Sino Forest did not own trucks, chainsaws or employ huge numbers of people because the AIs did all that. All the things needed to run a 17 million tonne per year forestry operation were done by the AIs.
So the AIs you would expect are fairly substantial organizations - bigger than Sino Forest anyway - because the AIs do all the work.
This makes the Sino Forest meeting with the AIs the critical part of the Sino Forest investigation. This was the backbone of Sino Forest. If the AIs were phony then Sino Forest is unambiguously fraudulent.
You can find the full summary of the meetings with AIs here. I am just going to quote the first page. This is not a selective quote (check the original if you want).
Terms Not Herein Defined Shall Have The Meaning As Ascribed In The Second Interim Report Of The Independent Committee Of The Board Of Directors Of Sino-Forest Corporation.
Supplier #1 (OSC Supplier #1)
Location 1
Hunan City #3
(Source: Provided by SinoForest)
Site did not have signs or any other indication that Supplier #1 occupied
the location.
According to an individual from the neighbouring office, Supplier #1’s
office is located on 2/F of the building. They were unsure whether or not
people worked in the office there.
Encountered individuals who introduced themselves as Supplier #1 staff,
including one who introduced herself as the Financial Controller.
Neighbouring occupants stated the office was no longer used and Supplier
#1’s office had moved to a new site located on 6/F of the (redacted)
building in Hunan Location 5.
Went to new address and confirmed that Supplier #1 shared the 6/F with
Hunan City #3's Government Land Acquisition and Demolition
Remediation Department.
Location 2
Hunan City #3
(Source: SAIC filings)
This was a factory site previously occupied by Supplier #1.
The factory is now operated by Other Co #11, a company owned by Other
Co #12.
According to a factory worker and neighbouring occupants, Supplier #1
moved out in 2009.
Neighbouring occupants referred to Supplier #1 as "Sino-Forest's Supplier
#1" (嘉漢的供應商#1).
Location 3
Hunan City #3
(Source: Mailing address
provided by Sino-Forest)
Individuals identifying themselves as Supplier #1 personnel stated that
Location 3 should, in fact, be the same as Location 1 as there was only one
insurance office building on the road. The address should be (redacted)
instead of (redacted).
Location 4
Hunan City #3
(Source: Mailing address
provided by Sino-Forest)
This location is the same as Supplier #10 Location 1 and is now a bank
with the office above occupied by the bank itself.
The security guard for the bank had not heard of Supplier #1.
It goes on:
Supplier #10 (OSC Supplier #10)
Location 1
Hunan City #3
(Source: Provided by SinoForest)
This location is the same as Supplier #1 Location 4 and is now a bank with
the office above occupied by the bank itself.
The security guard for the bank had not heard of Supplier #10.
Location 2
Hunan City #3
We could not locate Supplier #10 from the address provided.
Neighbouring occupants had not heard of Supplier #10.
Monty Python could have written this.
Remarkable company Sino Forest: beautiful plumage.
John
10 comments:
This isn't argument; this is abuse....
The story just gets better and better. Hilarious. Really sad so many lost so much on this.
Rich
Follow up on Trine Solar.
US retail pricing on a SINGLE panel is now down to 1.2 dollar per watt.
http://www.pvpower.com/trina-230w-solar-panel.aspx
Then you can imagine the discounts on 30-40 panels for a private installation or 400-500 panels for a corporate install.
Don't forget the IC was unable to reconcile reported revenues with cash transactions.
'As reported in its First Interim Report, the IC has reconciled reported 2010 total revenue to the sales prices in BVIs timber sales contracts, together with macro customer level data from other businesses. However, the IC was unable to review any documentation of AIs or Suppliers which independently verified movements of cash in connection with set-off arrangements used to settle purchase prices paid, or sale proceeds received by, or on behalf of SF'.
