PricewaterhouseCoopers Russia (PwC) was involved in the tax evasion
scheme of a failed audit client. This month, the Moscow Region
Federal Arbitrazh Court reversed an earlier First Instance and
Appellation Courts ruling brought against the firm by Russian tax
authorities. The case has now been terminated.
Tax authorities were seeking $600,000, which amounts to the
audit fees PwC collected for the 2002 audit of former oil company
Yukos. The tax collector said the firm should have been aware of
and alerted authorities about Yukos’s tax affairs, which were
determined to be illegal by a Russian court.
PwC appealed the earlier ruling and said it was pleased with the
“The court has made the correct ruling in this case,
particularly given that Yukos no longer exists. This is good news
for PwC, as well as for the Russian and international business
“As always, we continue to focus our energy on growing and
developing our business in Russia,” the firm said in the
Yukos was created in 1993 during a period of privatisation of
state oil assets. It became one of the world’s largest private oil
companies and was responsible for about 2 percent of global oil
production at its peak.
In August 2006, the company was declared bankrupt by a Russian
court and was liquidated in October 2007.
Russian tax authorities claimed PwC issued two different audit
opinions in 2002 – one for investors and one for Yukos management,
often referred to as an internal control report.
The authorities alleged the difference in opinion proved that
PwC was in collusion with the Yukos management and helped the
company evade tax payments.
PwC previously said that issuing different opinions to the two
groups was in line with Russian regulations.
The Big Four firm reported fee income of RUB7 billion ($264
million) in the year ended 30 June 2008.