PricewaterhouseCoopers on Tuesday lost its major Russian client, carmaker AvtoVAZ, following a YUKOS-related trial. Other clients of the audit firm pledge they will not drop the company. But its key partner, Gazprom, is yet to make the decision.
AvtoVAZ has dropped PwC as its auditor after 13 years of cooperation. The car maker said in a statement the board would recommend shareholders appoint Ernst & Young to conduct its 2007 audit. “A reputation criteria” has proved to be crucial in the decision to choose the auditor for the company, a source in AvtoVAZ told Kommersant. Members of the tender commission could not give PwC a high score after a recent trial against the firm.
A court late last month fined PwC some $650,000 over its audit of bankrupt oil group YUKOS in 2003 and 2004. The verdict said PwC assisted YUKOS in covering tax fraud. PwC denied any wrongdoing.
The court ruling and the decision from Russia’s largest carmaker come as the audit company waits for an extension of its operation license in Russia. Unofficial sources say the Finance Ministry, which decides the matter, may revoke the license given the latest developments.
PwC’s Russian division audits many of the country’s most prominent businesses some of which are state-owned. However, there are no signs that the companies will follow AvtoVAZ’s suit and decide not to renew contracts with the accountring firm. Russian power grid RAO UES says it cooperates with PwC under the current contract which is valid through 2009. The country’s largest bank Sberbank also denies any plans to drop PwC, saying it is satisfied with the auditor’s services.
A reaction from Gazprom, PwC’s key client in Russia, may prove to be decisive in the company’s future in the country. The gas giant is currently considering applications for the upcoming tender to choose the auditor for 2007, Gazprom said Tuesday.
AvtoVAZ has dropped PwC as its auditor after 13 years of cooperation. The car maker said in a statement the board would recommend shareholders appoint Ernst & Young to conduct its 2007 audit. “A reputation criteria” has proved to be crucial in the decision to choose the auditor for the company, a source in AvtoVAZ told Kommersant. Members of the tender commission could not give PwC a high score after a recent trial against the firm.
A court late last month fined PwC some $650,000 over its audit of bankrupt oil group YUKOS in 2003 and 2004. The verdict said PwC assisted YUKOS in covering tax fraud. PwC denied any wrongdoing.
The court ruling and the decision from Russia’s largest carmaker come as the audit company waits for an extension of its operation license in Russia. Unofficial sources say the Finance Ministry, which decides the matter, may revoke the license given the latest developments.
PwC’s Russian division audits many of the country’s most prominent businesses some of which are state-owned. However, there are no signs that the companies will follow AvtoVAZ’s suit and decide not to renew contracts with the accountring firm. Russian power grid RAO UES says it cooperates with PwC under the current contract which is valid through 2009. The country’s largest bank Sberbank also denies any plans to drop PwC, saying it is satisfied with the auditor’s services.A reaction from Gazprom, PwC’s key client in Russia, may prove to be decisive in the company’s future in the country. The gas giant is currently considering applications for the upcoming tender to choose the auditor for 2007, Gazprom said Tuesday.
