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PwC Probed For ‘Enabling Evergrande Misconduct For Years’

PricewaterhouseCoopers, one of the Big Four auditors, had been Evergrande’s auditor since 2009, when the developer listed in Hong Kong

The company logo is seen on the China Evergrande head office in Shenzhen. Photo: Reuters


British accounting firm PricewaterhouseCoopers is under investigation in Hong Kong for allegedly overlooking misconduct by collapsed developer China Evergrande for more than a decade.

HK’s financial watchdog Accounting and Financial Reporting Council (AFRC) said it was opening a probe into PwC following whistleblower claims that emerged this month accusing the auditing giant of severe deficiencies in its handling of Evergrande.

Saddled with nearly $300 billion in debt — roughly the size of South Africa’s GDP — Evergrande went into default in late 2021. A Hong Kong court ordered its liquidation in January this year.


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In March, China accused the developer of committing a $78 billion fraud. It slapped fines worth $581.4 million and $6.53 million on Evergrande and its founder Hui Ka Yan, respectively.

PwC, one of the Big Four auditors, had been Evergrande’s auditor since 2009, when the developer listed in Hong Kong. It resigned from that position in January last year due to ‘disagreements’ over matters relating to the audit of Evergrande’s 2021 accounts.

Early this month, whistleblowers — claiming to be partners at PwC — said in an open letter that the auditor had “turned a blind eye” to malpractices by Evergrande for more than ten years. Asia Financial has been unable to independently verify the origins of the letter.

The letter was written in Chinese and titled “Who brought PwC into the fire pit of Evergrande?”, according to a Telegraph report. In it, whistleblowers claimed that PwC had failed to establish proper systems and assign necessary executives so as to ensure audit quality.

They also accused Raymund Chao, chairman of PwC Asia Pacific and China, of ethical and managerial failures that went on to weigh on Evergrande audits.

The letter also claimed that senior PwC partners allegedly turned down probes by Hong Kong and US regulators saying Evergrande’s audit information was confidential as it was held in mainland China, according to an SCMP report.

It also reportedly questioned other services PwC provided to Evergrande and its founder Hui Ka Yan’s family office.


Second letter threatened

The whistleblowers urged PwC to conduct an independent review of the firm’s practices, calling for action against the “bad apples” that led to failures in Evergrande audits.

They also threatened to release another open letter, with incriminating audit information, in case they face retaliation from the firm.

Last week, PwC rejected the letter’s explosive claims as “inaccurate statements and false allegations.”

Despite PwC’s denial, however, the AFRC announced on Friday it would look into claims made in the open letter in order to “safeguard the interests of the investing public, the broader public interest in the auditing of listed entities, and to maintain public confidence in the integrity of the accounting profession.”

The regulator also vowed to take stringent action in case its norms were violated.

The AFRC has already launched multiple investigations into Evergrande and PwC since 2021, over the developer’s 2020 accounts.

Its latest probe comes on the heels of Beijing launching a similar investigation last month into PwC’s accounting practices.

Evergrande’s court-appointed liquidators Alvarez & Marsal have also been exploring the possibility of suing PwC, potentially claiming ‘negligence’.



  • Vishakha Saxena


Also read:

Will Evergrande Really be Liquidated? Not if China Says No

Hui Ka Yan and The Rise and Fall of China Evergrande

Mortgage Delinquencies in China Soared by 43% in 2023

Evergrande Chief’s Two Luxury Mansions ‘Seized by Creditor’

Beijing Seen Taking Over China Evergrande’s Debt Revamp

Evergrande Chief Suspected Of Transferring Assets Offshore: WSJ

China’s Property Sector Will Remain Weak For Years: Goldman

PwC Counts Cost of China, HK Audit Staff Exam Cheating – FT


Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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