Chinese Wood Firm Accused of Fraud

Bejing, China, June 28, 2011 -- Muddy Waters Research, a specialist in Chinese companies, said that Sino-Forest, parent company of Chinese flooring firm Sino Maple, has been engaged in fraud by exaggerating its assets, among other misdeeds.

The Toronto market, where the firm is listed, suspended trading in Sino-Forest stock, pending a clarification or two.

The research firm's report examines Sino-Forest’s money trail. The company is alleged to have “massively exaggerated” its assets, created non-existent “artificial intermediaries” to hide its real revenues, and used forestry consultants Poyry to sign off its valuations.

Muddy Waters says that Sino-Forest claims to have acquired a total of $2.9 billion in standing timber since 2006. But there is evidence that the company has overestimated its timber stock in Yunnan province by “at least $800 million.” according to the research house.