Sino-Forest Publishes New Documents Refuting Muddy Waters Claims

Sino-Forest Corp. has published new documents in the company's data room that it believes refute the claims by Muddy Waters LLC that one of the companies it has done business with is actually a subsidiary of Sino-Forest. Muddy Waters, which is run by Carson Block, said that a company known as Huaihua City Yuda Wood Company Ltd. is actually a subsidiary of Sino-Forest, as opposed to a customer. Huaihua City has received payments from Sino-Forest, and if Block's claims were true, this would mean that Sino-Forest may be a Ponzi scheme. Block cited an article from 2006 from a Chinese government website that said the companies were related. In the data room, Sino-Forest put two documents up which it believes show proof. One of the documents is a letter asking the Huaihua City Bureau of Commerce to amend the article. The letter is dated June 9, 2011. The other document is a letter back from the government, dated, June 15, saying it will correct the article. Sino-Forest has come under much scrutiny lately that the company is a fraud, and shares have fallen sharply since the Muddy Waters report was released. John Paulson, the famed hedge fund investor, is a large investor in Sino-Forest, and has stood by the company through the allegations so far. Paulson gained notoriety in 2008 when he placed bets against the housing market, and subsequently made billions for himself and his fund, Paulson & Co. as the housing market collapsed.