PwC and KPMG exit Russia and Belarus in wake of Ukraine invasion


PwC and KPMG have severed ties with their businesses in Russia and Belarus, becoming the first Big Four accounting firms to exit the countries since the invasion of Ukraine.

The moves are the most significant departures from Russia by global professional services groups since the war in Ukraine started last month and are likely to increase pressure on their peers, Deloitte and EY, to follow suit.

“Everyone knows the game is up in terms of being able to retain a network firm in Russia,” said an insider at one Big Four firm.

PwC, which operates a global network of locally owned firms, said it was cutting ties with its Russian member, which has 3,700 partners and staff across 11 locations in the country, as well as its 25-strong office in Belarus.

The businesses will continue to operate as standalone entities with no official link to the global brand.

PwC’s newly independent Russian and Belarusian operations will be renamed and be free to continue working for local clients as well as serving international companies with operations in the countries, said a person with direct knowledge of the arrangements.

KPMG said ending its association with its 4,500 people in Russia and Belarus was “incredibly difficult”. “This decision is not about them – it is a consequence of the actions of the Russian government,” KPMG said in a statement.

It said it was a “value-driven organization that believes in doing the right thing”, adding that it would provide support to employees in the countries.

The exits follow consultancy Accenture’s announcement on Friday that it had axed its 2,300-person Russian business. McKinsey, Boston Consulting Group and Bain & Company have halted work for Russian clients, while mid-tier accountant Grant Thornton has split from its Russian affiliate.

Leaving Russia has been complicated for the Big Four by their structure as federated networks of standalone national firms, owned by the partners in each country.

Conflicting laws had left the Big Four in a difficult position where their western operations faced penalties if they acted for clients hit by sanctions in the west but their Russian partners and staff could be punished by the Kremlin for complying with those sanctions by dropping work. Becoming independent will leave the Russian firms free to decide what work they take on.

PwC’s Russian clients include Sberbank, the country’s largest bank, state oil company Gazprom and Russia’s central bank. International clients with operations in the country include Mars, Toyota and Credit Suisse.

Under the new arrangements, Russian firms could continue to carry out the local component of international clients’ audits or tax work and receive referrals from their former international colleagues.

The audits of Russian groups with foreign operations, including state-owned entities, could still be carried out by PwC network firms provided they are not the target of sanctions and passed a “heightened risk assessment”, said the person with knowledge of the matter.

PwC will not work for Russian clients anywhere in the world if they are sanctioned by any jurisdiction, according to the person, meaning that its firms in the UK and Europe would not serve clients that are being targeted only by US measures, for example.

The process of dropping a member firm usually takes at least a year but is expected to be much quicker in this case. KPMG said it would work to finalize its departure within days.

PwC said it would “undertake an orderly transition for the business” and focus on the wellbeing of its Russian staff.

“Our main focus. . . continues to be doing all we can to help our Ukrainian colleagues and support the humanitarian efforts to help the people of Ukraine who have been devastated by this invasion, ”it added.



Source link

Leave a Reply

Your email address will not be published.