Hong Kong regulator launches investigation into Evergrande and PwC
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Hong Kong Financial Reporting Council (FRC) began investigation into Evergrande Property Services, a local division of the Chinese developer Evergrande, as well as the audit and consulting company PwC, which conducted its audit.
In March, banks took control of 13.4 billion yuan ($2.1 billion) of Evergrande Property Services’ bank deposits pledged by Evergrande.
During an internal investigation initiated by the company, it turned out that loans taken by the Hong Kong division of Evergrande were redirected through third parties to the parent company and used by it as collateral. Because of this, at the end of July retired Evergrande CEO Xia Haijun and CFO Pang Darong. The FRC will now review the financial statements of Evergrande Property Services for 2020 and the first half of 2021, as well as documents from the audit of these statements by PwC.
Evergrande has been in serious financial trouble since last September. At that time, the group’s total debt was estimated at $305 billion. Since then, Evergrande has sold some assets and remains afloat, however, the risk of its default remains.
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