Newspaper report disputes Sino-Forest timber claims

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TORONTO (Reuters) - Toronto-listed Sino-Forest, already under pressure from a short-seller's report alleging theft and fraud, appears to have substantially overstated its forestry holdings in China's Yunnan province, Canada's Globe and Mail newspaper said on Saturday.

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In a special report on Sino-Forest assets, the Globe said it had uncovered "glaring inconsistencies that raise doubts about the company's public statements regarding the value of the assets that lie at the center of the company's core business of buying and selling Chinese timber rights."

Sino-Forest was not immediately available to comment on the Globe's two-page report, which included details about land holdings listed in company documents and compared them with statements from officials in China.

Sino-Forest stock is down some 80 percent since June 2, when short-seller Muddy Waters accused the company of exaggerating its assets and falsifying its investments. The share slump has wiped $4 billion off its market capitalization.

Sino-Forest has denied the Muddy Water charges and has set up a special committee to investigate.

In its report, the Globe quoted Sino-Forest's partner in China's Yunnan province as well as local officials, who both offered far lower figures on Sino-Forest holdings to those provided by the company.

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"The Globe's investigation of the company's dealings and holdings in Yunnan points to inconsistencies in the company's accounting of its timber rights and raises broader questions about its business practices," the newspaper said.

The Globe said Sino-Forest had told it that it owned the trees rather than the land, and this would explain discrepancies between land acreages in Sino-Forest documents those detailed in the Globe report.

(Reporting by Janet Guttsman; Editing by Bill Trott)

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