Written by Xie Yu
HONG KONG (Reuters) – PwC is making “concrete investments” to develop a high-quality, sustainable business in China, it said in a memo to staff, after Chinese regulators slapped its mainland unit with its biggest-ever fine on Friday.
PwC Zhongtian law firm was suspended for six months and fined 441 million yuan ($62 million) on Friday over its audit of bankrupt property developer China Evergrande Group.
Chinese authorities have been investigating PwC's role in the company's accounting practices since the country's securities regulator accused Evergrande in March of defrauding $78 billion in the two years to 2020.
“We want to acknowledge that this has been an extremely challenging time for you all,” said an internal PwC memo published late on Friday after the regulatory fine was announced and seen by Reuters.
“The PwC network has demonstrated its ongoing support for our China office throughout this time, making concrete investments to help us develop a long-term, high-quality and sustainable business in China,” the company said.
PwC did not immediately respond to a Reuters query on Monday.
“We know the coming weeks will not be easy as we develop detailed turnaround plans and begin to position our business for future success,” Hemion Hudson, the company's regional head for China, said in the memo.
As part of its corrective measures, PwC appointed Hudson, its global risk and regulatory leader, to replace Daniel Li, a senior partner in the China region who resigned due to his “previous responsibilities” as head of the local audit business.
The company said its management would help “resolve any questions or concerns” employees may have related to China's regulatory announcement.
“One of my areas of focus will be spending time with you and considering ways to further develop our talent, including investing in you as a workforce,” Hudson said in the memo.
The memo also said PwC China has a long history of providing high-quality audits.
“We do not believe that the actions of a small number of audit team members are representative of the work of the majority of PwC China's 18,000 professionals,” the company said.
Meanwhile, mainland and Hong Kong regulators are continuing to investigate PwC's Hong Kong branch's work on Hong Kong-listed China Evergrande Group, according to statements from the two countries on Friday.
The penalties announced by mainland Chinese regulators “mark an important milestone in cross-border enforcement against China Evergrande,” Hong Kong's Accounting and Financial Reporting Council said in a statement on Friday.
“Our independent investigation into China Evergrande will proceed in an orderly manner,” the company said.
(Reporting by Xie Yu; Editing by Sumeet Chatterjee and Sonali Paul)
