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Foreign Companies Defending Russia’s Energy Expropriations

Two aspirin, please. From the Economist:

GOOD news for the Kremlin: no longer must it work so hard to justify the destruction of Yukos, a bankrupt oil firm, or defend the predatory instincts of Gazprom, its gas giant. It is finding surprising support from large foreign companies. … Cutting deals with whimsical governments is par for the course for oil companies. But the withdrawal of an audit, let alone a decade’s worth of them, is a rarity. Like anybody connected with Yukos, PWC had been under enormous pressure. The Kremlin found PWC’s failure to unearth any flaws in Yukos’s accounts irksome. The authorities raided its offices and accused it of tax evasion and of collusion with the former management of Yukos to conceal profits. It risked the loss of its licence and began to lose lucrative contracts. “This case challenges the basic role of the auditor, which represents a key element in the development of a normal, functioning economy,” Mike Kubena, the firm’s managing partner in central and eastern Europe, argued only six months ago. Now he stoutly maintains that PWC revised its opinion not because of the threats, but in the light of new information—although he will not say what that information is, only that it came from Russian prosecutors, who hailed PWC’s decision. The change will strengthen the case against Mikhail Khodorkovsky, an ostracised oligarch and former boss of Yukos, who may now stay in prison well beyond his present eight-year sentence.