the sale or purchase by investors of Noble Group’s securities listed on the Singapore Exchange (SGX),” the MAS added.
“Materially false or misleading statements by listed entities have no place in Singapore’s capital markets,” said Loo Siew Yee, assistant managing director (policy, payments & financial crime), MAS.
“If left unchecked, they will erode investors’ trust in the quality of information released by issuers and have an adverse impact on the integrity of our capital markets.
“The present action demonstrates that MAS takes breaches of disclosure obligations seriously and will take firm action against persons found to have fallen short,” she added.
Noble Resources Trading Holdings, the group that emerged after the initial company’s complex and drawn-out restructuring, said in a statement that it welcomed the authority’s announcement.
Matt Hinds, executive chairman of Noble Resources Trading Holdings, said: “We are pleased that this joint investigation…into the pre-2018 financial statements of Noble Group and Noble Resources International has now been concluded.
“Noble Resources Trading Holdings Limited, the commodity trading business, has been under new ownership and management since 20 December 2018 and has focused on the highest standards of corporate governance, reporting and transparency since then.
“Noble Resources today, is a separate business, unrelated to Noble Group. Noble Resources has different owners, directors, senior management and external auditors,” he added.
