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2w ago

PwC Hong Kong to Pay HK$1 Billion to Evergrande Investors in SFC Settlement

The SFC cast the payout as an unequivocal warning on audit accountability.

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FILE - A woman walks by a map showing Evergrande development projects in China, as she heads to an Evergrande city plaza in Beijing on Sept. 18, 2023. (AP Photo/Andy Wong, File)
FILE - Signage appears on the Australian head office building of PricewaterhouseCoopers in Sydney, Monday, June 26, 2023. (AP Photo/Rick Rycroft, File)
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Overview

  • A settlement announced Thursday requires PwC Hong Kong to pay HK$1 billion (US$128 million) to China Evergrande’s minority shareholders, with no admission of liability and no further SFC action if the terms are met.
  • The regulator said Evergrande’s 2019 and 2020 reports were false because the developer booked property-sale revenue before projects were finished and delivered to buyers.
  • Investigators quantified the misstatements, saying 2019 revenue was overstated by 44.79% (213.9 billion yuan) and 2020 by 69.03% (350.2 billion yuan), and that reported profits for both years should have been losses.
  • CityAM reported the payment as the first case in Hong Kong where auditors of a defunct company provide direct compensation to shareholders harmed by misleading accounts.
  • Evergrande is in court-ordered liquidation after a failed restructuring, PwC resigned as its auditor in 2023, and the firm faces a separate lawsuit from the developer’s liquidators alongside penalties previously imposed on PwC China.