OSC "schwere Bedenken" über Sino
Quelle:
http://business.financialpost.com/2011/11/15/...e-report/#more-112406
Financial Post Staff Nov 15, 2011 – 6:38 PM ET | Last Updated: Nov 15, 2011 8:24 PM ET
By Peter Koven and David Pett
Sino-Forest Corp. is claiming vindication, but the Ontario Securities Commission is not convinced.
When Sino-Forest’s independent committee released a mammoth 111-page interim report on Tuesday, investors hoped it would clarify whether the company committed fraud. Instead, it showed that there is no consensus on what constitutes fraud, and what is simply normal business practice in China.
From Sino-Forest’s standpoint, this report provides proof that the fraud allegations levelled by short seller Carson Block of Muddy Waters LLC are false.
“The major allegations in the Muddy Waters report have been refuted. We take great comfort in that,” Judson Martin, Sino-Forest chief executive, said in an interview.
But the special committee’s report leaves many unanswered questions. It also shows that the OSC has “grave concerns” about Sino and sees evidence of fraud where the committee does not.
“Our preliminary review has firmly suggested that our investigation, which is ongoing, should continue,” said Tom Atkinson, the OSC’s director of enforcement.
The interim report addresses whether the company’s stated timber holdings truly exist, and its complex web of third party relationships with customers and suppliers.
According to the report, Sino’s timber holdings do exist, but are mostly supported by “confirmation letters or approvals” from local forestry bureaus rather than more official plantation rights certificates (PRCs). The committee says that these confirmation letters still provide support of ownership, even though they do not represent title “in the Western sense.”
Mr. Martin is also confident that all documentation related to Sino-Forest’s assets are legit. “It’s not perfect, but it’s there,” he said.
The OSC sees it another way. The regulator is alarmed that the vast majority of Sino’s timber rights are not backed by proper PRCs from either the original owners, the counter-parties to Sino-Forest, or the local communities where the trees are harvested.
“The OSC expressed grave concerns as to such absence and surmised in its discussions with the [committee] that such absence is per se evidence of fraud. The [committee] disagrees with this proposition and has indicated that to the OSC,” the report states.
The conflict demonstrates the striking differences between doing business in the West and in China, which overhangs this whole affair.
If determining tree ownership was difficult for the committee, unravelling Sino-Forest’s myriad third party relationships has been an even bigger challenge. The committee has found plenty of evidence of questionable activity, and still has unanswered questions with respect to suppliers and customers.
One of the key allegations against Sino involves its relationship with a company called Yuda Wood, which sold tens of millions of dollars of timber rights to Sino-Forest. Mr. Block alleged that Yuda is a related party, and provided plenty of documentation to back that up.
After an extensive investigation, the committee said it is satisfied that Yuda Wood owner Huang Ran is not a Sino-Forest employee, and the company itself is not a subsidiary.
However, it did find evidence of highly irregular activities involving the two parties. For example, senior Sino manager Simon Yeung signed an agreement in Yuda Wood’s name to buy a manufacturing facility. His explanation was that Mr. Ran was out of town and he was “performing a favour” for him.
This is the sort of detail that alarmed the OSC. A day after Mr. Yeung provided that explanation, the OSC cease-traded Sino-Forest shares. Mr. Yeung and three other executives were removed from their positions.
Beyond Yuda Wood, the interim report details the ongoing troubles that the committee is having in getting cooperation from many of Sino-Forest’s third parties. They are not compelled by law to co-operate, and many of them are concerned about confidentiality and “the notoriety of the matter.”
Limited assurances were eventually provided to the third parties by the OSC, and all third party interviews have been completed, Mr. Martin said.
The committee said that Sino-Forest has been much more forthcoming since Mr. Martin was appointed CEO in late August. He replaced Allen Chan, who resigned following the OSC’s cease trade order.
Investors will now be watching for Sino-Forest’s final report, due before the end of the year, for more answers.
For his part, Mr. Block wasted no time in dismissing Sino-Forest’s positive spin on the interim report.
“It should be noted that all three directors who oversaw the investigation are defendants in shareholder lawsuits, and one of the three resigned just prior to this release,” he said in a statement.Beweise für Betrug[/b]
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