Accounting
Evergrande liquidators start legal action against PwC
China Evergrande Group’s liquidators have launched court proceedings against PricewaterhouseCoopers LLP, another legal step to recover at least a fraction of creditors’ investments from the property giant.
Lawyers of liquidators have started legal actions against PwC and PricewaterhouseCoopers Zhong Tian LLP, the global auditor’s mainland China arm, according to Hong Kong court documents seen by Bloomberg. The lawsuit was filed in March and recently made public.
The legal move comes along with liquidators’ attempt to recover
Bloomberg News
PwC has been in the spotlight for its role in Evergrande’s accounting, after Chinese authorities launched an investigation into one of the biggest financial frauds in history. Authorities earlier this year said it would impose a 4.18 billion yuan ($584 million) fine against Evergrande’s main unit, Hengda. Regulators said the firm overstated its revenue by
“A collapse as large as China Evergrande severely undermines investors’ confidence in the system, and the only way to restore it is to have a transparent autopsy,” said Pingyang Gao, an accounting and law professor at the business school of the University of Hong Kong. He added that the liquidators’ legal actions and court proceedings will help with that process.
PwC Zhong Tian, a Shanghai-registered firm that is part of PwC’s global network, was Hengda’s auditor during the period in question. The firm
Evergrande paid 389 million yuan in auditing and other fees to PwC from 2009 to 2022, according to calculations based on the developer’s annual reports.
Liquidators launched court proceedings against PwC’s “negligence” and “misrepresentation” in auditing work. The claim relates to PwC’s reports on Evergrande’s financial statement for 2017 and the first six months of 2018, according to the filing. That’s ahead of the 2019 and 2020 period, during which Chinese securities regulators said the developer overstated its revenue.
Another court document filed in June showed that assets linked to Hui include two yachts, two Rolls-Royce Phantom cars, three planes, four luxury homes in Hong Kong and properties in London and Los Angeles.
The liquidators also started court proceedings against global commercial real estate services company CBRE Group Inc. and advisory group Avista Valuation Advisory over valuation reports they produced for Evergrande and its subsidiaries in 2018, according to a separate court document seen by Bloomberg.
China has been weighing a record fine on PwC, which is likely at least 1 billion yuan, people familiar
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