Iceberg Research lambastes PwC’s third-party review on Noble

PwC won't answer questions, the group says.

Iceberg Research is at it again after months of inactivity. The short-seller today took aim at Noble Group's third-party assurance review on its financials, which will be undertaken by PwC.

Iceberg Research said that PwC’s review will not answer the fundamental questions surrounding Noble’s mark-to-market accounting methods.

“PwC, hired and paid by Noble, will answer the question that Noble wants them to answer: does Noble formally respect the letter of the law? This is the same question that EY has been answering for years. PwC will not answer the question that investors and creditors want them to answer: does Noble violate the spirit of the law, for example by using unrealistic forward curves or tonnage projections, to vastly overstate its MTM? The difference between the two questions is billions of market cap. Creditors and investors are only interested in the second question. The first one is completely irrelevant,” Iceberg said.

The group also claimed that Noble, like failed US energy giant Enron, is using loopholes to mislead investors, analysts and credit agencies.

“By using loopholes, companies such as Enron or Noble follow the letter of the law while completely violating the spirit of the law. They mislead investors who believe that accounting rules are straightforward and that there is little room for manipulation,” Iceberg said.

Iceberg also questioned the fact that Noble has not clearly defined the scope of the review. The audit committee’s members also came under fire, with Iceberg claiming that three out of four members of the new audit committee, including the committee chairman, are already members of the old audit committee.

“Who can seriously believe that the persons who have been involved in the audit of Noble will publicly admit that they were wrong? One more example of Noble’s dysfunctional governance. Finally, the public will only have access to a summary giving them little information,” Iceberg said.