China Evergrande liquidators seek US$8.4B from accounting firm PwC in Hong Kong lawsuit

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)

HONG KONG — Liquidators of the failed Chinese property developer China Evergrande are seeking 57 billion yuan (US$8.4 billion) from accounting firm PwC over its auditing work, a Hong Kong court heard on Monday.

The hefty amount was claimed against PwC International, PwC Hong Kong and PwC’s mainland Chinese entity, the court was told. A court decision has not yet been made on the claims.

China Evergrande, once one of China’s largest real estate developers, first defaulted in 2021, and with more than $300 billion in liabilities became the world’s most indebted developer.

Its downfall triggered a liquidity crunch in China’s property sector, which faced a slump in sales and prices and still has not fully recovered.

After a Hong Kong judge ordered China Evergrande’s liquidation in early 2024, its court-appointed liquidators launched legal proceedings against PwC over alleged “negligence” in its work for Evergrande as they attempted to recover what they could for creditors.

Last month, Hong Kong regulators said PwC was paying HK$1.3 billion ($166 million) in fines and compensation over its role in auditing Evergrande’s financial statements before its collapse, as they said there were breaches of professional duties by PwC.

PwC said last month that they acknowledged the work on the Evergrande audits “fell well below our high expectations and the expectations of our stakeholders” and that it had taken “accountability and remediation measures” over the past months.

That came after mainland Chinese authorities in September 2024 separately fined PwC 441 million yuan ($62 million) over its Evergrande audits, and said the Chinese developer had inflated its revenues by roughly $80 billion in its 2019 and 2020 financial results.

Evergrande founder Hui Ka Yan, once one of Asia’s richest people, in April pleaded guilty to charges in mainland China including fraud and bribery.

Chan Ho-him, The Associated Press