PwC Hong Kong denies claims about China Evergrande audits in anonymous letter
PwC Hong Kong has denied claims set out in an anonymous letter circulating on Chinese social media about its audit work for property developer China Evergrande Group.
The letter, according to multiple reports, detailed several allegations of auditing failures by the firm. Many of the reports said they were unable to verify the authenticity of the letter.
PwC Hong Kong said it was aware of the letter, which was purportedly authored by individuals claiming to be partners at the firm, and was investigating the matter.
“We believe the letter contains inaccurate statements and false allegations” concerning PwC and its partners, the firm said in a statement on its website, adding that these allegations “could tarnish PwC’s reputation and infringe our legal rights”.
“We have promptly reported this matter to the relevant authorities and reserve our right to pursue appropriate action,” the firm said.
The Big Four firm has come under scrutiny after Chinese authorities launched one the biggest-ever fraud investigations into Evergrande.
The developer and its founder, Hui Ka Yan, have been accused of inflating its revenue by $78bn (£61.6bn) in the years before the firm defaulted on its debts.
Following an investigation, the China Securities Regulatory Commission last month fined Evergrande’s mainland business, Heganda Real Estate, and its founder, Hui Ka Yan, $580m and $6.5m respectively following the investigation. It also banned Hui from China’s markets for life.
Evergrande and PwC have also been under investigation by Hong Kong’s audit regulator since 2021, while Bloomberg reported last month that mainland Chinese authorities are also investigating PwC’s potential role in Evergrande’s accounting practices. PwC formally resigned as Evergande’s auditor in January last year following disagreements over matters related to the company’s 2021 accounts.