PwC’s Political Contributions At Work – Update

It looks like PwC dodged a bullet, for now. They’re dancing with joy as far away as China!

MOSCOW, April 4 (RIA Novosti) – “The United States expects Russia to treat U.S. companies doing business in the country fairly, including embattled auditor PricewaterhouseCoopers (PwC), the U.S. Commerce Secretary said Wednesday.

PwC, a respected international auditing firm, has been accused by Moscow city tax officials of helping the bankrupt Yukos oil company evade taxes, and it may as a result lose its operating license in Russia. Carlos Gutierrez, who arrived in Moscow Monday to discuss Russia’s bid to join the World Trade Organization (WTO) and bilateral investment, said after a meeting with Russia’s economics minister, German Gref, that Washington expects any investigation into alleged violations of Russian tax legislation by PwC to be even-handed. The Moscow Arbitration Court held hearings into the PwC case March 20 and ruled that the company violated professional standards while conducting audits for Yukos in 2002-2004. It ordered the company to pay a $480,000 fine to the federal budget. The court decision could provide grounds for the Finance Ministry not to renew the auditor’s auditing license, which expires May 20.”

As I posted here, PwC, as well as the other Big 4 firms, are heavy contributors to both Democratic leaders on key committees and George Bush. Comes in handy when you need an advocate.

Unfortunately for them, I would lay my bets on PwC losing its license. They’ve already lost clients, including for more reasons than just their troubles with the government.. The titans of Russia’s big companies know what’s coming down the pike , you can be sure and are getting a jump on the necessary change. Can PwC pull a switcheroo like they tried in Japan and set up another firm with the refugees from their current Moscow office and start all over again? Maybe… But they’ll lose clients in the deal as they did in Japan, lose credibility, which is their stock in trade and give up one of the fastest growing markets, albeit one of the toughest ones to operate in, to their competitors.

I’ll give them this… They have a lot of chutzpah in light of the situation. What are they going to do with all this office space?

“PricewaterhouseCoopers Makes Russia’s Biggest Ever Rental Deal
In spite of the losing in the suit brought against it by the Federal Tax Service and its first loss of a major client, AvtoVAZ, auditing company PricewaterhouseCoopers believes in its future in Russia. The company announced yesterday that it has rented 32,500 sq. m. for its own offices in the White Square business center, which is still under construction on Lesnoi St. in Moscow.”