PracticeAuditPwC to stay put in Russia despite Yukos problems

PwC to stay put in Russia despite Yukos problems

Analysts warn that PwC stands to lose market share over Yukos scandal

PricewaterhouseCoopers
said it plans to stay put in Russia following allegations of irregularities in
its auditing of Yukos and accusations of tax evasion – both of which the firm
denies.

But analysts have warned that the firm stands to lose some of its market
share.

Earlier this month police conducted a search under prosecutor instructions at
the company’s central Moscow’s offices.

The search related to embezzlement charges against Yukos jailed former CEO
Mikhail Khodorkovsky, who is currently serving an eight-year prison sentence for
tax
evasion
and fraud, the Moscow Times reported.

On Tuesday the firm was slapped with a 16.8 roubles (£327,500) fine from a
Moscow court over its auditing of Yukos from 2002 to 2004.

The court case revealed that the firm had compiled two sets of accounts – one
for internal use that warned of illegal actions taken by Yukos; and another for
shareholders.

Prosecutors are also investigating the firm for 243 million roubles
(£4,721,300) worth of evaded taxes in 2002.

Research head of Renaissance Capital, Roland Nash, said the raid and other
incidents involving the firm have become ‘something of an occupational hazard in
Russia.’

‘But the market in Russia is enormous and companies are willing to take the
risks,’ he said.

Bank strategist of Alfa Bank, Chris Weaver, said PwC’s problems were unlikely
to affect other international auditing companies in Moscow.

‘These situations tend to arise in connection to specific issues: the
auditing of Yukos, in PwC’s case,’ said Weaver.

PwC’s managing partner in Moscow, Peter Gerendasi, said the firm planned to
appeal
the court’s decision.

Further reading:

Russia
court orders Khodorkovsky moved to Moscow jail for new investigation

Government investigators storm PwC in
Moscow

Moscow judge throws out case against
PwC

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