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Russia Renews Attack on PwC

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PwC literally getting iced in Russia (photo from www.pwc.com)

Today’s news that Russia has extended its campaign against the accounting group PricewaterhouseCoopers for its work related Yukos is another reminder that pandering with the Russian state simply doesn’t work. We learned this same familiar lesson in the case of Russneft, when fallen owner Mikhail Gutseriyev recanted his public comments, yet ended up having to flee the country while his company was delivered to Oleg Deripaska in gift wrapping. For PwC, it seems that the quid pro quo move of withdrawing ten years worth of Yukos audits to satisfy the prosecutors was not sufficient. Clearly they are being persecuted by people who don’t stop at a deal. From the Financial Times: “Russia widens PwC’s tax case

During hearings in a tiny court room in northern Moscow, representatives of the fifth tax inspectorate subpoenaed PwC and the Russian prosecutor-general’s office for a list of the global audit firm’s 146,000 employees and for a breakdown of its foreign entities. They demanded information on PwC offices consulting Yukos and affiliated entities on registering firms abroad, on creating trust agreements and “option” schemes to exert control over foreign entities, as well as information on whether they provided services for the “siphoning of assets out of Russia via oil trading firms”. A trio of judges granted their request in spite of the protests of PwC’s defence team, who said the request had nothing to do with the appeal case being heard and thus was in breach of procedure. “This is not a hearing about PwC in general,” one defence lawyer objected. “This is absurd.” The Moscow appeal court had convened to hear PwC’s appeal against a ruling earlier this year, which found that PwC Moscow had colluded with Yukos to sign off on “false” audits from 2002 to 2004, a ruling that covered a contract between ZAO PwC Audit in Moscow and Yukos. The ruling had looked to threaten the firm’s licence to operate in Russia, where it audits some of the country’s biggest blue chips, including Gazprom. The case has been seen by critics as an attempt by Russian officials to portray the government campaign against Mikhail Khodorkovsky’s Yukos as Russia’s Enron.