Ex-Noble Group's CEO Alireza Sues Founder Elman for $58 Million

(Bloomberg) -- The former chief executive officer of Noble Group Ltd. has filed a lawsuit against founder Richard Elman claiming that he’s owed stock in the embattled commodity trader.

Yusuf Alireza, who left the company in May 2016, filed the suit against Elman in the High Court of Hong Kong alleging contract breaches, according to a writ of summons. Alireza seeks at least HK$450 million ($58 million) in compensation.

Elman, who stepped down as chairman of the company in May, declined to comment. Alireza couldn’t immediately be reached for comment.

Once Asia’s largest commodity trader, Noble Group is beset by a crisis that stretches back more than two years, which has left the Hong Kong-based firm grappling with losses, a collapse in its securities, junk credit ratings and uncertainty over its ability to fund its debt. The company’s market value has slumped to S$400 million ($290 million) from more than $10 billion at the end of 2010. Elman, the largest shareholder, has an 18.5 percent stake.

Alireza, who was appointed CEO in 2012, oversaw the sale of assets, including Noble’s agricultural unit to China’s Cofco Corp., to raise funds and cut debt. According to the writ, Alireza had a deal to receive about 63.9 million fully-paid shares in Noble Group for starting work at the company, and an additional 52.3 million shares when his employment was terminated. He claims those shares haven’t been transferred.

‘Future Viability’

The former Goldman Sachs Group Inc. executive approached Elman early May last year and raised “concerns over the future viability” of Noble Group and made various recommendations, according to the writ. That same month, Elman gave Alireza six months’ notice of termination, citing irreconcilable differences between the two on how the company should be run in future, the writ says.

Noble Group’s troubles started in February 2015, when a group called Iceberg Research criticized its accounting methods. The company dismissed the allegations as the work of a disgruntled ex-employee and started litigation against him. Attempts to reset the business in 2016 included the sale of its U.S. energy solutions unit after Alireza left, an exit from European power and gas, a reduction in its metals business and a rights issue. The trader’s now in talks with lenders to extend a $2 billion facility that expires this month.

The writ also names Fleet Overseas (New Zealand) Ltd. as a defendant. Bill Patterson, a partner at Patterson Hopkins law firm in Parnell, Auckland, which administers Fleet Overseas, declined to comment. Noble isn’t part of the suit.

The lawsuit is a second filed by a former CEO of Noble Group. Ricardo Leiman, who left in 2011 and went on to found a rival trading house now called Engelhart Commodities, sued Noble in Singapore claiming shares and a bonus were wrongfully withheld. Noble Group has said the compensation shouldn’t be paid because Leiman had been in discussions to set up a rival business while still on a Noble contract.

Noble Group’s stock sank 6.2 percent to close at 30.5 Singapore cents, near the lowest since 2000. The shares have collapsed 83 percent over the past year.

With assistance from Benjamin Robertson, Livia Yap and Andrea Tan. To contact the reporter on this story: Jasmine Ng in Singapore at jng299@bloomberg.net. To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net James Poole.

Copyright 2017 Bloomberg News.

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