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  "documentTitle": "Sino-Forest Corporation (TRE)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2011-06-02 00:00:00",
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  "notes": "The slide uses a narrative structure to expose potential accounting irregularities and lack of transparency in TRE's business operations.",
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      "text": "The key point to note is that in the 2003 Annual Report, TRE began disclosing that it needed to conduct business through authorized intermediaries due to lack of proper licensing, while failing to disclose that in the fourth quarter of the year, it was winding down an existing WFOE that had the business scope to do the business.",
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      "kind": "paragraph",
      "text": "when the debtor really owes you money. It is substantially harder when you are really the debtor, and the counterparty is a government agency.",
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      "kind": "paragraph",
      "text": "TRE’s initial AI model was that it purported to buy logs, turn them into woodchips, and then sell them to customers. TRE disclosed in 2003 that it had been engaging in this model via its Heyuan and Guangxi CJVs. (TRE makes shameless use of the corporate memory hole.)",
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      "kind": "paragraph",
      "text": "After the exit of the Leizhou Forest Bureau, the Company did not locate a new joint venture partner. In May of 1999, TRE converted the EJV into a Wholly Foreign-Owned Enterprise (“WFOE”). In April of 2000, the WFOE’s new scope of business, which included producing and selling wood products, was formally approved.",
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      "text": "However, after receiving approval to reduce the size WFOE’s remaining required capital contribution to only $1.4 million, TRE still failed to do so for another three years. In October of 2003, TRE finally wound down the Leizhou WFOE (without having contributed the additional capital). The application for deregistration was made on Oct 28, 2003 and approved by the Guangdong Zhanjiang COFTEC on November 4, 2003. The key point to note is that in the 2003 Annual Report, TRE began disclosing that it needed to conduct business through authorized intermediaries due to lack of proper licensing, while failing to disclose that in the fourth quarter of the year, it was winding down an existing WFOE that had the business scope to do the business.",
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      "text": "This model appears to be a tortured attempt to create an accounting event for TRE even though it risked no capital and moved no physical goods. (TRE would later make this look less tortured by creating a third party to the transactions, the agent, which probably made its auditors feel better.)",
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      "kind": "source-note",
      "text": "Footnotes 30-34 detailing legal and corporate filings.",
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      "kind": "source-note",
      "text": "Source: TRE Annual Reports",
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      "text": "Leizhou WFOE A/R Collections from Leizhou FB. Years 1999-2003 with corresponding amounts.",
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      "kind": "title",
      "text": "How to Succeed in Business Without Really Trying (by Finding AIs)",
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