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August 28, 2011 –  By Euan Rocha and Ryan Vlastelica
TORONTO/NEW YORK (Reuters) - Sino-Forest, a Chinese forestry business accused of fraud, stated on Sunday Allen Chan had resigned as chairman and CEO and that it put a few senior staff on administrative leave, due to info uncovered in an ongoing internal assessment.
Toronto-listed Sino-Forest has witnessed its stock value plummet considering that June, when short-vendor Carson Block accused the company of fraudulently exaggerating the dimension of its forestry assets. Sino-Forest had denied any wrongdoing and appointed a committee of its independent directors to examine the make a difference.
However, on Friday, the Ontario Securities Commission (OSC) ordered a 15-day halt in trading of Sino-Forest shares and mentioned it appeared that Chan and other executives had misrepresented revenues and kept bogus accounts.
The Sino-Forest saga is the most notable amid a series of accounting scandals in modern months to have tainted the image of Chinese businesses listed in North America. The scandals have prompted investing halts, de-listings, lawsuits and regulatory probes the two in Canada and the United States.
Shares of Chinese clothing and footwear company Zungui Haixi, just a week in the past, fell far more than 75 % after the business mentioned auditor Ernst & Young suspended its audit pending an investigation into certain issues it determined.
Sino-Forest's individual market place capitalization has fallen by roughly C$ four billion since Block and his firm, Muddy Waters, accused the business of fraud on June 2.

The business did not provide details on what prompted these actions, but indicated that Chan agreed to action apart prior to the issuance of the OSC's cease-trade purchase.
"The a few overriding priorities of the organization are to total the operate of the independent committee, to cooperate with the OSC and to preserve shareholder appeal," it mentioned.
Chan will grow to be founding chairman emeritus and will help with operational issues and the inner critique, as requested, the company mentioned in a brief assertion. It did not determine the a few staff placed on administrative leave, but stated they would remain obtainable to aid the business, if necessary.
A fourth senior employee has been asked to act exclusively on the new CEO's directions and support with matters relating to the critique and the company's functions, Sino-Forest stated.
David Horsley will carry on as chief monetary officer, while Tom Maradin will continue to be vice president of company finance, the company explained.
OSC INVESTIGATION
The OSC, Canada's primary securities regulator, is continuing its Sino-Forest investigation and on Friday demanded that Chan and 4 other officers resign. But in a shocking about-face, it rescinded that buy, declaring it lacked the electrical power to force them out until after a hearing, expected inside fifteen days.
The company said it has been cooperating with the OSC all the way through, by responding to numerous and substantial data requests and offering standard periodic briefings. It noted that the allegations manufactured by the regulator are nevertheless unproven.
The organization mentioned its individual review would most likely consider another 4 months to comprehensive.
Sino-Forest also mentioned the OSC's stock buying and selling halt will not set off any defaults on excellent financial debt. The company "does not believe any default below its certain senior notes or its convertible senior notes has been triggered by these activities."
Sino-Forest would continue on to review the phrases of all of its credit card debt and other contractual arrangements, it additional.
According to its yearly information form for the 12 months to December 31, 2010, Sino-Forest had exceptional short- and lengthy-phrase debt of $ two.07 billion. Past $ 87.seven million being repaid this month, Sino-Forest has no other prolonged-phrase financial debt due this calendar year.
It does have approximately $ 345 million in long-term personal debt due in 2013, alongside with $ 424.five million that matures above 2014 and 2015, according to the 2010 annual report. As of June 30, the business held money and dollars equivalents of about $ 900 million.
(Reporting by Euan Rocha Modifying by Braden Reddall)