Singapore-based Olam International Ltd., one of the world’s largest rice and coffee traders, has sued short-selling firm Muddy Waters and its founder Carson Block for defamation.
The company filed the suit Wednesday at the High Court of Singapore following what it said were libelous statements made by Block earlier this week at a London hedge fund conference.
According to the Financial Times, Block told the conference attendees Olam was a “black hole” of excessive debt and accounting “shenanigans.” Olam’s Singapore-listed shares began to plummet the following day, forcing the company to temporarily suspend trading. It later closed down 7.5 percent.
Olam founder and CEO Sunny Verghese told the FT on Tuesday that Block’s claims were “baseless” and “rumor mongering.” He added, “We are one of the most transparent companies in our sector.”
Muddy Waters immediately followed Verghese’s statements with a public letter to Olam pointing to similar criticisms made by Hong Kong-based brokerage CLSA in early 2011. Muddy Waters said Olam’s “disproportionate reaction” in this instance was “extraordinary in our experience” and accused the company of trying to silence critics.
“Our research into Olam has been exhaustive, and we plan to resolutely stand by it regardless of any attempts you might make to discredit it or us,” the letter said.
WongPartnership senior counsel Andre Maniam is representing Olam in its suit. Maniam declined to comment on the case.
Block and Muddy Waters first received worldwide attention last year when it accused Hong Kong/Canadian timber company Sino-Forest of accounting discrepancies. The resulting fallout prompted the delisting of Sino-Forest from the Toronto exchange and its eventual filing for bankruptcy protection.
Muddy Waters told the FT: “We have not received a lawsuit and, should we have to defend ourselves, we will do so vigorously.”
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