THE Monetary Authority of Singapore (MAS) has imposed a civil penalty of S$12.6 million on Noble Group Limited (NGL) for publishing misleading information in its financial statements for the fiscal years ended December 2012 to 2016.

In a Wednesday (Aug 24) press statement issued by MAS, Accounting and Corporate Regulatory Authority (Acra) and the Singapore Police Force (SPF), the authorities announced the conclusion of their joint investigations into the group and Noble Resources International (NRI) – the commodities trader’s wholly-owned subsidiary at the time.

Since commencing in November 2018, the joint investigations found that NGL entered into long-term marketing agreements with mine owners and coal producers through NRI.

By either assisting these counterparties to build a brand name for their mines or acting as a salesperson for their commodities produced from the mines, the group was entitled to earn fees based on a predetermined percentage of the sales value.

NGL and NRI were discovered to have applied an incorrect accounting treatment to these agreements by classifying them as financial instruments instead of service contracts. Future fees from these agreements were also recognised before the services were rendered, thus inflating both NGL and NRI’s reported profits and net assets.

According to the authorities, NGL’s publication of such materially misleading financial statements from 2016 to 2018 were likely to have induced the buying or selling of the group’s securities listed on the Singapore Exchange.

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In concluding the joint investigations, Acra has also issued “stern warnings” to 2 former directors of NRI for failing to prepare and table annual financial statements that complied with prescribed accounting standards in Singapore.

The Public Accountants Oversight Committee – which administers Acra’s practice monitoring programme under the Accountants Act, has further issued orders against Ernst and Young auditors of NRl* in relation to the financial statements for the financial years ended Dec 31, 2012 to Dec 31, 2016.

Loo Siew Yee, MAS’ assistant managing director of policy, payments and financial crime, said these actions demonstrate that the authority “takes breaches of disclosure obligations seriously and will take firm action against persons found to have fallen short”.

“Materially false or misleading statements by listed entities have no place in Singapore’s capital markets. 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,” she added. 

The civil penalty regime, under which NGL was fined, has been operational since 2004. It does not constitute a criminal action, nor attract criminal sanctions. Instead, the regime is designed to complement criminal sanctions and provide a nuanced approach to combat market misconduct. 

NGL is presently in the midst of winding up in Bermuda and does not own any business or assets. It delisted from the SGX in 2018 after the embattled company underwent restructuring.

As part of the debt-for-equity restructuring process, Noble Group Holdings Limited (NGHL) was established in late-2018 as an asset holding company.

The commodities trading business now operates as Noble Resources Trading Holdings Limited, which separated from NGL in 2018 and from NGHL in 2022.

Responding to the authorities’ joint press statement, Noble Resources’ executive chairman Matt Hinds said the company was “pleased that (the matter) has now been concluded.”

He emphasised Noble Resources as a separate business that is unrelated to NGL.

“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,” said Hinds.

“We are looking forward to continuing to work with our suppliers and serve our customers, building on the strong start to 2022.”

*Amendment note: An earlier version of this story incorrectly stated that orders were issued against Ernst and Young auditors of Noble who were preparing the said financial statements, when the charges were in fact issued against auditors of NRI. ACRA has clarified that the auditors were not involved in the preparation of the financial statements.