PwC China Faces 6-month Business Ban over Evergrande Audit

The logo of Price Waterhouse Coopers is seen at its Berlin office in Berlin, Germany, September 20, 2019. REUTERS/Wolfgang Rattay/File Photo Purchase Licensing Rights
The logo of Price Waterhouse Coopers is seen at its Berlin office in Berlin, Germany, September 20, 2019. REUTERS/Wolfgang Rattay/File Photo Purchase Licensing Rights
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PwC China Faces 6-month Business Ban over Evergrande Audit

The logo of Price Waterhouse Coopers is seen at its Berlin office in Berlin, Germany, September 20, 2019. REUTERS/Wolfgang Rattay/File Photo Purchase Licensing Rights
The logo of Price Waterhouse Coopers is seen at its Berlin office in Berlin, Germany, September 20, 2019. REUTERS/Wolfgang Rattay/File Photo Purchase Licensing Rights

Chinese regulators will likely impose a six-month business suspension on a big part of PricewaterhouseCoopers' auditing unit in mainland China, as a penalty for its work on troubled property developer Evergrande, according to five sources with knowledge of the matter.

PwC Zhong Tian LLP, the registered accounting entity and the main onshore arm of PwC in China, is expected to be hit with the ban in its securities related business, affecting its work for clients including listed companies, IPO-bound companies and investment funds on the mainland, said the sources who declined to be named as the information was private, Reuters reported.

A fine of at least 400 million yuan ($56 million) is expected to accompany the six-month ban, three of the people said. Combined with the business suspension, it would be the toughest ever penalty received by a Big Four accounting firm in China, the three people added.

In the most recent case of a Big Four auditor being hit with hefty penalties, Deloitte's Beijing branch in March last year was fined 211.9 million yuan and the branch's operations were suspended for three months after serious deficiencies were found in its audit of China Huarong Asset Management.

The PwC penalties, which are being mainly handled by China's Ministry of Finance (MOF), the primary regulator of accounting firms in the country, are yet to be finalised, said one of the sources.

"Given this is an ongoing regulatory matter, it would not be appropriate to comment," a PwC spokesperson said in a statement.

The MOF did not immediately respond to requests for comment.

PwC has been under regulatory scrutiny for its role in auditing China Evergrande Group 3333.HK since the developer was accused in March of a $78-billion fraud. PwC audited Evergrande for almost 14 years until early 2023.

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Chinese regulators are expected to announce PwC's penalties in the coming weeks, three of the people said.

The Financial Times first reported on Thursday that PwC China expected a six-month business ban by Chinese authorities as early as September.

Bloomberg in May reported that the firm faces a record fine of at least 1 billion yuan ($140 million).

The looming PwC penalties have led to an exodus of clientele, opens new tab and prompted cost cuts, opens new tab and layoffs, opens new tab at the firm in recent months, sources have said, clouding the firm's prospects in the world's second-largest economy.

As part of the penalties, PwC would be barred from signing off on certain key documents for clients in mainland China such as results and IPO applications as well as from carrying out other securities-related services, the sources said.

The business suspension could also affect PwC Zhong Tian, as a whole, from taking on new state-owned or domestically-listed clients in the next three years, in accordance with Chinese regulations.

Last year, domestic regulators reiterated state-owned firms and mainland China-listed companies should be "extremely cautious" about hiring auditors that have received regulatory fines or other penalties in the past three years.

In the past few months, at least 50 Chinese firms, many of which are state-owned enterprises or financial institutions, have either dropped PwC as their auditor or cancelled plans to hire the firm, according to stock exchange filings reviewed by Reuters.

Its largest mainland China-listed audit client, Bank of China 601988.SS, said on Monday it plans to hire EY, opens new tab for its 2024 annual audit. In June, the bank stated that its service agreement with PwC would only be for the interim report review.

PwC Zhong Tian recorded revenues of 7.92 billion yuan in 2022, making it China's highest-earning auditor that year, followed by EY, Deloitte and KPMG, official figures show.



Kuwait's KPC CEO Says Oil Production Capacity Exceeds 3 Million Bpd 

A general view of Kuwait City buildings, Kuwait, December 23, 2024. (Reuters)
A general view of Kuwait City buildings, Kuwait, December 23, 2024. (Reuters)
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Kuwait's KPC CEO Says Oil Production Capacity Exceeds 3 Million Bpd 

A general view of Kuwait City buildings, Kuwait, December 23, 2024. (Reuters)
A general view of Kuwait City buildings, Kuwait, December 23, 2024. (Reuters)

Kuwait's oil production capacity now exceeds 3 million barrels per day, Kuwait Petroleum Corporation (KPC) CEO Sheikh Nawaf Saud al-Sabah told reporters on Tuesday.

The country's oil production capacity was at more than 2.8 million bpd in June last year, Ahmad Jaber Al-Eidan, the CEO of KPC subsidiary Kuwait Oil Company (KOC), said at the time.

Kuwait aims to boost its oil output to 4 million bpd by 2035, having previously missed a goal of reaching that level by 2020.

Commenting on US President Donald Trump's views on fossil fuels, Sheikh Nawaf said there is no alternative to oil as a primary source of energy, "neither now nor in the future".

"Perhaps this is what President Trump and officials in the United States have realized, that there must be continued exploration and production of oil, and this is what we reflect here in Kuwait. We know that demand for Kuwaiti oil will increase in the future."

Trump signed a flurry of orders within hours of his inauguration on Monday intended to boost the United States' already record-high oil and gas production.

Al-Eidan said KOC aims to reach "full production" from discovered offshore fields within eight to 10 years.

Of the 4 million bpd of oil production capacity Kuwait is targeting by 2035, 350,000 bpd of capacity is expected to come from an area called the Neutral Zone, jointly operated with Saudi Arabia.

Kuwait last year said it had made a "giant" oil discovery with estimated reserves of 3.2 billion barrels. It said on Monday it had found 800 million medium-density oil barrels and 600 billion standard cubic feet of associated gas offshore.

Sheikh Nawaf said Kuwait has completed engineering studies for the Durra gas field and is proceeding according to a plan agreed with Saudi Arabia.