Greenheart shares go in the red

Greenheart Group, the Hong Kong-listed unit of beleaguered logging company Sino-Forest, lost a third of its value yesterday after a trading halt on its shares was lifted and investors shrugged off its attempts to distance itself from its scandal-ridden parent.

The stock has now plunged 80 per cent since Toronto-traded Sino- Forest was accused on June 2 by US short seller Muddy Waters of exaggerating assets and sales. The company denied the allegations but was last month accused of fraud by the Ontario Securities Commission.

Greenheart - which says it holds timber concessions in Suriname, South America - announced late on Monday that 'the group's operations are independent of Sino-Forest'.

However, it also admitted that an ongoing investigation into its business by Hong Kong's Securities and Futures Commission had not yet been completed.

'[Greenheart] may be operationally independent in part, but Sino-Forest owns a majority stake. There are common board members and the two companies are major customers of each other,' said Richard Segal, an emerging markets analyst at Jefferies International.

Greenheart chief executive Judson Martin is Sino-Forest's chairman. He took on the role when it was vacated by the commercial forest plantation operator's founder, Allen Chan, late last month.

Former Hutchison Whampoa director Simon Murray is on both companies' board of directors.