Sometimes, mistake is made. It happens.
Sino-Forest Corp.has published new documents in its data room to try and refuteallegations from Muddy Waters LLC that one of the companies it has donebusiness with is actually a related party.
In short sellerCarson Block’s report on Sino-Forest, he claimed that a company calledHuaihua City Yuda Wood Company Ltd. is secretly a subsidiary ofSino-Forest. This is a serious allegation, as Huaihua Yuda has receivedsignificant payments from Sino-Forest.
Mr. Block’s evidence that they are related parties is an article on a Chinese government website from 2006 that said so.
OnFriday, Sino-Forest put two documents in its data room. One of them is aletter from Huaihua Yuda to the Huaihua City Bureau of Commerce (datedJune 9, 2011) in which it denies being a Sino-Forest subsidiary and asksthe bureau to correct the article on the website. The other is aresponse from the bureau on June 15th in which it apologizes to HuaihuaYuda for the apparent error and said it is amending the article.
“Wehave confirmed that your company is in fact a subsidiary of Sonic JitaEngineering Limited from Hong Kong and not of the Canadian listedcompany Sino-Forest Corporation. We apologize for any inconveniencecaused to your company by this administrative error on the part of thebureau,” the translated document says.
These new documentsform just part of Sino-Forest’s ever-growing data room, as it tries topublish as many documents as possible to prove that its forestrybusiness in China is legitimate. Mr. Block accuses it of being a massivefraud, and there are many other allegations that Sino-Forest needs torefute.