Sino-Forest's chief resigns amid probe into accounting
- 29 August 2011
- From the section Business
Sino-Forest Corporation's CEO Allen Chan has resigned after the Ontario Securities Commission ordered a 15-day trading halt on its shares on Friday.
The regulator said Sino-Forest may have inflated its revenues and exaggerated the value of some of its timber holdings.
Earlier this year, Muddy Waters research had also levelled similar allegations against the company.
Sino-Forest's shares have plunged more 70% this year due to these accusations.
"Allen Chan has voluntarily resigned pending completion of the review by the Independent Committee of the allegations made by Muddy Waters" the company said in a statement.
There have been growing concerns about accounting or audit standards at Chinese companies, especially those listed on exchanges in North America.
Since March, 30 US-listed Chinese firms have had their auditors resign and 20 have been delisted, tarnishing the image of Chinese companies among investors and regulators.
Earlier this year, another tree plantation owner, China Forestry, admitted that its bank statements and harvesting records had been faked, while its accounts had gone missing.
Sino-Forest has denied the allegations levelled against it and says it takes the accusations seriously.
"The allegations made in the Ontario Securities Commissions' (OSC) temporary order, while unproven, are of a serious nature." it said.
The company said it has placed three employees under "administrative leave" as a part of its investigation into the charges.
"These actions were undertaken by the Company after certain information was uncovered during the course of the Independent Committee's review, subsequent to the release of the Company's second quarter financial results," it said.
However, Sino-Forest said it had uncovered this information before the OSC's ordered a trade halt on its shares.