CEO Yusuff Alireza has just resigned on 30 May 2016 for "family reasons". It is not surprising. In fact, a long time coming. He was previously from Goldman Sachs Asia division which was involved in the" scandalous" and highly suspicious arrangement of 1MDB fund raising program in 2012/13 which has become the subject of investigations by relevant authorities in their scope of investigative work expanding outwards into peripheral areas. And it was him at the helm when Noble group "grew" its income and asset base through what Muddy Waters claimed was"gross misrepresentation" of real asset values. The group defended this claim vehemently and expressed every confidence in Alireza but now suddenly he is leaving for so called "family reasons". The good thing for the group is that he is finally leaving them, but the not so good thing is that his job is now being handled to 2 executive directors, both of them are existing staff of the Noble management group. So, essentially, the style and culture of the Noble group management has not changed.
The group is now experiencing a real low, in terms of performance, business outlook, and staff morale. I understand that 5 of Noble group's oil traders in its London office has left them and joined rival Glencore. This gasoline trading business is one of Noble's core trading business and with the departure of these seasoned traders there is nothing upbeat to look upon this arm making any significant contribution to the group's efforts to rebuild both its business level as well as confidence from the capital market. They are finding it more and more difficulty to raise funds and have to resort to do it through an internal rights issue very recently. Those who have got out when Muddy Waters sounded the alarm bell would have sighed a huge relief (the share then was about $1.00 and its now $0.21). In an effort to stem the slide in its share price the management had erroneously engaged in massive share buybacks at $0.60-0.80 range using borrowed funds. A huge mistake as now they have to write down a significant portion of depleting income in their MTM valuation, something which they can't afford as they are already bleeding with losses.
The US Department of Justice has just announced that it will be seizing assets worth more than US$1bn from funds illegally obtained from 1MDB and invested all across the US. It has indicated that the misappropriation of funds happened when a top public official (name not specifically mentioned) in the Malaysian government was in authority. Part of the funds went to one of his relatives (his adopted son, Riza Abdul Aziz and Red Granite Pictures were specifically mentioned), and part went to the official's agent Jho Low (who was specifically mentioned). A specific amount of US$681m was mentioned as credited into the bank account of the top official. Goldman Sachs was mentioned as involved in the debacle, arranging the issue of 1MDB bonds to buyers and misleading them in the process, and getting a hefty 11 % commission and fees in the process for their trouble. That merchant banker Goldman Sachs has now been officially mentioned as being involved.
Well, ex-Noble Group CEO Yusuff Alireza was at Goldman Sachs Asia when the 1MDB bonds were issued. He then left and joined Noble Group after that. The group's management was behind him all the way when its share price took a hit amid the accusations by Iceberg Research and Muddy Waters. And then suddenly this year in May he resigned out of the blue. The reason the group gave for his resignation as for "family reasons" was very vague. The indictment the US Dept of Justice is now seeking against the people behind the 1MDB saga seems to suggest a plausible answer. I think in the interest of all shareholders of Noble Group, the SGX should query the Noble Group management for an explanation on whether its ex-CEO was personally involved in arranging those bonds.
Noble Group Ltd. surged the most in over a year after it said it’s in discussions with a strategic investor, which people familiar with the talks have identified as Sinochem Group.
Noble rose as much as 17 percent in Singapore, its biggest gain since October 2015. The company is discussing a strategic investment, according to a statement Tuesday that didn’t refer to Sinochem. “No binding arrangements have as yet been entered into with respect to this possible transaction and, accordingly, there can be no assurance that this transaction will be concluded,” it said.
Well, those who got burnt when they entered Noble at the time when it was sliding at $1.00 and lost terribly after it slipped to a quarter of that price would have licked their wounds. If they are investor smart they should avoid this counter because there are many other counters in SGX which have good potential of realising higher asset value than currently being appreciated by the market. As they say, fool me once shame on you, fool me twice shame on me.
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