Deloitte, CPA Get Taken to the Woodshed in Hong Kong
The Hong Kong Institute of CPAs doled out some fines on Nov. 13 to Deloitte Touche Tohmatsu and a Deloitte CPA for making some auditing faux pas. The firm and accountant Lee Po Chi each have to pony up $50,000 HKD ($6,384 USD) “for their failure or neglect to observe, maintain or otherwise apply professional […]
Big 4 Fears of Social Unrest in Hong Kong Were Totally Overblown
So, not only did fans of democracy have a successful protest in Hong Kong yesterday but the Big 4 — who felt compelled to take out an ad warning against assembly — were totally wrong about downtown festivities clogging up the center of business! OK, first of all, July 1st was a local holiday. So […]
Big 4 in Hong Kong Will Not Let Democracy Get In the Way of Providing Exceptional Client Service
As you may have heard, the Big 4 found it within themselves to unite in a recent advertisement taken out in three Chinese-language newspapers warning against pro-democracy protests that would clog up downtown and make it really hard to lube up the capitalist machine with trust and reliable audit opinions. Thanks to our pal Professor […]
Not Quite Layoffs Watch ’12: PwC China, Hong Kong
Does anyone think that this sounds strange? This week, accounting firm PricewaterhouseCoopers announced that to help avoid layoffs, employees in mainland China and Hong Kong will be offered a chance to take an additional 12 days’ holiday in the coming months, of which eight of them will be unpaid. The company is also launching a […]
Wow, Deloitte Nearly Went a Month Without Resigning From a Hong Kong-listed Audit Client
It's been 26 days since Deloitte resigned as the auditor of Daqing Dairy, which is an impressive streak considering the number of days between the previous two resignations was seven. This time around, the Green Dot is walking on SouthGobi Resources Ltd.: Deloitte & Touch LLP has resigned as an auditor “on its own initiative” […]
There Seems to Be Some Confusion About the Official Office Hours at Deloitte Hong Kong
Busy season probably hasn't started in earnest for many of you but many people are getting geared up. Herman Miller is getting more ass, caffeine intake is on the rise, and you're blowing off your loved ones. All signs that things are about to get real. For some people, however, forgetting about the rigor and […]
CEO Finds KPMG Hong Kong Auditors to Be Arrogant, Incompetent, Ignorant, Indifferent OH! And Unprofessional, Can’t Forget Unprofessional
It's not really that odd that someone would sue an auditor for $100 million. It's also not unusual that a company (usually through some PR flak) would publicly rebuke the auditor in a news report or press release. What is unique is a company issuing a press release announcing their lawsuit against their audit firm that […]
Big 4 Hiring Watch: PwC Going on the Offensive in China
You may remember that the Big 4 have BIG plans to go on a hiring binge here in the States and around the globe over the next few years. Just last year, Deloitte announced that they were adding 250,000 new employees over the next five years (although we were a bit skeptical as to what the final numbers would actually shake out). The latest in job creation PR, comes from PwC who has announced that they will be adding 15,000 new professionals in Hong Kong and China:
Accounting firm PricewaterhouseCoopers plans to hire 15,000 graduates and experienced professionals over the next five years in China and Hong Kong, it said Tuesday, as it capitalizes on growing business opportunities in the region, particularly mainland China.
The Big-Four firm said the new hires will be “across all lines of service,” adding it hopes to recruit more than 2,000 university graduates in the coming months in Hong Kong and China. The company is conducting campus recruitment in Hong Kong and three mainland Chinese cities this month.
Adding to this glowing news was Fitch Rating’s vote of confidence in the Big 4 who “should inspire confidence in terms of corporate governance” in Chinese companies. Right. Because it’s been clockwork so far.
PricewaterhouseCoopers: To Hire 15,000 In HK, Mainland Over Next 5 Years [Dow Jones]
(UPDATE) Ex-Grant Thornton Partner Gabriel Azedo Arrested in Spain
~ Updated includes statement from Grant Thornton International in final paragraph.
The South China Morning Post is reporting that former Grant Thornton partner, Gabriel Azedo was arrested in Spain, citing “people with knowledge of his detention.”
