Accountant PwC China has halted work on a $140m business campus in China after it was sanctioned by China’s Ministry of Finance, the Financial Times reports.
The company audited the accounts of Evergrande, the property company that was ordered to liquidate its assets in January after collapsing under a $300bn debt pile.
Last week, the ministry imposed a record fine of $62m on PcW China and banned it for six months.
The move followed a statement from China’s securities regulator in March that PwC China had approved Evergrande’s accounts even though they inflated mainland revenues by nearly $80bn in the two years before its default in 2021.
PwC Zhong Tian, as the firm is officially known, was the country’s largest accountant. Now the six-month ban means it has had to scramble to retain blue-chip clients such as Alibaba, Tencent, and insurer AIA.
The firm has reassured them that it can complete their 2024 audits despite the ban.
PwC’s international management has also moved to limit the damage to its business and reputation.
It issued a statement saying it was “disappointed” by PwC Zhong Tian’s audit of Hengda [Evergrande’s name for its division in mainland China], which “fell unacceptably below the standards we expect of member firms of the PwC network”.
They also sacked 11 of PwC China’s staff and drafted a new leader for the company.
‘Building trust’
Designed by US architect Gensler, the Reimagine Park campus was being built at Haitang Bay in the city of Sanya on China’s tropical island of Hainan.
Work on the project, which was part financed by the municipality, began last year, but sources close to PwC China told the FT that work had stopped and that it was now under “strategic review”.
The 7.9 ha campus, which was to have been completed next year, was to have been used as a training facility for “building trust in leadership”.
Gensler designed a zero-carbon facility consisting of nine buildings connected by autonomous electric shuttles.
When the FT visited the site, it found that three buildings had been built and partially fitted-out.
One man working on a nearby road told the paper that the project had halted at the end of July. He said: “There were loads of them, now it’s empty. It must be to do with Evergrande. There’s no money anymore.”
The South China Morning Post
reported
in December 2022 that the facility would be a platform for the PwC Asia-Pacific Trust Leadership Institute.
The firm said at the time it was partnering with France’s Insead Business School, the USA’s Thunderbird School of Global Management, and the Danish Design Centre to create the curriculum for the institute.
The three institutions told the FT they were no longer involved in the project.