John, you omitted the best bit - Para 110 of the Process Memorandum. To quote:
110. The following factors have affected the AI and Supplier visits process:
(i) Certain members of Management have not disclosed to the IC Advisors all the relationships between Suppliers or AIs and the Company, or among Suppliers, AIs and/or Company personnel of which they were aware and that may be pertinent to the examination;
At least some of the AI's are fronts for management.
(ii) While certain members of senior Management have advised Company Counsel that they know or believe that there are “influential people” or “supporters” behind certain Suppliers who are different from those parties disclosed in the SAIC searches, they have not disclosed to the IC Advisors the identities of such persons;
Management is admitting that the AI's are shams, and are a mechanism for paying bribes to senior officials
(iii) Management has:
a. Taken in excess of two months to disclose basic details of relationships/inter-relationships between AIs and to disclose the identities of “holding companies” and individuals with the ultimate beneficial control of AIs and Suppliers;
b. Not provided full names of the principals, management and operational contacts of all Suppliers, AIs and associated conglomerate companies which are necessary for comprehensive searches;
c. Delayed access to available Company personnel records which were critical to the consideration of relationships to the IC Advisors on a timely basis;
d. Not provide the Chinese names of all Suppliers, and AIs, and associated conglomerate companies on a timely basis, or in some cases not at all, which are required for SAIC and electronic data keyword searches;
e. Provided Company personnel records which appeared to be inconsistent in some degree with records obtained through review of electronic correspondence; and
f. Not provided the requested senior Management attendance earlier in the process, as Allen Chan did not attend interviews and Judson Martin became available and attended interviews commencing on October 17, 2011.
(iv) AI and Supplier representatives are not required to meet with, or produce documentation to, the IC or the IC Advisors.
Suppliers are refusing to provide documentation, probably because (i) it doesn't exist; (ii) what does exist would become exhibit A is prosecutions in Canada and (worse) China (tax fraud).
(v) The IC Advisors have not had visibility into the process regarding the setting up of meetings relating to AIs and Suppliers. Judson Martin, in his capacity as CEO, has agreed to provide a letter of representation to the IC with respect to the process undertaken while he has held this position. The IC Advisors have not viewed any letter of representation to date. In late August 2011, other senior members of Management were placed on administrative leave by the Company upon the advice of Company Counsel and, as a result, the IC Advisors understand these individuals were not involved in the process.
Management has been doing everything it can to frustrate access to AI's. The IC had to replace key managers before any co-operation occurred.
(vi) All meetings with AIs and Suppliers were attended by SF employees who,
after the first interview, had knowledge of the IC Advisors’ general
questions to be asked of AIs and Suppliers at all subsequent interviews.
Any interview with AI's which were allowed, were scripted by Management.
The most amazing aspect of this whole investigation has been Managements attitude towards the IC. The IC was Managements best friends. All they wanted to do was make the scandal go away. Provided that at least some evidence supporting Managements' position was produced, the IC would have backed them to the hilt. It's not like they had many other options. Instead, Management gave the advisors the finger.
This sounds very much like Enron.
Selling and offloading their liabilities to AIs (read Enron's Special purpose entities), which are in fact just fronts for SF.
What the heck were Richard Chandler and Wellington doing trying to bottom fish this thing. Chandler I suppose can do what he wants, but Wellington.. another example of dumb long only money seeing "value" and ultimately doing a major disservice to their pension fund customers. - KC
http://www.atimes.com/atimes/China_Business/ML07Cb02.html
In light of today's news, Judson Martin's comments over the past few months are simply amazing. I wonder if he will eventually be implicated as well?
TRE-X now in default on its debt...
http://www.bloomberg.com/news/2011-12-12/sino-forest-will-miss-earnings-deadline.html
Are you aware that "Alfred Little" has now been legally identified?
Currently his name is redacted in court papers.
A legal motion was brought to publish his identity on November 17, 2011 in New York Supreme Court by DEER.
Judge Carol Edmead will be ruling any day now.
Silvercorp has publicly stated they are working with DEER in their Defamation suit.
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