Embattled Sino-Forest Corp. suffered another major blow with the resignation of director James Bowland, a member of an independent committee investigating allegations of fraud against the Chinese timber company.
Late Friday evening, Hong-Kong and Mississauga-based Sino-Forest revealed that Mr. Bowland had resigned from his position as a director and member of the independent committee, effective immediately.
“The Company would like to thank Mr. Bowland for his contributions,” Sino-Forest said in a tersely worded statement.
It is unclear why Mr. Bowland resigned. Neither Mr. Bowland nor William Ardell, Sino-Forest’s chairman and head of the independent committee, responded to requests for comment.
The loss of Mr. Bowland marks another significant setback for the company, once Canada’s largest publicly traded forestry firm boasting a market value of more than $6-billion. If allegations of fraud are proven, Sino-Forest could represent one of the biggest cases of corporate fraud in Canadian history.
Sino-Forest is due to release third-quarter financial results within the next 10 days and is also expected to provide an update on the committee’s investigation.
A source close to the company who spoke on the condition of anonymity said the pressures and time demands of the committee had become too much for Mr. Bowland. “He felt he didn’t sign up for this,” the source said. “[Mr. Bowland]didn’t have the appetite to continue.”
A former managing director with BMO Nesbitt Burns in Toronto, Mr. Bowland served as a Sino-Forest director for less than a year. The ex-investment banker joined the Sino-Forest board in February, 2011, an addition that the company hailed at the time as a further strengthening of its corporate governance practices.
Just a few months later, Sino-Forest was rocked by allegations of fraud levelled by U.S. short-seller Carson Block and his firm Muddy Waters LLC. Toronto Stock Exchange-listed Sino-Forest’s share price collapsed following the Muddy Waters allegations, which included overstating the size and value of the company’s timber assets in mainland China as well as undisclosed related-party transactions. The Globe and Mail has also uncovered suspicious and questionable activity at Sino-Forest’s operations in China. Sino-Forest has denied the fraud allegations against it.
The Ontario Securities Commission is investigating Sino-Forest and has ordered the company’s shares cease trading until at least the New Year after finding evidence of fraud. Sino-Forest’s co-founder, chief executive officer and chairman Allen Chan resigned as an executive and director of the company in August. Mr. Chan continues to co-operate with investigators, the company says.
Mr. Bowland’s resignation leaves just two Sino-Forest directors on the special independent committee investigating the fraud allegations. Staff from PricewaterhouseCoopers in China are assisting the now two-person committee which comprises Mr. Ardell and director James Hyde.