SINGAPORE - Sometime between receiving the midnight tinkle that upended his world last Monday and yesterday, Olam's Sunny Verghese blinked - just a bit - in the face of research firm Muddy Waters' all-out siege of the commodities trader.
Olam's CEO conceded yesterday that the firm might have to tone down the very thing that defines it - its hard-driving expansion - if it wants to be less of a target for short-sellers like Muddy Waters' Carson Block.
"We will take stock and see whether we need to slow down, decelerate, recalibrate. We're convinced that we've got a great strategy . . . but we might recalibrate . . . the pace at which we are doing things," Mr Verghese told The Business Times yesterday.
Olam's bout of soul- searching comes 11 days after Mr Verghese found himself on the wrong end of a phone call in the dead hours of the morning with a New York-based journalist.
"I was taking a 1.35am flight to Geneva. I was waiting in the departure lounge when a reporter called me and asked if I'd heard that Carson Block and Muddy Waters have made these remarks about Olam at a conference in London," Mr Verghese recalled.
"So I told him it's 12.45 am in Singapore and obviously this is my first time hearing of it."
What Mr Verghese saw next on the Internet made him cancel his flight.
In an 18-slide presentation to hedge fund managers in London on Nov 19, Mr Block had attacked Olam for what he said was its aggressive accounting of its biological gains and accused it of dishonesty, while condemning the firm to failure.
"You should assume we are short on securities of Olam," Mr Block had said.
"I thought, 'This is a serious crisis'," Mr Verghese said yesterday.
His Swiss trip now abandoned, he began rousing various Olam directors from their beds.
"My first call was to my chairman and my board, although it was that early in the morning," he said.
Several hours later at 7am on Nov 20, Olam's audit committee and board members found themselves in a room, trying to make sense of the events that had led up to the panic now unfolding in the market.
Even as Mr Block's words about Olam - "black box", "black hole", "heavily indebted" - reverberated in the chamber of the Internet, the company at the heart of the controversy had no access to Mr Block's slides, or what exactly he had said.
"He gave the slides selectively to the media who said that they couldn't legally (give them to me)," Mr Verghese said.
Left with no way to respond to the specifics of the situation, Olam suspended trading of its counter that Tuesday, but had to resume trading after the 80-page report that Mr Block had promised failed to materialise.
For the rest of the afternoon, the company's shareholders cut and ran, driving the counter down 11 per cent at one point.
After trading yesterday, Olam stock rallied six cents to $1.56 but remained 10 per cent below its pre-crisis price.
Muddy Waters' report - which analysts have largely concluded contains nothing new - eventually came out a week later, weighing in at 133 pages.
As Olam executives watched the stock go on to hit a 31/2-year low in the chaos of the following days, events from earlier this month came back to haunt them.
On Nov 1, a portfolio manager called Seth Fischer and his colleagues from an "Oasis hedge fund" paid Olam a visit for which they had an appointment, Mr Verghese claimed.
Among the visiting group lurked the man that Olam now believes was Carson Block in disguise.
"He was dressed very differently from the other fellows who were in jackets and suits.
This guy was in a baseball cap and all that.
My colleagues didn't want to proceed with the meeting and after much persuasion, he gave a name - 'Jacob Cohen'.
He said he was there because he was an investor in this fund," said Mr Verghese, who was not at the meeting.
During the meeting, the visitors asked about various kinds of details that Mr Verghese claimed are similar to the material in the Muddy Waters report that followed.
"They said that they had a position in Olam and wanted to learn a bit more. We didn't realise that it was a short position," Mr Verghese added, laughing wryly.
In the days following Mr Block's bombshell in London but before the Muddy Waters report release, Mr Fischer would surface again in a 300-participant investor call that Olam held to assure shareholders.
"We looked at the register for the conference call. One of them was (Mr Fischer)," Mr Verghese said.
This conference call that Mr Fischer had listened in on, Mr Verghese believes, helped to inflate the Muddy Waters report from 80 to 133 pages.
"(Mr Block's) game was tactical. He wanted to see what our defence was so that he could modify his report," Mr Verghese said.
News reports show that a Seth Fischer and the Hong Kong-based Oasis Management (Hong Kong) LLC which he founded were each fined HK$7.5 million (S$1.2 million) last year for making trades to drive down the closing price of Japan Airlines shares in 2006.
Oasis also bought options to sell Sino-Forest Corp stock last May, just a month before Mr Block launched his short-sell move on the timber company.
Sino-Forest's counter has since collapsed and the firm remains in restructuring purgatory.
The conspiracy stretches beyond Muddy Waters and Oasis, according to Mr Verghese.
"Some of the other hedge funds involved went to some of our big shareholders and tried to entice them to sell, before this report came out."
Now, Olam faces the prospect of becoming more conservative about growth, even as it insists that this is not a change in strategy.
"As a responsible management and board, we cannot be pig-headed and say that, come what may, we will do what we'd planned to do," Mr Verghese said.
Another change at Olam might see it starting to generate free cash flows - another Muddy Waters bugbear.
"We have a four-year investment plan which will end in 2015 and after that, our investment rate will dramatically come down . . . at which (time) we will be generating a lot of free cash flows. We should get to that as quickly as possible so that there is less vulnerability," the CEO added.
Even as Muddy Waters' attack has given Olam pause, Mr Verghese made it clear that he remains unbowed.
"After this 133-page report, if (Mr Block) comes out with some other 200-page report, it doesn't matter to us because we know we haven't done anything wrong."