(Reuters) - China-focused plantation operator Sino-Forest Corp said an independent committee had wound up its investigation into allegations the firm had exaggerated its assets, but had not been able to get to the bottom of all the issues raised.
Short-seller Carson Block and his Muddy Waters firm last year alleged that Canadian-listed Sino-Forest had exaggerated its Chinese forestry assets, but the investigating panel’s preliminary report in November found no evidence of fraud.
In its final report, the independent committee said it was not able to reach definitive conclusions regarding “certain relationship issues” between Sino-Forest and its “suppliers” — the owners of land on which it had contractual rights over the timber.
The investigation was concluding because Sino-Forest had agreed with its debt holders it would make its final report by January 31, “although there remain outstanding issues that have not been fully answered,” the company said in a statement.
Sino-Forest also said it intended to vigorously defend a class action commenced against it in the United States.
The class action, filed in New York state on Friday, was brought on behalf of investors who purchased Sino-Forest shares on the Over-the-Counter market and non-Canadian buyers of Sino-Forest debt securities, it said.
The company was already facing class actions in Canada.
The independent panel looked at two of Sino-Forest’s Chinese forestry concessions in a sampling exercise and found the company’s statements of its assets to be accurate to within 6 percent.
But it added that: “...no extrapolation of the findings to Sino-Forest’s broader forestry assets is possible or is implied.”
Sino-Forest said it has engaged Singapore-based consultancy Stewart Murray to assist the company in verifying and value its forestry assets.
Shares in the company, once the largest forestry stock listed on the Toronto Stock Exchange, plunged 71 percent in the two days after the Muddy Waters report was released last June, and it has been under a cease-trade order since late August.
Last week, Canada’s top securities regulator extended the cease trade order to April 16.
Reporting by Sakthi Prasad; Writing by Alex Richardson; Editing by John Mair