Just when you thought Deloitte's China rash had gone into remission, some investors come along who don't think too highly of the audit performed by D to the T. In this particular case, the investors are a group of investment funds including Columbia Pacific Opportunity Fund LP and Fir Tree Value Master Fund LP who, according to the Bloomberg report, are trying to recover some losses they had in a NASDAQ-listed company called ChinaCast Education Corp:
“Deloitte recklessly failed to conduct even the most basic audit procedures and blatantly violated numerous accounting standards1,” the funds said in the Feb. 15 complaint, citing losses in the “tens of millions.”
The company took out massive loans and pledged its assets to third parties without making disclosure to investors, according to the complaint. Its former chief executive officer also engaged in “brazen looting” by diverting $35 million in cash to parties outside the company, the funds alleged.