China Evergrande: PwC refutes letter claiming fraud tied to indebted developer, vows to investigate ‘fabricated’ claims
- Claims are ‘clearly contradictory to the facts’ and have ‘severely encroached upon PwC’s business reputation and legal rights’, accounting firm says
- Anonymous letter circulating on social media names partners it claims were involved in ‘auditing failure’ tied to the indebted developer
The anonymous letter, titled “Who dragged PwC into the fire pit of Evergrande”, began circulating on Chinese social media earlier this week.
The claims made in the letter against the auditing company and its partners were “clearly contradictory to the facts” and had “severely encroached upon PwC’s business reputation and legal rights, causing adverse impact”, PwC said in a post on its official WeChat account on Tuesday.
The company said it had taken measures to investigate the matter, including reporting the letter to law enforcement, adding that it reserved the right to pursue the legal responsibility of those who had “fabricated, spread, and disseminated” the letter.
The letter claims that the firm’s “auditing failure” with regards to Evergrande was tied to senior partners who allegedly refused probes by Hong Kong and US regulatory authorities by asserting that Evergrande’s audit working papers were held in mainland China territory and hence confidential. Working papers detail how auditors plan and execute an audit of a company’s financial statements.
The anonymous writers concluded their letter by saying they will release a second open letter, along with part of the relevant audit working papers, should there be any form of retaliation against them.
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PwC is one of the world’s “big four” auditing firms. PwC Australia cut jobs in March as part of a major restructuring after a former partner leaked government tax plans to clients last year in a serious conflict of interest. In October, Australian regulators banned the partner from providing financial services for eight years. In March 2023, PwC’s UK branch was fined for breaches found in audits of Babcock International, an engineering company.
