As liquidators take over the debt-ridden property giant, which owes more than $300bn to banks and bondholders, critics now question who should take responsibility for Evergrande’s downfall.
According to claims in anonymous letter shared on Chinese social media platform WeChat last week, questions surround the role of Evergrande’s former auditor: PwC.
The open letter, which purports to have been signed by unnamed PwC partners, claimed the professional services firm “turned a blind eye” while auditing Evergrande for more than a decade.
If the big, planned, government supported, state thing – and the Chinese property market was that, even if done by privately owned firms – goes tits up then it can’t be the government, nor the plan, that was wrong. Must be the capitalist lackeys, right?
No, it is quite believable. Evergrande ( brother of Ariana Grande ? ) is a ponzi scheme.
PwC failed, as AA did at Enron and EY did at Wirecard ( small beer at 1.9 billion Euros ) to flag up the discrepancies and expose their client before it all got out of control.
When we talk of missing sums this huge, I am reminded of the joke.
Why do elephants wear green berets ?
So you can’t see them when they jump over snooker tables.
The Chinese have methods for dealing with colluption.
Having worked in these circles, I remember that getting a government contract was like being the first bloke to put a pick in the ground in Klondike. Unlimited funds, no possibility of a bad debt and all you had to do was say the right things.
Doing them, not so much…
How many Evergrande buildings are sinking at a faster rate than their bond prices?
I’m guessing there will be no foreign PWC executives going to China for a while, at least until this gets sorted out.
Nobody wants to get whacked by the Chinese government for doing a bad job at external audit, do they?
Just wondering. In a Chinese environment when some random employee of PwC finds a problem with a giant outfit supported by a totalitarian government where ‘face’ is all-important, what’s he supposed to do?
Report it to his superior in the chain of management and then ignore it.
Yes JG but at some point in the upwards reporting chain there will be some poor bugger who will suffer personally in serious ways if he pushes it any further. In the UK that would be a career risk. In China?
what’s he supposed to do?
Go to the airport.
What PwC shouldn’t do is take the job on if they’re not prepared to face down the client.
At which point they quit and walk away for another job in another company paying 1 CNY / hour more. How do you think it works?
The only ones that are stuck are the executives with accountability and therefore (presumably) equity or at least a big fat pay check.
At some level the buck stops, if no where else then with the CEO, which is why the news is always passed up from the guys who (literally) the problem is below their pay grade until it hits someone whose job it is to deal with it.
Given the graft and corruption, “private” and state controlled, I’m surprised that Chinese companies can be audited at all.
I have always thought that the fact that the audited company chooses and pays the auditor is a fertile breeding ground for corruption. Even where there is no dishonesty, it’s quite easy for a big enough company to persuade auditors that a small anomaly is merely a quirk and not worth investigating.
If you have the senior executives saying don’t worry the Chinese government are the real owners and they will step in then the face thing maybe kicks in where you can’t qualify based on management representations even though you are relying on them