CHINA Evergrande Group’s liquidators have launched court proceedings against PricewaterhouseCoopers, 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, 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 US$6 billion in dividends and remuneration from seven defendants including Evergrande’s founder Hui Ka Yan, former chief executive officer Xia Haijun, former chief financial officer Pan Darong and Hui’s ex-wife Ding Yumei, according to a filing earlier this week.
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 (S$774 million) fine against Evergrande’s main unit, Hengda. Regulators said the firm overstated its revenue by 564 billion yuan in the two years to 2020.
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 served as Evergrande’s auditor for more than a decade until it resigned in January 2023 due to what the developer said were audit-related disagreements.
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.
The liquidators also started court proceedings against global commercial real estate services company CBRE Group 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 one billion yuan, sources familiar said in May. BLOOMBERG
