Evergrande liquidators start legal action against PwC for ‘negligence’ in auditing work
- Action follows a lawsuit against founder Hui Ka-yan and other defendants to recover US$6 billion in dividends and benefits paid on falsified accounts
PwC, the former auditor of China Evergrande Group, is facing legal action from the collapsed developer’s liquidators, the latest setback for the accounting firm.
The lawyers for the liquidators have started legal action against PwC and its mainland unit PwC Zhong Tian, according to Hong Kong court documents seen by Bloomberg. The lawsuit was filed in March and only recently made public.
Liquidators launched court proceedings against PwC’s “negligence” and “misrepresentation” in auditing work. The claim relates to PwC’s reports on Evergrande’s financial statements for 2017 and the first six months of 2018, according to the Bloomberg report.
That precedes the accounts for 2019 and 2020 when the developer overstated its sales by 564 billion yuan (US$78.9 billion) and profits by 92 billion yuan before its collapse, for which the China Securities Regulatory Commission slapped a fine of 4.2 billion yuan on Evergrande in March.
PwC Zhong Tian, a Shanghai-registered firm that is part of PwC’s global network, was the auditor of Hengda, Evergrande’s onshore unit, during this time. It served as Evergrande’s auditor for more than a decade until its resignation in January 2023 because of audit-related disagreements.
