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A committee of directors from forestry giant Sino-Forest Corp have released a preliminary report saying they have found no evidence of fraud, after a US short-seller accused the company of shady dealings and caused its share price to plummet. Muddy Waters Research said in June the company was exaggerating its earnings and assets and likened the company to a Ponzi scheme. But the report leaves plenty of unanswered questions.
The long awaited report by independent directors of timber giant Sino-Forest says the company's records are much cleaner than critics had argued.
But unanswered questions remain about the company, which manages timber plantations in China and raised more than $3.5-billion from investors.
The CEO, Judson Martin said in a statement, "We can categorically say Sino-Forest is not the 'near total fraud' and 'Ponzi scheme' as alleged by Muddy Waters."
The company's shares in Canada plunged after short-seller Muddy Waters Research released a scathing report in June claiming the company had exaggerated the value of its timber assets and annual revenue. At the time there was growing public concern about the reporting methods of some Chinese firms listed in the West.
The Ontario Securities Commission began its own investigation and said in August it had preliminary evidence of fraud.
But the report by independent directors said it had confirmed the company's cash balance, and that it had title or other rights to over 800,000 hectares of forestland.
The report blamed Chinese financial reporting methods for the difference between the filings of Sino-Forest and its suppliers.
But questions remain about the value of the company's assets, and an independent valuation is taking place.