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The Times: Investigators storm into Moscow offices of PwC

Tony Halpin in Moscow
March 10, 2007

The Moscow headquarters of PricewaterhouseCoopers (PwC) was raided yesterday by two teams of investigators from the Russian Government.

Ten Interior Ministry police officers demanded access to documents relating to allegations that the accountancy firm owes back taxes of 290 million roubles (£5.7 million) and investigators from the Prosecutor-General’s Office arrived to search for papers linked to its criminal inquiry into the fallen oil giant Yukos.

PwC was the auditor for Yukos, which was bankrupted by the Kremlin after being found guilty of fraud and tax evasion. Prosecutors laid fresh money-laundering charges last month against Mikhail Khodorkovsky, the former chairman of the oil company, alleging that he stole $25 billion (£13 billion) from the company. He is serving eight years in jail for fraud and tax evasion.

A spokeswoman for PwC said that both teams of officials had been at the company’s offices all day after arriving unannounced. Nobody had been arrested and no documents had been removed.

“One group is looking for files relating to 2002 in the framework of the tax claim against PwC,” she said. “But we have already paid a fine in relation to this issue, so it’s not clear what they are looking for.

“The second group is looking for additional files relating to Yukos. It concerns us indirectly because we were the auditors.”

PwC denies that it owes any outstanding taxes but it has lost three legal hearings against the claims by the Federal Tax Service. The spokeswoman said that the company paid a fine of 290 million roubles in February after losing the third hearing.

Later the Interfax news agency quoted a statement in which the Interior Ministry said that it had begun a preliminary criminal inquiry into suspected tax evasion by PwC executives amounting to 243 million roubles.

The company is already under investigation in relation to Yukos, formerly the biggest and most profitable Russian company. The tax authorities filed a legal action in December accusing PwC of producing false audits for Yukos between 2002 and 2004.

PwC has denied the allegations and insisted that it acted in accordance with Russian law and professional standards. The company spokeswoman said that the visit by prosecutors yesterday did not relate to that case but to the Government’s continuing investigation into Yukos.

Khodorkovsky insists that he and his company are the victims of a Kremlin campaign to punish him for supporting opponents of President Putin. The Government denies any political motive.

PwC audits the accounts of many leading Russian companies, including the state-owned Gazprom and the electricity monopoly United Energy Systems. The firm said in December that its clients were responsible for half of Russia’s gross domestic product.

Official scrutiny of PwC’s operations has uncomfortable echoes of government pressure applied to other British companies in Russia. Shell was forced to concede a majority stake in the massive Sakhalin-2 oil and gas project to Gazprom in December after being threatened with prosecution by the Natural Resources Ministry.

The environmental watchdog has also threatened TNK-BP with the loss of its licence to develop the giant Kovykta gas-field in Siberia.

The purging of Yukos

— Mikhail Khodorkovsky, the former chairman of Yukos, faced new money-laundering charges last month. Prosecutors accuse him and his business partner, Platon Lebedev, of stealing $25 billion from the company

— Both men are serving eight years in prison and the new charges could add 15 years

— Vladimir Pereverzin, a former Yukos director, was jailed for 11 years this week after being found guilty of embezzling £6.6 billion

— Yukos’s remaining assets are to be auctioned, starting with its 9.44 per cent stake in the state-controlled Rosneft oil company on March 27 Rosneft bought Yukos’s biggest production facility in a 2004 auction widely dismissed as a farce

— The court-appointed Yukos receiver, Eduard Rebgun, was nominated this week for a seat on the board of Rosneft, along with the head of the Yukos refining and marketing division, Sergei Tregub

http://business.timesonline.co.uk/tol/business/economics/article1494931.ece

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