Sino-Forest faces more scrutiny

The beleaguered Chinese forestry company Sino-Forest has had its ratings withdrawn by Standard and Poor's (S&P) today subsequent to news that its Chairman and Chief executive Alan Chan has resigned.  S&P states that the charges laid against Sino-Forest are most likely true and as such, it is forced to de-list.  Moody's Investors Service on the other hand has cut Sino-Forest's rating "to Caa1 from B1 and warned it was continuing its review of the company for further downgrade."

This blog earlier wrote an article describing the underlying fraud and failures of corporate governance associated with Sino-Forest.  In the days ahead there will be plenty of finger-waving at the company and its managers. The fact that corporate fraud  is involved is hardly new.  The tool most used by white-collar criminals is accounting gimmickry to conceal nefarious activities that enrich the owners and/or management.  I have written previously on the wide-spread corruption within China and prevalent ethos of fraud within America's most vaunted institutions, such as AIG, Goldman Sachs, Lehman Brothers, Big Pharma, and Moody's.  The fact remains that China is learning from the Master, the United States of America, when it comes to engaging in corporate malfeasance.

The questions that need to be addressed are:

1. Are any rating agencies actually capable of rating any company's true credit worthiness?
2. Why are accounting agencies constantly failing to detect this level of deception?
3. Why aren't agencies such as the the Ontario Securities Commission (OSC) given more resources and talent to investigate and prevent systematic corruption within its jurisdiction?
4. Why aren't Canadian governments more vigilant in prosecuting corporate criminals?
5. Why aren't US governments more vigilant in prosecuting corporate criminals?
6. Why are so few white-collared criminals prosecuted and furthermore found guilty in both Canada and the USA?

Only once the public begins to ask and demand answers to these questions, will substantial change occur.