The View | Noble Group’s amazing story of how to soar, then fall back to Earth

When I first arrived in Hong Kong I kept hearing great things about a company formed in 1986. The company was called Noble and its CEO, Richard Elman, was widely regarded as a genius. He built the Noble Group into being one of the world’s biggest commodity traders but now its very survival is in question.

This is a classic tale of smoke and mirrors, hubris and denial. In a different world it might be possible to say that lessons will be learned from Noble’s demise but then again that’s what we were told after Enron’s collapse in 2001. By no coincidence Enron’s business model was very similar to that of Noble, except that Noble has not yet filed for bankruptcy.

Noble, like Enron, had a great story to tell. True, no one outside the company was exactly sure how it made money but the proof seemed to be in the pudding as its share price rose and rose again. The heady rise in its market capitalisation was frequently punctuated with news of acquisitions and fabulous deals; only wimps questioned how they were leveraged.

When Noble, founded in Hong Kong, made its move to Singapore, there were strenuous efforts to keep it here. Some of the biggest names in banking and accountancy joined Noble’s cheerleaders and quite respectable analysts and other commentators joined the chorus. Today, unsurprisingly, they are all suffering from acute amnesia. Some, however, claim not to have forgotten but are bitterly accusing Elman and his colleagues of misleading them. Others, with the benefit of hindsight, are busy claiming a degree of foresight that they remarkably kept under wraps.

Somewhere in all this was genuine business genius, yet what really mattered was the Noble story which, in essence, was: loads of money could be made from trading commodities, many of which are in short supply and all it needed was for the smartest kids on the block to find a way of skewering the best deals and then moving on to skewer yet bigger and better deals.