A Russian appeals court has given PricewaterhouseCoopers' Russian firm the right to appeal a tax evasion case involving the firm's audits of the bankrupt Yukos oil company.
The ruling by the Federal Arbitration Court reverses a lower court order in January that could have threatened PwC's auditing license in Russia, according to the Wall Street Journal. PwC will now be able to appeal a ruling that found PwC was an active participant in aiding Yukos's tax evasion for 2002, 2003 and 2004. The Russian government has also filed tax evasion claims against the firm itself. Under pressure from authorities, PwC was forced to withdraw its audits of Yukos last year.
Yukos, which went bankrupt in 2006, was charged by the Russian government with more than $7 billion in tax claims for misusing tax havens inside Russia to reduce its tax burden. Several foreign courts have ruled that the tax charges were politically motivated, aimed at wresting control of the company away from former Yukos head Mikhail Khodorkovsky.
"We had issued unqualified audits in those years for Yukos, and they claimed that our audits were defective and that we should have uncovered tax evasion schemes by Yukos and reported it," said PricewaterhouseCoopers spokesman Mike Ascolese.
He acknowledged that PwC withdrew its Yukos audits for those years, but said the withdrawal was unconnected to the tax case. "We discovered new information concerning the financial reports at Yukos," he said. Ascolese also acknowledged that there is a separate case against PwC on the firm's own tax status in Russia. He said that too is an unconnected case, but is also in the appeals process.
