SinoSound

Disadvantages

• ✗Sino-Forest engaged in significant fraud perpetrated by senior management including Chan, Ip, Hung, Ho and Yeung, contrary to Ontario securities law.
• ✗Sino-Forest controlled numerous purportedly arm's length suppliers and customers, including Yuda Wood and others, through nominees, undisclosed to investors.
• ✗Sino-Forest employed a deceitful documentation process with backdated purchase and sales contracts, false Forestry Bureau Confirmations and missing key attachments to misstate ownership of standing timber.
• ✗Sino-Forest's subsidiaries in the BVI Model could not legally obtain PRCs; no proof of ownership for vast majority of forestry assets was substantiated.
• ✗Sino-Forest's revenue recognition was materially misleading; revenue was recognized before contracts were signed and prior to actual harvesting.
• ✗The AR/AP Set-Off Process was used to settle accounts without cash flow confirmation, facilitating overstatement of assets and revenues.
• ✗Sino-Forest concealed material internal control weaknesses, such as concentration of duties in Hung, never remediated, enabling fraud.