Sino-Forest shares plunge as fraud report delayed

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Published: 12:00am, 17 Aug 2011

Shares of Sino-Forest Corporation have continued to plummet since Monday after the mainland-based timber supplier said it would delay releasing findings of an internal review. On Monday, the Toronto-listed firm plunged 8.4 per cent, closing at C$6.09 (HK$48.11) a share.

In early June, American short seller Carson Block accused Sino-Forest of fabricating its land holdings on the mainland.

In a statement accompanying its second-quarter results, the company said it needed more time to complete the review of Block's accusations.

Sino-Forest's shares traded as high as C$25 earlier this year. They were valued at C$18.81 the day before Block published allegations of fraud against Sino-Forest on his website (www.muddywatersresearch.com).

The company said its independent committee needed more time to complete its report 'primarily due to a prolonged data collection and review process'. As such, it would not discuss its quarterly results with financial analysts, the company said.

That is a reversal of the open manner with which Sino-Forest first confronted Block's allegations, which he published on June 2. On June 14, 11 days after it announced its internal review, Sino-Forest held an analysts' conference call to discuss its first-quarter results.

In recent weeks, however, the company appeared less willing to discuss the allegations. Last month, it postponed plans for investment analysts to tour its mainland operations.