Gaby was on the lam for over year and has allegedly stolen HK$91 million (around USD$11.7 million) from those close to him, although one of his alleged victims doesn’t see this as a half glass full situation:
Yesterday one of his alleged creditors, racehorse owner Archie da Silva, said: “I don’t know whether to be happy or not. Just because he has been arrested doesn’t mean we will get our money back. It could be a very tedious process to get him back to Hong Kong.”
Arch’s concerns about bureaucratic nightmare that is extradition seem to be well-founded, as the article explains that getting Gaby back to Hong Kong really isn’t going to be easy:
“There is no bilateral agreement between Hong Kong and Spain but a transfer under multilateral treaties the two jurisdictions are signatories to, or under provisions in Spanish domestic law, are two areas that can be looked at,” the person said.
However, it is likely extradition could involve a lengthy legal and diplomatic process because Hong Kong has no Surrender of Fugitive Offenders Agreement with Spain.
Another officer linked to the case said: “It’s really up to Spanish authorities to decide whether to hand over the man to us. They could ignore our request as there is no legal obligation for them to hand over Azedo.”
We contacted Grant Thornton International to see if they wanted to comment but have yet to hear back. It goes without saying that this story is pretty strange/intriguing so, we’ll continue to follow the developments.
UPDATE, circa 10:45 am ET: A Grant Thornton International spokeswoman provided us with the following statement regarding the matter:
“We understand from media reports that Gabriel Azedo has been arrested in Spain and that he may be the subject of extradition proceedings to Hong Kong. He was a member of the global leadership board of Grant Thornton International until his dismissal in October 2009. Immediately following his disappearance, Ms. Angela Gardner, a close relative of Mr. Azedo, filed a lawsuit in Hong Kong against Grant Thornton International Ltd but this was subsequently dismissed by the Hong Kong court.
While the situation is highly regrettable for the individuals concerned, this is now a matter for them and for the Hong Kong courts.”
There’s Still Some Confusion About the BDO/Grant Thornton Situation in Hong Kong
The Wall St. Journal’s China Real Time Report stumbled upon the BDO/Grant Thornton poaching exodus merger situation (some may say, “clusterfuck”) in Hong Kong and we have no choice but to take issue with it.
The headline reads, “Missed It? Hong Kong’s Big Accounting Merger” and they mention the original report from the South China Morning Post. They manage to tone down the narrative but more or less tell the same story, full with quotes from BDO Hong Kong’s CEO Albert Au Siu-cheung:
On Wednesday, about a month after the joint press release, the South China Morning Post featured a front-page article describing the merger as a mass poaching of staff by BDO, “the biggest such raid in the city’s accounting sector.”
“It’s a bit sensational,” Au said, adding there was no raid. “Poaching is I pick a few heads here and there,” he said. “What you’re seeing here is the whole firm, meaning the partners and staff, coming to join us in BDO.”
In other words, “Sure it sounded bad but really it was just people making a choice”:
“There is no goodwill payment of any kind,” Au said. “I like to think they are voting with their feet. By that, I mean they think they’re joining a platform they have commitment to and believe in.” Clients were informed of the change and had the option to find another accounting firm. All clients have stayed with Grant Thornton for this merger.
Of course if someone at the Journal had rang up Grant Thornton International they would have likely gotten the story that we reported on last Friday which is that GTI booted the affiliate firm in Hong Kong and that BDO is kinda, sorta misrepresenting the situation:
They did not choose to leave, they were told to leave…[I]t is disingenous, or possibly wishful thinking, on the part of BDO to suggest that Grant Thornton is pulling out of Hong Kong. Many partners and staff from the former Hong Kong firm have already contacted the new Grant Thornton firm and clients will, of course, decide for themselves whether to move to BDO, which operates in the region as a loose affiliation, or remain with the more integrated, ‘one firm’ approach of Grant Thornton.
And of course there are the opposing press releases. The joint one issued by the BDO/GT firm dated October 7th that states:
Leading accounting firms BDO and Grant Thornton are pleased to announce that their firms have agreed in principle to merge their businesses and practise in the name of BDO Limited.
And the one from GTI, also dated October 7th that states something quite different:
Grant Thornton International gave its Hong Kong member firm notice on 20 September to leave the global organisation by March 2011.
With that mandate and probably few options, it appears that GTHK ran into the arms of BDOHK. BDO is using the Journal to disseminate a story that makes them look proactive and ambitious when in reality, none of this would even be happening if GTI hadn’t told their HK firm to get lost. The Journal – like the South China Morning Post – doesn’t mention that. Some people might consider that a major piece of the story.
