The deeper one looks into Sino-Forest Corp, the Toronto-listed Chinese logging firm that has been engulfed by allegations of fraud, the more questions emerge.
Sino-Forest, which was once the most valuable forestry company on the Toronto stock exchange, has lost most of its stock market value after being accused in a June 2 research note by American private investor Carson Block of overstating its forestry assets in China and being a 'stratospheric fraud'.
On August 26, the Ontario Securities Commission charged that Sino-Forest directors, including its Hong Kong-based founder Allen Chan Tak-yuen, had committed fraud and misled the stock market. The commission called on Chan and four other executives to resign.
Yet one part of Sino-Forest that has escaped notice so far is Greenheart Group, its Hong Kong-traded subsidiary, which counts Li Ka-shing's former right-hand man, Simon Murray, as a director and founding shareholder.
Trading was suspended in Greenheart shares on August 29.
While Sino-Forest billed itself as the mainland's biggest logging company, Greenheart says it is one of the largest forest owners in the tiny South American nation of Suriname, a heavily forested, former Dutch colony situated north of Brazil and between Guyana and French Guiana.
That may be true. But official public records in Suriname also conflict with some statements Greenheart and Sino-Forest have made about Greenheart's assets. Public records show Greenheart may own far less forest land than it had previously claimed.
Greenheart has said it owns four timber concessions in the South American country, covering 312,000 hectares of forest land.
Records show that two of these concessions, covering just under half of the amount of land claimed, are valid. But one of the four licences has expired. Another appears not to be a formal concession, but a subcontracting arrangement that a leading parliamentarian in Suriname, Rabin Parmessar, claims may be illegal.
Despite repeated requests by the South China Morning Post for comment from Greenheart over a two-day period, no response was forthcoming. However, the company has altered some of the language on its website in response to the Post's inquiries.
There are also discrepancies between Greenheart's descriptions of certain of its subsidiaries and these companies' official business registrations with the Chamber of Commerce in Paramaribo, Suriname's capital.
Beach Paradise, for example, is a company Greenheart describes as one of its subsidiaries involved in the 'manufacturing and sale of timbers'. Yet a company of exactly the same name, which is registered to Greenheart chief executive William Judson, describes itself in Chamber of Commerce records as an operator of amusement arcades, nightclubs, hotels and bars.
There are also discrepancies among other subsidiaries of Greenheart.
The Suriname government sells logging concessions, which are rights to grow and cut trees over a certain area of forest, to private companies for a pre-set number of years.
In March, Greenheart acquired the majority stake in Suriname-based Vista Marine Services.
In a March 1 press release, Greenheart said: 'This transaction will increase Greenheart's concessions under management in Suriname to approximately 312,000 hectares.'
Greenheart repeated that claim in an investor presentation issued the same month.
Yet Vista Marine does not describe itself as a timber concession holder. In its Chamber of Commerce registration, obtained by the Post on September 2, Vista Marine, a company registered to Greenheart's Suriname director Ty Wilkinson, says it is primarily a wood-mill operator.
Vista Marine also does not appear to own a timber concession.
The government makes the full list of concession holders publicly available in the form of a colour-coded map. Vista Marine does not appear on that map.
A Greenheart spokesman declined to comment.
In addition to Vista Marine, Greenheart lists three other subsidiaries that have said it owns logging concessions in Suriname. Two of these, Epro and Octagon International, have valid concessions covering 151,825 hectares. But a third, Dynasty Forestry, does not own a valid concession.
Dynasty's 10-year licence, covering 31,440 hectares of forest land, expired in March, records obtained from the Suriname Ministry of Natural Resources on September 2 show.
The Greenheart spokesman did not reply to an e-mail seeking comment about the expired licence.
Shortly after announcing the Vista Marine acquisition, Greenheart stopped describing its recently acquired company as owning a 'concession'. In its March 14 annual report, Greenheart instead called Vista Marine a holder of 'certain sustainable harvesting rights'.
On September 6, in response to inquiries by the Post, Greenheart added a further clarification to its website. The site now states that Vista Marine owns a subsidiary named Forest Technologies, which in turn owns rights to harvest trees on an unnamed third party's concession.
Parmessar, the chairman of the Suriname parliamentary standing committee for natural resources, said the arrangement described on Greenheart's website was not permitted by Suriname law.
He said Suriname concession holders were not allowed to sell rights to harvest trees on their land to third parties.
'If you want to harvest in an area, you have to own the [timber] concession,' he said in a telephone interview. 'We don't have [the concept of] a concession and besides that a [separate concept of] harvesting rights.
'If a person has a concession and sells it to another person without the knowledge of the government, that is something legally that does not fit.'
Parmessar conceded, however, that the government's management of timber concessions is poor, and that subcontracting arrangements, such as that described by Greenheart's website, are fairly common.
'The government gives concessions and then we do not control adequately what is happening there,' he said. 'Lots of people have concessions and they sell other people their harvesting rights. This is an area we have to focus on.'
A Greenheart spokesman did not respond to an e-mail outlining Parmessar's comments.
Murray, a well-respected businessman who chairs London and Hong Kong-listed commodities giant Glencore International, is intimately involved in the Sino-Forest debacle.
A former French Legionnaire and experienced polar adventurer who also managed Li's Hutchison Whampoa conglomerate from 1984 to 1993, Murray became a non-executive director of Sino-Forest in 1999. He was also a founding shareholder of Greenheart.
In August 2007, a group of mainly Hong Kong-based private investors including Murray sold 60 per cent of Greenheart to Omnicorp, a Hong Kong-listed, loss-making electrical goods trader. At the same time, Sino-Forest bought a small stake in Omnicorp and agreed to buy logs from Greenheart. (Omnicorp later changed its name to Greenheart.)
At the time of the 2007 deal, Omnicorp said Greenheart owned Suriname forestry concessions covering 126,000 hectares.
In June last year, Sino-Forest increased its stake in Greenheart to about 60 per cent. Chan, who has just resigned from both companies, became Greenheart's chairman at this point.
Then, in August last year, Murray's Hong Kong-based private equity fund GEMS bought a US$25 million convertible bond issued by Greenheart. Murray joined Greenheart's board at the same time.
In August and December last year, Greenheart also granted directors including Murray, Chan and Martin five-year share options.
Late last month, Canadian shareholders of Sino-Forest such as the Labourers' Pension Fund of Central and Eastern Canada filed a C$6.5 billion (HK$51.53 billion) lawsuit against the Toronto-traded company's management and directors.
While Greenheart is treated as a subsidiary of Sino-Forest in the claim and, therefore, not named as a defendant, the lawsuit alleges that its assets in Suriname were 'overstated'.
'Chan, Martin and Murray stood to profit handsomely from any inflation in the market price of Greenheart's shares,' the lawsuit claims.
A spokesman for Greenheart and Martin declined to comment on the lawsuit. Murray and Chan did not return e-mails seeking comment.
Martin has replaced Chan as chairman of Greenheart.