On June 2nd 2011, Muddy Waters issued a report alleging that Sino-forest was a fraud. That same day, management set up an independent committee to look into the allegations. On January 31, 2012, the Independent Committee reported that it could not resolve issues in three areas: (i) timber asset verification; (ii) timber asset value; and (iii) revenue recognition. Part of the subsequent investigation revealed that sales proceeds were immediately applied towards the purported purchase of further timber assets which increased the risk that no cash transfers could be tranced.
OSC: STATEMENT OF ALLEGATIONS, 3 Dec 2012
Muddy Waters: Muddy Waters Initiating Coverage on TRE.TO, OTC:SNOFF, 2 Jun 2011
Sino-Forest: Annual Report 2010
OSC: Reasons and Decision, 13 Jul 2017