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PwC To Appeal Moscow Court Ruling Over Yukos Audit Irregularities

by Tatiana Smolenskaya,, Moscow

23 March 2007

Tax and audit firm PricewaterhouseCoopers has announced that it intends to appeal a decision by the Moscow ommercial Court to fine the company for a breach of audit rules, concerning its dealings with the bankrupt oil firm Yukos between 2002 and 2004.

The Moscow court imposed a fine of 16.8 million roubles (US$647,000) on PwC because it completed two audit reports on Yukos - one intended for the oil firm's shareholders, and the other for internal use, warning of illegal actions carried out by the company.

"We regret this decision by the court, we believe the claim has no legal merits and is based on a fundamental misunderstanding of the role and functions of the auditor," PwC said in a statement. "We will appeal this decision in the second instance court."

PwC has defended its decision to produce two separate audit reports on Yukos, saying that this was standard practice in the profession.

The Moscow authorities are also alleging that PwC evaded about 243 million roubles in taxes in 2002, and have conducted searches of the company's offices in respect of this investigation.

PricewaterhouseCoopers Audit (PwC) said recently that its operations were "unaffected" after representatives of the Russian Ministry of Internal Affairs and Prosecutor General’s Office seized documents from the firm’s Moscow office earlier in the month.

However, it issued a strong rebuttal of the Prosecutor's claims, and has claimed that the Russian authorities have overstepped their legal authority in the manner of their investigation.

"PwC strongly objects to the seizure of such information and has engaged legal counsel to ensure that applicable laws pertaining to the release of seized documents are respected and that all documents unrelated to the cases in question are promptly returned to PwC," the firm said on March 12.

"PwC strongly denies any wrongdoing in either the 2002 tax case or in relation to its audits, and continues to work to resolve both matters," it added.

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