SGX, MAS draw further fire over Noble saga

Market observers agree with Iceberg Research that regulators did not do enough to protect investors

Singapore stock market regulators are coming under pressure, with market observers on Friday joining Iceberg Research in saying that more could have been done to protect investors in the long-drawn Noble Group saga.

Their comments come as the Monetary Authority of Singapore (MAS) responded on Friday morning to Iceberg's criticism, saying that it will follow up with listed companies to investigate any allegations of irregularities.

Corporate governance advocate Mak Yuen Teen, an associate professor at the National University of Singapore, said Iceberg's criticism is not without merit.

He told The Business Times: "While I can understand the regulators being hesitant to do anything, especially when there is no clear wrongdoing - and bearing in mind that Noble has been receiving clean audit opinions - there is a sense among investors that the regulators are too passive and react only when problems have reached a point when it's a little too late to protect investors."

There are also regulatory gaps for foreign listings, whether in applying laws and rules or effectively enforcing them, he added.

Noble has, for instance, passed the audit by EY, but this was done from the Hong Kong office, which does not have the same public oversight that Singapore auditors are subject to.

"This may affect audit quality," said Prof Mak.

External auditors in Singapore undergo audit inspections, also known as the practice monitoring programme, by the Accounting and Corporate Regulatory Authority (Acra).

The programme is rigorous and serious deficiencies can result in sanctions, Prof Mak noted. "It is probably the one area in corporate governance that we are ahead of Hong Kong, which is moving towards that."

In sum, Singapore's regulatory framework "is not really fit for the purpose of foreign listings, while we continue to try to attract such listings", he said.

Meanwhile, the MAS told BT on Friday that it will follow up with listed companies to investigate any allegations of irregularities.

"MAS will also investigate potential breaches of the law that have been referred to us," said its spokesman. "Should MAS's own investigations uncover any violations of our regulations, we will not hesitate to take the necessary enforcement actions."

Iceberg had said on Thursday that the Noble saga revealed the "complete failure" of the regulators in Singapore due to their inaction.

The Singapore Exchange (SGX) and MAS should not have allowed Noble to raise more money on a balance sheet, which had attracted questions over its veracity, it said.

SGX responded on Thursday, saying that it has consistently applied the same approach to companies that were the subject of negative commentary.

"The company has the right of first reply and should respond as quickly and comprehensively as possible," said an SGX spokesman.

"We will review the company's response to see if it has addressed all the points of concern. However, if the response is inadequate, we will query the company or oversee the appointment of a third-party professional to ensure proper disclosure to the market."

The exchange would, at the same time, review the negative commentary to see if it contains false or misleading statements that warranted a referral to the relevant authorities, she added.

The responses by SGX and MAS drew flak from former investment banker Michael Dee. He pointed out that Noble has neither responded comprehensively nor addressed all points of concern, and yet has not received any query from SGX.

He also asked about the investigations MAS has done, and the conclusions drawn from them, if any.

Iceberg said in response to SGX and MAS' replies: "Their reaction won't satisfy the shareholders who have been misled and lost almost everything."

Shares in Noble Group slipped a further 0.5 cent, or 1.33 per cent on Friday to close at 37 Singapore cents, extending its 5 per cent decline on Thursday.

Andrea Soh

05 August 2017