Independent inquiry exonerates Sino-Forest of fraud charges

The Wall Street Journal this week reported that the independent committee investigating Hong Kong-based Chinese timber producer Sino-Forest Corp. said it found no evidence of fraud at the company and emphatically rejected allegations by a short-seller that sent shares tumbling 80 percent.

The claims by research firm Muddy Waters LLC, which said Sino-Forest was a "near total fraud" and a "Ponzi scheme," were among the most explosive in a string of accusations against Chinese companies.

The Canada-listed Chinese timber company says its report—the result of a USD35 million, five-month investigation—found that the company owned all the timber it claimed, valued it correctly and had not carried out any questionable transactions.

Sino-Forest is under investigation by the Ontario Securities Commission and the Royal Canadian Mounted Police. Trading in the company's shares on the Toronto Stock Exchange has been suspended since late August. After the report was released, shares of its Hong Kong-listed subsidiary, Greenheart, soared more than 93 percent to HKD1.16 dollars (USD0.15).