2024-03-22 05:35:47
Chinese authorities are examining the role of PricewaterhouseCoopers (PwC) in the accounting practices of China Evergrande Group after the developer was accused of a $78 billion fraud, Bloomberg News reported on Friday.
No decision has been made on whether to sanction the auditor, the report said, citing sources, and adding that Chinese authorities are in contact with some former PwC accountants who handled the audit of ‘Evergrande.
PwC did not immediately respond to Reuters’ request for comment.
This week, the China Securities Regulatory Commission (CSRC) fined Evergrande and its chairman Hui Ka Yan 4.2 billion yuan ($581.4 million) and 47 million yuan respectively for accounting fraud and bond issuance fraud, and banned Hui and other senior executives from entering the securities market.
Hengda Real Estate, Evergrande’s flagship onshore unit, said a CSRC investigation found it had inflated its revenue by 213.99 billion yuan, half of the total, in 2019. In 2020 , sales were inflated by 350 billion yuan, accounting for 78.5% of the total. The promoter issued bonds based on these falsified statements.
PwC resigned as Evergrande’s auditor early last year due to disagreements over issues related to the audit of its 2021 accounts, the promoter said.
Evergrande and PwC have been under investigation by the Hong Kong Audit Regulator since 2021 over the developer’s 2020 accounts.
With total liabilities of $300 billion, the world’s most indebted developer defaulted on its offshore debt at the end of 2021.
After 18 months of unsuccessful negotiations with creditors, the Hong Kong High Court in January ordered the company to be liquidated.
($1 = 7.2244 Chinese yuan) (Reporting by Clare Jim; Editing by Stephen Coates)
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