PwC defections continue as China Cinda Asset Management abandons auditor who faces fines for alleged Evergrande malpractice

China Cinda has replaced PwC's services with those of Ernst & Young (EY), another of the Big Four accounting firms, for 2024, the asset manager announced in a stock exchange filing on Monday.

The decision was taken to “practice sound corporate governance and further improve the quality of external audit work”, and in line with “relevant requirements for the selection and engagement of accounting firms by public companies “China Cinda said, adding that the details The text of EY's appointment will be communicated to shareholders in due time.

PwC has not yet responded to the Post's request for comment.

China Cinda's announcement comes less than a week after Shenzhen-listed China Merchants Port Group withdrew its proposal to hire PwC as auditor for the year, following similar moves by industry giants private companies such as China Merchants Bank, China Railway Group and Mindray Bio-Medical. Electronic.

PwC's problems have deepened since regulators in mainland China and Hong Kong began investigating its involvement in the China Evergrande financial fraud. The troubled property developer had inflated sales by 564 billion yuan and profits by 92 billion yuan in the years before its collapse in 2021, according to China's securities watchdog.

Evergrande was ordered liquidated by the Hong Kong High Court in January, and its founder, Hui Ka-yan, was fined 47 million yuan by the China Securities Regulatory Commission and banned for life to participate in the country's capital markets.

The anonymous letter, titled “Who dragged PwC into the Evergrande hotbed?” claimed the audit firm had “turned a blind eye” to Evergrande’s misconduct for more than a decade.

PwC vehemently denied the allegations and said it had taken steps to investigate the origins of the “fake news”.

China's real estate market has been mired in a historic slowdown since authorities unveiled a national campaign at the end of 2020 aimed at deleveraging the sector. Among the main victims are Evergrande, Country Garden and Shimao Group, which have defaulted on their debts in recent years.

Reported sales by the country's 100 largest real estate developers fell 47% year-on-year in the first four months of this year, according to the China Real Estate Information Corp.

Prices of new and secondary housing in China's major cities have fallen steadily for most of last year, official data shows.