Business Ethics : Sino – Forest Company
Sino-Forest Corporation
The Company Sino-Forest claimed to be one of the largest tree plantations in China. The nature of the business is growing large number of tree plantations, processing and selling wood related products which where used in industrial, commercial and Residential products.
Sino – Forest Company was founded in 1994 and they started growing trees in large quantity with the money invested by potential investors. They generate revenue from sale of these products.
In 2nd June 2011, it was found that the company was fraudulently inflating its assets and earnings to boost its share price. Its share prices fell and lots of people lost their investment in this company. Since the farm was in China, most of the backend business work was happening in China. The company was listed in Toronto stock Exchange and it was believed that the company really has its huge farm and products are manufactured in a large scale in China. But that was not true.
Finally one fine day, Muddy waters Research Company found and published that the details proposed by the company are fake. The share prices fell immediately and the company tried to file a lawsuit against Muddy waters Research. But nothing helped. Finally in March 30, 2012 Sino-Forest Company filed for bankruptcy.
Even-though lots of companies get caught every year; there are still few companies that find loop – holes in the industry and misuse them to grow bigger. The business owners must practice a common business ethics. They should also think in the shoes of the investors to know the real pain which will be a consequence of their scandal.
References:
http://en.wikipedia.org/wiki/Sino-Forest_Corporation
http://www.bloomberg.com/news/2011-08-26/sino-forest-executives-ordered-to-resign.html
http://d.muddywatersresearch.com/wp-content/uploads/2011/06/MW_TRE_060211.pdf