The ongoing tussle between Muddy Waters and Singapore commodities firm Olam International urther heated up after the short-seller published a much-awaited 133-page report on Tuesday detailing "shocking" accounting gaffes at the trading firm, prompting Olam to respond with a 45-page rebuttal on Wednesday.
But even as Olam described the accusations as "false and misleading" and stood by its practices, some analysts are now wondering whether there might be some truth in Muddy Waters' allegations.
Muddy Waters' report is "pretty good" and has raised many questions over Olam's accounting practices and finances that the latter will have to answer, Roger Tan, CEO of SIAS Research, told CNBC.
"They (Muddy Waters) have done extensive research into it," Tan said on CNBC Asia's "Squawk Box" on Wednesday. "They have even gone down to look at some of the investments and what the assets look like. And there are a lot of questions over how they (Olam) value these assets…a lot of questions over whether their profit is true and whether their cash holding is strong."
He added: "There are a lot of questions that Olam has to answer. Gven that there's so much detail in the report, I would say that to be fair to them (Muddy Waters), it looks like a pretty good report."
Olam has been diversifying into new areas in recent years through acquisitions and it now owns plantations and processing plants around the world.
Muddy Waters, in its report, criticised Olam's actions in many of those acquisitions. It alleged that the value of property, plant and equipment held by Crown Flour Mills (CFM), a Nigerian company that Olam acquired for $107.6 million in January 2010, was vastly overstated and that disclosures about the asset were misleading, Reuters reported.
Olam , in which Singapore state investor Temasek Holdings has a 16 percent share, refuted Muddy Waters' report in a statement on Wednesday, saying there is no risk of solvency and that it has sufficient liquidity to pursue its current business and future investments.
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"We believe that the report's assertions are motivated to distract and create panic amongst our continuing shareholders, bond holders and creditors," Olam said.