Sino-Forest Corp., the Ontario-based Chinese timber firm that collapsed under fraud allegations last year, said former chief financial officer David Horsley is no longer employed by the company.
Mr. Horsley was the top Canadian-based executive at the TSX-listed forestry firm and served as CFO from October, 2005, until this past April, when Sino-Forest was hit with enforcement notices by the Ontario Securities Commission.
In May, Mr. Horsley was one of several respondents named in a series of allegations made by the OSC. At the time, the commission alleged Mr. Horsley had not complied with securities laws and had acted against the public interest. The regulator did not, however, accuse Mr. Horsley of participating in the fraudulent activity it alleged was conducted by other executives, including Sino-Forest’s former chairman and CEO Allen Chan. Mr. Horsley had remained an employee at the company after resigning as CFO.
Late Wednesday, Sino-Forest disclosed it had received a second enforcement notice from the OSC that “adds a further allegation similar in nature” to the allegations made in May.
On Thursday, Sino-Forest said Mr. Horsley “has ceased to be employed by the company.”
Mr. Horsley did not respond to a call to his mobile phone seeking comment.
Once Canada’s largest publicly traded forest firm with a market value in excess of $6-billion, Sino-Forest’s shares have been de-listed from the Toronto Stock Exchange and the company is now insolvent. It is operating under creditor protection granted by an Ontario court.
Sino-Forest represents the most high-profile scandal involving companies from China that have gained listings on North American stock markets using “reverse takeovers” to avoid the regulatory scrutiny of an initial public offering. The OSC is also investigating the role of so-called gatekeepers, which include auditors, investment banks and legal firms, and helped Sino-Forest raise more than $3-billion from investors.
In its statement of allegations filed in May, the OSC said Si no-Forest and its executives used “caretakers” or friends and former employees to control many of the company’s business partners. The OSC said Sino-Forest used these arrangements to move funds around in a “circular” fashion that inflated the company’s revenue and assets.
In July, Sino-Forest conceded that it is owed more than half-a-billion dollars from business partners in China that it said no longer exist. These companies, which included customers and business partners owing more than $568-million to Sino-Forest and its subsidiaries, have now been de-registered.