Singaporean Regulators Widen Noble Group Probe to Auditor EY

Singapore has expanded its investigation into Noble Group Ltd.’s accounting to probe the company’s longstanding auditor, Ernst & Young LLP, according to a statement Nov. 28.

The move comes follows the recent announcement of a three-agency probe into potential “suspected false and misleading statements” at Noble, which threw the struggling commodity trader’s $3.5 billion debt restructuring into a fresh crisis.

Singapore’s accounting regulator “is commencing inspection on the work performed by EY (Singapore),” a spokesperson for the Accounting and Corporate Regulatory Authority said Nov. 28.

At the same time, the Monetary Authority of Singapore and the police have told EY Singapore to “produce documents in relation to the audit of Noble Resources International Pte (NRI), a wholly-owned subsidiary of Noble Group Ltd.,” according to spokespeople.

An EY spokeswoman in Singapore was unable to comment immediately.

The spotlight on the role of Noble’s auditor comes as accounting firms, in particular the “big four” of Deloitte, KPMG, EY and PwC are under pressure globally amid a probe by U.K. regulators.

Noble’s accounting has been in focus since early 2015, when a previously unknown group called Iceberg Research started criticizing the company, saying it had inflated the value of long-term commodity contracts and carried billions of dollars in profits on its books that would eventually have to be written down.

Since then, the once $12 billion company has lost billions in value, reduced to a rump by untenable debt and writedowns -- including on many of the contracts that Iceberg had been criticizing.

“You see repeated clean audits, and then suddenly you have these big writedowns,” Lee Boon Ngiap, assistant managing director of the Monetary Authority of Singapore, told Bloomberg. “That’s something regulators will pay attention to – and move to ask questions, press more.“

EY’s Hong Kong branch was the auditor for Noble Group Ltd., the Hong Kong-based, Bermuda-incorporated parent company of the group, in a relationship stretching back at least two decades.

NRI is Noble’s main operating subsidiary, based in Singapore, and the unit through which it carries out much of its trading activity. It was audited by EY’s Singapore branch during the period 2012-2016 that regulators are investigating.

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