We’ve put out a warning in the past about wandering into our corner of the sandbox without knowing what the hell you’re doing (or at least checking with us first) and you can consider this a friendly reminder about that. We’re more than happy to help because this accounting/accounting firm stuff is tricky when you don’t spend every single day reading and writing about it.
Grant Thornton: BDO Suggestion That We Are Pulling Out of Hong Kong Is ‘Disingenuous’
Following up on our post from Wednesday on the movement of 600+ Grant Thornton Hong Kong employees to BDO, we’ve received some correspondence from Grant Thornton International that clarifies the situation.
Turns out, a brief press release – whole thing after the jump – was issued by GTI last month that announced that the firm had given notice (confirming speculation in the comments) to its HK firm to GTFO by March 2011.
In email to Going Concern, GTI spokeswoman Hilary East broke it down for us:
They did not choose to leave, they were told to leave. Success in China is critical to the long term ambitions of G are committed to an integrated approach to the China market, which includes Hong Kong. While many partners in the former Hong Kong firm supported that strategy, their leadership was unable to agree amongst itself and separation became the only option. Grant Thornton China immediately set up a new firm in Hong Kong, led by a group of partners from the original Hong Kong firm with support from the 1500 partners and staff across mainland China.
The new firm that Ms East mentions, presumably is Jingdu Tianhua Hong Kong which we mentioned in our previous post that will adopt the Grant Thornton name “in due course.”
But what about this article in the South China Morning Post that quotes BDO Hong Kong’s CEO as saying, “The opportunity to have a massive admission of so much established accounting talent is rare.” ?
Ms East elaborated for us:
[I]t is disingenous, or possibly wishful thinking, on the part of BDO to suggest that Grant Thornton is pulling out of Hong Kong. Many partners and staff from the former Hong Kong firm have already contacted the new Grant Thornton firm and clients will, of course, decide for themselves whether to move to BDO, which operates in the region as a loose affiliation, or remain with the more integrated, ‘one firm’ approach of Grant Thornton.
If you read the South China article, you won’t see a single mention of GTI giving the Hong Kong firm notice, unless you count the extremely vague and misleading passage:
Grant Thornton chief executive Patrick Rozario, who led the move to BDO, said the team decided to shift because of Grant Thornton International’s directive for the mainland member firm to lead Grant Thornton’s Hong Kong office.
“We consider BDO, which is run independently in Hong Kong and China, respectively, is a model that suits us better,” Rozario said.
No mention of the GTI press release. No mention of the new firm that GTI was setting up. No mention that some staff and partners were considering their options. The headline (and sub-hed) in the article is even ridiculously misleading: “Troubled accounting firm’s staff jump ship Grant Thornton to close as BDO gains full team”.
And why the article even brings up Gabriel Azedo’s disappearance is mystifying. It’s more than hella-stretch to suggest that the trouble caused by him has anything to do with GTI’s or BDO’s moves. Plus hardly anyone (including the Financial Times) gives a damn any more about his whereabouts. The guy has been on the lam for over a year and is probably some accounting Kurtz figure by now.
Exodus Watch: 600+ in Grant Thornton’s Hong Kong Office Move to BDO
What in the name of Stephen Chipman’s dubious accent is going on here? Why would a firm shut down an office in an emerging financia osing six hundred partners and professionals to one of their rivals?
If you ask BDO’s Hong Kong Chairman and CEO Albert Au Siu-cheung, it has nothing to do with the disappearance of former GT managing partner Gabriel Azedo. It’s simply a once-in-a-lifetime opportunity that found its way into the lap of BDO:
From the South China Morning Post:
“The opportunity to have a massive admission of so much established accounting talent is rare. This will strengthen BDO’s competitiveness in the local accounting industry,” Au said. “This will also create a bigger mid-tier firm allowing listed companies a choice for auditing and professional services in future.”
Au said the recruitment would be completed by the end of this year, and all staff and partners would become part of BDO, while Grant Thornton would cease operation in Hong Kong. Grant Thornton’s clients – including 130 listed companies audited by the firm – had been notified of the change and most agreed to make the switch to BDO, Au said.
