Construction Halt on PwC Project 'Reimagine Park' in China

The auditing giant PwC has temporarily halted the construction of its ambitious 'Reimagine Park' campus on the Chinese island of Hainan. Planned as a training institute to build trust at the executive level, the project is now under strategic review. The reason for this is sanctions imposed by the Chinese government following audits of the insolvent real estate conglomerate Evergrande. Construction on the campus at Haitang Bay, an idyllic bay near the city of Sanya, began last year. According to well-informed sources, the work was stopped in recent weeks. The campus was scheduled to be completed by next year and to feature a 'Net Zero' building complex on a 6.5-hectare site. The background to the construction halt is financial sanctions and a six-month ban on PwC China. The long-time auditor of Evergrande supported reports that, according to Chinese authorities, falsely reported high revenues for years. These irregularities led to Evergrande's insolvency in 2021. On Friday, Chinese authorities imposed a fine of 441 million yuan (62 million dollars) on PwC China, alleging that the company concealed or even tolerated fraud during Evergrande’s audits. This crisis has led to a significant loss of clients, prompting PwC China to cut staff and reduce costs in anticipation of financial losses. PwC's ambitious construction project in Sanya was originally expected to cost over one billion yuan and was also open to Chinese students and professionals. Planned in collaboration with renowned institutions such as the Insead Business School and the Thunderbird School of Global Management, these partners have since withdrawn from the project. Also in Hainan, Evergrande invested billions in building the 'Ocean Flower Island' in Danzhou, an artificial island paradise, which had to be partially dismantled due to corruption and environmental scandals. The suspension of PwC China marks a dramatic turning point for the country's largest accounting firm and led to the appointment of Hemione Hudson as the new head. She promised to implement necessary restructurings and steer the business back into calmer waters. PwC China assured its clients that the company would resume year-end audits after the suspension ends in spring 2025. Hudson emphasized that the international leadership would continue to make 'tangible investments' in the Chinese subsidiary to restore trust.