Four former Sino-Forest executives accused of fraud did not deceive anyone or shirk responsibility for their actions while they worked for the forestry company, a securities tribunal heard Monday.
To the contrary, Albert Ip, one of the four accused, agreed to be examined by law firm Bennett Jones while he was hospitalized in critical condition, said his lawyer Markus Koehnen.
Two people from Bennett Jones came to the hospital and examined Ip for three hours, despite the fact that he was having trouble breathing and had suffered internal bleeding, Koehnen said.
“That’s not running away from responsibility,” Koehnen said. “Mr. Ip could have kept his mouth shut and said, ‘Go away.’ He didn’t.”
Koehnen, who is also representing Alfred Hung, George Ho and Simon Yeung, began his closing arguments in the Ontario Securities Commission hearing against five former Sino-Forest executives accused of perpetrating fraud before the firm collapsed in 2012. The case is the longest and most complex in the regulator’s history.
Koehnen said his clients accurately disclosed what was going on to their superiors at the company and did not act dishonestly.
He also argued that his clients did not commit fraud because there were legitimate business reasons for their actions — even if those reasons can at times be difficult to decipher.
“I will be the first to agree that sometimes that conduct requires explanation,” Koehnen said, adding that it’s not because the conduct was nefarious but because the company’s business operations were in mainland China, where business customs are different.
Former CEO Allen Chan has also been accused of perpetrating fraud. His lawyer, Emily Cole, has argued that Chan did not know everything that was going on within the company, and that he relied on others more familiar with Canadian reporting obligations when it came to the company’s finances.
The OSC alleges the five men took part in “deceitful conduct” that included the fabrication of assets and revenue, undisclosed relationships with suppliers and customers and providing misleading documentation to support the alleged fraud.
The securities watchdog also alleges that the executives misled investors by issuing false financial statements in every quarter from 2007 to 2010.
Established in 1994, Sino-Forest was the largest foreign-owned forestry company in China. Most of the company’s business was conducted in China, but its headquarters were in Ontario and its shares were traded on the Toronto Stock Exchange.
At its peak, Sino-Forest was the most valuable forestry company listed on the Toronto Stock Exchange with a market capitalization of $6 billion. From June 2005 to March 2011, the company’s shares rose by 340 per cent from $5.75 per share to $25.30 per share.