Au said lawsuits involving Grant Thornton’s missing boss, former managing partner Gabriel Ricardo Dias-Azedo, were not a factor in the move.
This is a head scratcher for sure. Although this isn’t the first time a major firm has had mysterio issues in H to the K. Last year, Ernst & Young’s office was raided for the firm’s involvement with Akai that ultimately resulted in the firm paying a rumored $400 million to settle the case.
We reached out to PR at Grant Thornton’s International office but since they’ve probably been at the pub for hours already, we’re still awaiting a response.
We did find this announcement from Grant Thornton International which states that the firm has a new “member firm” in HK but nothing about the movement of the 600 professionals:
Grant Thornton has announced the appointment of a new member firm in Hong Kong. The new practice, set up by Grant Thornton China, will begin trading as Jingdu Tianhua Hong Kong but will adopt the name “Grant Thornton” in due course. The new firm will be led by Daniel Lin, an established and highly regarded member of the accounting profession in Hong Kong.
[…]
The new firm plans to have a staff of over 100 people within 12 months. Significantly, it will be fully integrated with Grant Thornton China and be part of a network of 10 offices providing seamless access to 65 partners and over 1,500 professionals across mainland China and Hong Kong.
Ed Nusbaum, chief executive officer of Grant Thornton International explains, “Grant Thornton has long been committed to a strategy of an integrated approach to serving clients across the China market, including Hong Kong. This appointment of Jingdu Tianhua Hong Kong is a vital step in that strategy and our member firms, now over 100 in number, look forward to working with their new colleagues in Hong Kong.”
Okay, so a “vital step” includes the closing of an office the defection of 600 professionals and “130 listed companies” for an office with less than 100 people total? Can anyone – looking straight at you Ed – explain this? Since he’s pretty hard to nail down we’ll take your theories for now.
Accounting News Roundup: The Debate Over IRS-prepared Tax Returns; KPMG HK Senior Manager Arrested for Bribery; CFOs Starting to See Job Options | 04.09.10
• Should the IRS Fill Out Our Tax Returns? [TaxVox]
Some say, YES! At the very least the Service could get the ball rolling, “by filling in your wage income, exemptions, and standard deduction and perhaps even figuring some other deductions and credits. This…could be a huge benefit for those who file Forms 1040A and 1040EZ.” Naturally, the taxpayer has to approve the return prior the actual “filing” of it but this would potentially assist millions of Americans who are otherwise stumped by 1040s of any stripe.
The other side of this argument is that it will delay refunds:
Bob Weinberger, a senior fellow at the Aspen Institute Initiative on Financial Security and a former top executive at the tax prep firm H&R Block. Bob counters that the “fatal flaw” of such a system is that it could delay refunds for months. For many taxpayers, Bob argues, getting a check from IRS in April is a key to their annual financial planning, and postponing that refund would generate a huge backlash. Bob also said such a system would be a huge drain on IRS resources.
While this likely true, the root of the problem is the “check from the IRS is key to financial planning” part. If these people need the money so bad, they should adjust their withholding so they don’t pay in so much during the year. Perhaps that’s not an easy concept to grasp, so if we say “You’re giving the government an interest-free loan for 12 months,” that will help.
• HK charges KPMG man with bribery [FT]
Leung Sze-chit, a senior manager in the Hong Kong office, has been arrested on corruption charges after offering a co-worker a $12,280 bribe related to a client’s IPO. The FT reports that the firm learned of the situation via its internal hotline, “After investigation, the member of staff in question was suspended by KPMG and a report was then made . . . to the relevant authorities.” So yes, to answer some of you, people do call those internal hotlines.
• CFO Job Options Opening Up [FINS]
After hunkering down for the last couple of years or so, CFOs are starting to see some new job options. FINS reports that “Some felt loyalty to organizations in financial straits, while others hesitated to jump given uncertainty about potential landmines at other companies.” Now that growth is slowly creeping back, “some companies are likely to find they need a different type of executive in the role. And some CFOs may even find themselves in line for positions higher up the corporate ladder.”
Stephen Chipman Begrudgingly Wore Green on St. Patrick’s Day
Stephen Chipman’s blog post from last week got lost in the shuffle but you’ll be happy to know that you didn’t miss anything. Our lack of enthusiasm is not shared however, as the daily grind for a globe-trotting CEO seems to be enough to entertain some of the GT faithful. How do we know?
