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| for more on the China stock scandal: • What’s behind the great China stock scandals? • The China stocks under the microscope |
Sino-Forest, according to its own description, is "a leading commercial forest plantation operator in China, [which] operates and manages approximately 894,200 hectares of plantations (as at June 30, 2011) and downstream manufacturing operations spanning eleven key provinces across China". The essence of Muddy Waters’ case is that the company runs most of its revenues through authorized intermediaries (AIs), third-party timber trading customers that "purportedly pay much of TRE’s value-added and income taxes. At the same time, these AIs allow TRE a gross margin of 55% on standing timber merely for TRE having speculated on trees."
The report also examines the company’s SEC and SAIC filings, including alleged discrepancies between the amounts raised by the company in capital markets transactions and its assets and cash.
Sino-Forest has repeatedly rebutted these allegations.
The entire report is still available at http://www.muddywatersresearch.com/research/
Sino-Forest’s rebuttals can be found in its press releases at http://www.sinoforest.com/companyreleases.asp