{
  "docId": "019dd923-622c-750b-8b95-ddcaae91147c",
  "docSlug": "16b80d15dcb2",
  "documentTitle": "Sino-Forest Corporation (TRE)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2011-06-02 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.7070758,
  "pageNumber": 3,
  "pageCount": 40,
  "prevPage": 2,
  "nextPage": 4,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 8,
  "notes": "This is a text-heavy research note page from a short-seller report (Muddy Waters).",
  "elementsJson": [
    "paragraph",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b95-ddcaae91147c/3",
  "deckHref": "/decks/019dd923-622c-750b-8b95-ddcaae91147c",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b95-ddcaae91147c.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b95-ddcaae91147c#slide-3",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "TRE significantly falsifies its investments in plantation fiber (trees).",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd952-ee37-76cb-846b-3e9e7db077f5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.72,
        "x": 0.14,
        "y": 0.64
      },
      "kind": "paragraph",
      "text": "Another issue with auditors detecting fraud is that when the auditors are based in Canada, and the fraud is in China, the auditors are far less versed in the games fraudsters can play in China.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "313afdcb-374a-44bd-be71-9854ff0822b5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.72,
        "x": 0.14,
        "y": 0.38
      },
      "kind": "paragraph",
      "text": "TRE then feeds the fraudulent data to Poyry, while allowing Poyry access to only 0.3% of its purported timber holdings. TRE touts the valuation reports as evidence of its credibility.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "4ac09f56-e85b-4ede-9a4e-52197f41988c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.07,
        "w": 0.72,
        "x": 0.14,
        "y": 0.23
      },
      "kind": "paragraph",
      "text": "On the other side of the books, TRE massively exaggerates its assets. TRE purports to have purchased $2.891 billion in standing timber under master agreements since 2006. We have smoking gun evidence from Yunnan province that it overstated its purchases there by over $800 million.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "60e1326b-c80d-4090-9486-369529a21b65",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.06,
        "w": 0.72,
        "x": 0.14,
        "y": 0.15
      },
      "kind": "paragraph",
      "text": "Despite TRE’s opacity on the revenue side, we have overwhelming evidence that the $231.1 million in Yunnan province timber TRE claimed to sell is largely fabricated. Such amount exceeds TRE’s real timber holdings in Yunnan province.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7d8fbec5-3d56-4399-ab46-cfea30b9a2c5",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.06,
        "w": 0.72,
        "x": 0.14,
        "y": 0.09
      },
      "kind": "paragraph",
      "text": "TRE avoids disclosing the identities of all but one of its AIs “for competitive reasons.” The one AI we know it has disclosed (at a credit analyst event in April 2011) is actually a connected party – to both TRE and one of its agents.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "9b2f91b3-166d-42c7-9ab3-dcc5d3f6e65f",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.72,
        "x": 0.14,
        "y": 0.53
      },
      "kind": "paragraph",
      "text": "TRE’s claims to be “transparent” are interesting. Its offshore structure, which utilizes at least 20 British Virgin Island entities, is an unjustifiable black hole.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "a4289151-3c56-42e4-bfc3-48107fa95a7e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.06,
        "w": 0.72,
        "x": 0.14,
        "y": 0.57
      },
      "kind": "paragraph",
      "text": "Auditors are far less effective in detecting fraud than most investors assume they are. The problem is that fraudsters are willing to forge documents. We show a suspicious letter from HSBC that was written on behalf of one of TRE’s main subsidiaries, Sino-Wood Partners.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "eac9618a-2a80-43e2-9fcd-b82ce2592e6f",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "“six personal weeks” — CFO David Horsley",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd952-ee37-76cb-846b-41532705de66",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.03,
        "w": 0.72,
        "x": 0.14,
        "y": 0.88
      },
      "kind": "source-note",
      "text": "Muddy Waters is proud to say that by this methodology, we spent two man-years researching TRE and preparing this report.",
      "attrs": {
        "numbered": true
      },
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7c4c5cb1-4b9f-4aaf-bf61-756823b0d131",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "603ec0ee-e175-40a9-aaa7-36dd02ddd3bc",
      "evidence": "Systematic breakdown of financial discrepancies and governance failures.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 40,
      "from": 3,
      "beatId": "88101fba-40c4-4ce1-bed1-ff010cf7d0c8",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Expose Contradiction",
      "beatSlug": null,
      "evidence": "The document repeatedly exposes contradictions and suspicious transactions in Sino-Forest Corporation's business practices",
      "position": 0,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}