Counting trees

15 November 2011 By Wei Gu

An independent committee cleared the Chinese group of major accounting worries. But $3 billion of lost market value won’t be easily recouped. Sino-Forest could have helped itself with a simpler structure, more disclosure and by focusing on quality as well as speed of growth.

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Sino-Forest, a Chinese timber producer listed in Canada, said on Nov. 15 an independent committee found no evidence of fraud at the company. Sino-Forest’s accounting practices were questioned in June by Muddy Waters, an investor with a short position in the company’s stock.
The report verified the company’s stated cash balances, and confirmed the registered title or contractual rights to its stated timber assets, as well as the book value of these assets. The final independent committee report was expected to be submitted prior to the year end.
Sino-Forest said it would defer the release of its third quarter results, pending resolution of outstanding issues including certain relationships with its suppliers and customers.

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