KPMG caught between a rock and a hard place in China Medical liquidation battle
Current and former partners of the audit firm face contempt charges in Hong Kong — but say Chinese law prevents them from producing the documents demanded
Beijing — Several current and former KPMG partners are facing contempt proceedings in a Hong Kong court, as liquidators for a failed US-listed Chinese company step up their action against the auditor over its refusal to produce Chinese working papers. The contempt summons, seen by Reuters, names 91 individuals and was issued on November 22. It is the latest move in a battle surrounding the 2012 collapse of China Medical Technologies, whose founders are being prosecuted in the US for allegedly defrauding investors out of more than $400m. The writ highlights a long-running tussle between China, which is reluctant to hand over mainland documents, and overseas regulators that demand such papers — leaving auditors trapped between upsetting Beijing or facing offshore penalties when dealing with foreign-listed Chinese firms. KPMG was ordered by Hong Kong’s High Court in 2016 to give audit papers, correspondence and records on China Medical to Borrelli Walsh, liquidators for the one-time Na...
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