Court-appointed liquidators handling the collapse of Chinese property developer Evergrande Group are pursuing 57 billion yuan ($8.4 billion) in damages from accounting firm PwC, claiming the auditor failed to properly perform its duties, according to testimony Monday in a Hong Kong courtroom.
The massive damage claim adds to substantial penalties already levied against the international accounting firm by Chinese and Hong Kong regulators following Evergrande’s spectacular collapse with more than $300 billion in debt, marking it as among the largest failures in China’s troubled real estate market.
The liquidators are demanding 38 billion yuan from PwC International, PwC Hong Kong and PwC’s Chinese division combined. An additional sum is being pursued from the Hong Kong and China offices specifically.
Monday’s court session centered on determining what level of liability PwC International should face in the matter.
Richard Handyside, representing PwC International in court, contended his client should be removed from the lawsuit entirely. He maintained that the Big Four accounting network operates as separate entities, with the Hong Kong and China offices functioning independently rather than as subsidiaries.
Handyside further argued that PwC International never directly communicated with Evergrande and bore no “duty of care” regarding the property developer’s financial auditing processes.
However, Adrian Beltrami, speaking for the liquidators, countered that PwC International operates as the umbrella organization and bears responsibility for ensuring quality standards across all member firms.
Evergrande failed to meet its international debt obligations in late 2021, and Hong Kong’s High Court mandated the company’s liquidation in 2024.
Chinese authorities imposed severe sanctions on PwC’s domestic operation in 2024, including a six-month business suspension and a record-breaking 441 million yuan ($65 million) penalty related to its Evergrande audit work.
China Securities Regulatory Commission investigators determined that PwC Zhong Tian LLP “turned a blind eye” to and “even condoned” Evergrande’s revenue inflation and bond issuances based on falsified financial data.
Hong Kong regulators similarly concluded that PwC Hong Kong severely violated its professional obligations during its Evergrande auditing work.
The Hong Kong office faced a HK$300 million penalty and six-month suspension, while also agreeing with the city’s securities regulator to establish a HK$1 billion ($128 million) fund for compensating Evergrande’s independent minority shareholders.
Outstanding creditor claims against Evergrande total approximately $45 billion, though liquidators report that only around $255 million in assets had been sold through last August.
