- March 21, 2024
- Posted by: legaleseblogger
- Category: Related News
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Chinese Authorities Investigate PwC’s Role in Evergrande Accounting Scandal
HONG KONG (Reuters) – Chinese authorities are examining the role of PricewaterhouseCoopers(PwC) in China Evergrande Group’s accounting practices after the developer was accused of a $78 billion fraud, Bloomberg News reported on Friday.
The situation has caused significant concern among investors and regulators, leading to a thorough investigation into PwC’s involvement in overseeing Evergrande’s financial activities.
No decision has been made on whether to penalize the auditor, the report said, citing sources, and adding the Chinese officials are in contact with some former PwC accountants who handled Evergrande’s audit.
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PwC did not immediately respond to Reuters’ request for comment.
China Securities Regulatory Commission (CSRC) this week fined Evergrande and Chairman Hui Ka Yan 4.2 billion yuan ($581.4 million) and 47 million yuan, respectively, for accounting and bond issuance fraud, and barred Hui, among other senior executives, from the securities market.
Hengda Real Estate, the onshore flagship unit of Evergrande, said a probe by the CSRC found that it had inflated revenue by 213.99 billion yuan, or half of the total, in 2019. In 2020, sales were inflated by 350 billion yuan, or 78.5% of the total. The developer issued bonds based on those falsified statements.
PwC resigned as Evergrande’s auditor early last year amid disagreements over matters relating to the audit of its 2021 accounts, the developer has said.
Evergrande and PwC have been investigated by Hong Kong’s audit regulator since 2021 over the developer’s 2020 accounts.
With $300 billion of total liabilities, the world’s most indebted developer defaulted on its offshore debt in late 2021.
After 18 months of unsuccessful restructuring negotiations with creditors, it was ordered by the Hong Kong High Court in January to liquidate.
($1 = 7.2244 Chinese yuan)
(Reporting by Clare Jim; Editing by Stephen Coates)
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