He shared one reader/fan’s thoughts this week, that’s how, “So, you really don’t just drink coffee and check e-mail!” While SC neither confirmed nor denied this particular allegation, one could assume that this is a big part of his day.
Moving on…Of the near 1,000 words in this week’s masterpiece, the only thing really worth mentioning is that the GT CEO spent his first St. Patrick’s Day in Chicago last week. And guess what Chi-town? You didn’t let him down; Steve-o was impressed.
This is my first time living in Chicago to experience St. Patrick’s Day; it was very interesting to see the Chicago community’s commitment to this holiday. Dutifully I wore my green tie, in respect of St. Patrick, which was very challenging to do for an Englishman. Nevertheless, I thought it appropriate…even though the Irish did beat the English at rugby a couple of weeks ago in the Six Nations Championships…which was a crushing disappointment…but I digress.
Digression! He’s really getting the hang of this. Maybe Chip’s blog readership is increasing?
The real question is what did SC see on St. Pat’s that piqued his interest? The green river? The turnout at the parade? The vast number of people vomiting in the streets? More details Stevey!
On the biz-nass front, SC did have a conference call with all the GT global leaders and he had to get up bright and early to get on the call at 8 am Chicago time. He did admit that this is NBD because when Steve-o was in China, he had to do the call in the god-awful morning hours to accommodate the BSDs in the U.S. and London.
Speaking of China (and digression), does anyone think Steve knows where mini-Madoff of Hong Kong Gabriel Azedo is? Dude has been missing for awhile.
Grant Thornton Named in New Writ, Partner Still MIA
Today in non-Patrick Byrne Grant Thornton news, the Hong Kong and International firms are now named in a new writ related to the scandal involving nowhere-to-be-found-former-partner Gabriel Azedo.
We imagine GT is less than thrilled with this latest development since they probably felt pretty good about firing Gabe’s ass the moment they found out he was a liability. The new writ states that the firms are ‘vicariously liable’ for $10.3 million.
There’s no indication that Eddie Nusbaum & Co. have put out an APB on Gabe in order to track him down and get all Jack Bauer on his ass. If it were us, we’d have every SD scouring the Earth* for this guy.
Until that happens, Grant Thornton is in deny ’til you die mode, saying that it will be ‘defended vigorously’ and that they expect to be ‘fully exonerated.’ God, will someone come up with a new press release for these scandals?
Grant Thornton linked to fraud claims [FT]
*You’re a Global Six Firm after all
Facing Writs, Ex-Grant Thornton Partner Bolts Hong Kong
A former Grant Thornton partner in Hong Kong is facing two writs from clients that total $12.1 million, according to the Financial Times.
Gabriel Azedo was reported by Grant Thornton Hong Kong*, after the allegations were made, to the HK commercial crime bureau for ‘inappropriate’ conduct.
Of course, when we hear “inappropriate conduct” we automatically imagine something lewd but alas, it’s about money:
Angela Gardner, a Hong Kong resident, is suing Mr Azedo and Senning International, registered in the British Virgin Islands, for breach of contract and breach of trust and demanding $9.8m. Grant Thornton is not mentioned in this suit.
Arthur and Betty da Silva, prominent local racehorse owners, have filed a writ against Mr Azedo and Grant Thornton Hong Kong seeking an account of trust assets allegedly held on their behalf by the defendants.
Mr and Mrs da Silva are demanding the transfer of “all such trust property” to them or restitution of not less than $2.3m.
On October 20, GTI realized that this guy was a liability, reported him to HK Fuzz and promptly terminated their relationship with him. Gabe, “a pillar of the city’s financial establishment”, was on GT’s global leadership board as recently as October 21, although he had not technically been a partner in the firm since 2008.
Oh so mysterious, Mr. Azedo. What were you doing over there in HK? The FT, being the bastions of journalism that they are, tried reaching him for comment but sounds like he’s is on the lam.
Although it doesn’t seem to be much more than a headache for GT — for now — we’re happy to see something out of the firm aside from another visit from the press release elves.
Ex-Grant Thornton partner faces writs [FT]
*Everybody knows that the offices are independent of each other right? The global firm is just something they say. Sort of like “Global Six Accounting Firm”. Which, for the record, was not mentioned once in this article.