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KPMG has been accused of “appalling” audit work that allowed a US-listed Chinese biotechnology company to carry out a “brazen” $400mn accounting fraud, the Hong Kong High Court heard on Monday.

The liquidator of China Medical Technologies, which collapsed in 2012 and whose senior executives are wanted on fraud charges in the US, said the Big Four audit firm failed to ask “obvious” questions that would have “easily” exposed the fraud.

These included not questioning a large related-party transaction by the group in 2006, when it acquired a Chinese diagnostics business worth $155,000 for $176mn, according to the liquidator.

It is suing KPMG on the grounds that losses at China Medical “flowed from” its negligent audit work, which gave the company accounts a clean bill of health in 2007 and 2008, according to Monday’s hearing. It is asking for as much as $454mn to cover allegedly misappropriated cash and dividends that were paid out to shareholders while the company was operating under a negligent audit, plus interest of more than $376mn, according to a person close to the matter.

likehelpful

Excellent summary thank you

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One has to wonder how this happens. 10/10 on the yikes scale.

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It’s always the biotechs/pharma doing the shady shit

Sounds like my bonus next year will be peanut 🥜

😂

Honestly, delist all Chinese companies until they’re up to accounting audit snuff that any western company has to abide by.

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