Bend Me, Shape Me…PwC Folds Its Hand In RussiaBy Francine • Jun 24th, 2007 • Category: Pure Content
Looks like PwC is claiming the “we were duped” defense. (Do any of our attorney readers know which firm that defends the Big 4 came up with this brilliant strategy – make your client, who makes their money by selling knowledge and expertise, look dumb?)
“PwC has withdrawn its entire set of audit reports over 10 years for the bankrupt Yukos oil group, in a move that marks a significant climbdown by the global audit firm following months of Russian government pressure.
PwC said on Sunday it was withdrawing all its audit reports of Yukos from the years ending 1995 to 2004 because Russian prosecutors had unearthed new information that led it to believe statements provided by Yukos management in the past “may not have been accurate”. The sudden about-turn comes after a government pressure campaign that included police raids in March on PwC’s Moscow office and an ongoing criminal investigation into alleged underpayment of taxes by PwC.
The audit firm has also risked losing its licence to operate in Russia. The finance ministry agreed in April to extend PwC’s licence for another five years. However, in recent months PwC has been fighting the tax investigation and a recent court ruling that found it had colluded with Yukos in producing false accounts between 2002 and 2004. It has also lost two big Russian clients in this period.
PwC management said the decision to withdraw the audit had nothing to do with this pressure. But former Yukos managers and shareholders said they found that difficult to believe.
“I don’t think anyone is going to believe this is anything other than bowing to pressure from the Kremlin,” said Tim Osborne, managing director of GML, the main shareholder of Yukos. “I’m astonished to see such a complete lack of backbone in an organisation like that.”…
PwC said in its decision to pull the audits was “influenced by the fact that some former shareholders and management of Yukos are continuing to encourage others to rely on PwC’s audit reports”.
It could not say what specific piece of new information had forced it to withdraw the audits for the entire 10-year period. Only Yukos’s liquidator could disclose that information, it said.”