Developer hits PwC with audit cash claim

PUBLISHED : Friday, 12 May, 2006, 12:00am
UPDATED : Friday, 12 May, 2006, 12:00am

A Shanghai-listed firm is demanding 200 million yuan in compensation from PricewaterhouseCoopers (PwC) after the money disappeared from an account it had at a securities firm. PwC has denied any wrongdoing.

In a statement filed with the Shanghai Stock Exchange, Shanghai Waigaoqiao Free Trade Development, which manages and develops the Waigaoqiao bonded district in Pudong, said it had filed the complaint with the Shanghai branch of the China International Economic and Trade Arbitration Commission on Tuesday asking for a rebate of PwC's fee of 1.7 million yuan and compensation totaling 200 million yuan.

The statement said that PwC served as the firm's accountant in 2003 and 2004 and gave unreserved approval of its accounts for both years. But last June it discovered the account of money it had deposited with a Shanghai branch of Guohai Securities did not conform with that given by PwC and that the money had been embezzled.

It said that PwC had not completed a proper audit and should compensate it for the loss and that the arbitration commission had accepted the complaint.

A Shanghai Waigaoqiao official said the money had been embezzled by a former chief of its finance department and a former general manager of Guohai Securities, some of it being used to trade in stocks and the rest transferred to another company.

The two men were arrested and will go on trial in Pudong on Monday charged with embezzlement.

'Before we went to the arbitration commission, we sent a lawyer's letter to PwC over the issue but did not receive a response,' said the official. 'We do not have a schedule for the commission hearings and so do not know where the matter will be settled.'

PwC said it stood by its audits and that its work complied with the appropriate auditing standards. 'The firm will continue to ensure the audit opinions we provide are independent, objective, fair and of the highest quality,' it said.

PwC said it had not been notified of any filing. 'Professional ethics also prohibit us from commenting or divulging any information which are client-related, both present and past,' the firm said.