Sino-Forest auditor Ernst & Young resigns
April 05, 2012
By: National Post
Ernst & Young LLP has officially resigned as the auditor of Sino-Forest Corp., less than a week after the company entered creditor protection.
In a resignation letter, Ernst noted that Sino “had not prepared” 2011 financial statements for audit, and that the company “remained unable” to address outstanding issues related to them.
Ernst & Young was Sino-Forest’s longtime auditor, signing off on the company’s financial statements for many years. It has come under the spotlight since Sino was accused of fraud by short seller Muddy Waters LLC, and has been named in multiple class action lawsuits related to the company’s collapse.
Sino-Forest was forced to enter creditor protection after its independent committee failed to unwind the company’s third-party relationships despite a seven-month, $50-million investigation. Last summer, the Ontario Securities Commission halted trading of the stock and said that company insiders committed acts that they “know or reasonably ought to know” perpetuate a fraud.
Before being accused of fraud last June, Sino was the largest forestry company on the Toronto Stock Exchange. At its peak, it had a market value of more than $6-billion. It is now running an auction process to try and sell its assets.