Three out of Four Global Accounting firms are exiting from Russian Market
PwC’s Russian clients reportedly include Sberbank, Gazprom, and Russia’s central bank. Accountancy giants PwC, KPMG, and EY have announced they are stopping operations in Russia amid the ongoing attacks on Ukraine.
PwC and KPMG both announced the move on Sunday, while EY followed the next day. Deloitte – the other “Big Four” accountancy giant – is yet to say whether it’s exiting Russia.
Companies have been scrambling to cut ties with Russia since it invaded Ukraine on February 24. Some have shut their Russian offices, closed stores, or ended online services or sales.
PwC, KPMG, and EY are global networks of individual firms which are separate legal entities, a structure required to comply with laws stipulating that audit firms have to be locally owned and independent.
“As a result of the Russian government’s invasion of Ukraine we have decided that, under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the network,” PwC’s statement said. PwC Russia has around 3,700 employees across 11 cities in Russia.
PwC Russia’s clients include Sberbank, which is the country’s biggest bank, Kremlin-controlled energy giant Gazprom, and the Central Bank of Russia, The Financial Times reported.
Sberbank and Russia’s central bank have both been targeted by Western sanctions, aimed at hobbling Russia’s economy. PwC did not immediately respond to Insider’s query about whether these companies were among its clients.
PwC is also pulling out of Belarus, where it has a team of 25 staff, per The Financial Times.
PwC said that it would undertake an “orderly transition” and focus on the wellbeing of its staff at PwC Russia. Its Russian firm said in its own statement that, though it was leaving the PwC brand, it was “confident” in its business.
PwC added it was “doing all we can” to help its more than 750 employees in Ukraine and support humanitarian efforts.
KPMG said in a statement that its firms in Russia and Belarus, which between them have more than 4,500 employees, would leave the KPMG network. It told The Financial Times that this would be finalized within days.
KPMG said that ending its working relationship with these employees was “incredibly difficult” but that “this decision is not about them – it is a consequence of the actions of the Russian Government.”
“We are a purpose-led and values-driven organization that believes in doing the right thing,” it added.
EY said Monday that it was restructuring its Russian member firm, which has more than 4,700 employees, to separate it from EY’s global network. It added that EY would stop serving Russian government clients, state-owned enterprises, and sanctioned entities and individuals.
EY’s statement did not say whether it was
EY said that it was providing financial support, relocation help, transport, and immigration services to roughly 700 colleagues in Ukraine and Eastern Europe.
Severing ties with their Russian partners allows the accounting giants to avoid falling foul of sanctions against Russia because of the work of their Russian partners, which could have been targeted by the Kremlin if they complied with the sanctions, The Financial Times reported.
McKinsey and Company said Thursday that its Russian offices would remain open but that it wouldn’t take on new clients and would stop existing work with both government and state-owned entities.
“After our remaining engagements in Russia conclude, all client service in the country will be suspended,” it said.
Accenture said Thursday that it was discontinuing its business in Russia, where it has 2,300 colleagues, while Boston Consulting Group said Friday that it was suspending work with Russian clients but that its Moscow office was still open.
Deloitte and EY did not immediately respond to Insider’s request for comment about whether they were withdrawing their operations in Russia and Belarus.
