PwC was auditor for what was then one of Russia’s largest oil companies, Yukos. The Russian government took a serious disliking to Yukos and its then-president Mikhail Khodorkovsky, eventually putting the company effectively out of business (with key bits sold off to state-owned or state-controlled companies) and Khodorkovsky in jail. Now the Russian government is pursuing another case against Khodorkovsky, and it does not want PwC’s audits to be usable in his defense. So the Russian authorities claim that PwC has not been diligent in paying its own taxes. It has raided various offices and threatened to pull the company’s license to operate within the country.
Yesterday, PwC said that it was withdrawing its audits of Yukos from 1995 to 2004, after “new information came to light.” New information provided by the government. Will PwC say what that information is? It will not. Its management did offer an opinion on a related question:
PwC’s management said yesterday the decision to withdraw the audits had nothing to do with this pressure
That’s from the first page of the second section in yesterday’s FT. (Electronic version is in pay-per-view.) The reporter did not indicate whether it was said with a straight face or not. More here here here and here.
At any rate, the message is clear: Audits of businesses that are important to the Russian state will say what the state wants them to say. Caveat lector.
Feed: A Fistful of Euros
June 27th, 2007 at 12:54 pm
Whatever happened to “There is not enough money in the city of Chicago to make me change my mind!”?
June 27th, 2007 at 4:21 pm
[...] why anyone should trust their audits of any other big Russian firm.” A Fistful of Euros has more on this. Share [...]
June 27th, 2007 at 5:26 pm
PwC withdraws 10 years of Yukos audits…
In a move that many are condemning as a climbdown in the face of Kremlin pressure, PricewaterhouseCoopers has withdrawn all of the Yukos audits it undertook between 1995 - 2004:
“PwC now believes that information and representations which was pro…
June 28th, 2007 at 12:33 pm
Ah. Looks like we have another ’standard Russian risk factor’ to add to the seven or eight pages of ‘em that prospectuses already have.