PwC invokes Russian Constitution in defence

PricewaterhouseCoopers Russia is refusing to hand over documents to a Russian court, where it’s accused of helping bankrupt oil giant Yukos avoid taxes. In an unprecedented move, PwC has invoked the Russian constitution in its defence.

Article 51 of the constitution’s says the accused have the right to not testify or provide information against themselves.

In a statement on Thursday, PricewaterhouseCoopers Russia said:

“It has always been our belief that this case has no legal merits and is based on a misunderstanding of the role and functions of the auditor. The request for irrelevant and non-existent ”evidence“ relating to the PwC international network only confirms this belief.”

Valery Tutykhin of John Tiner & Partners says using this defence mechanism makes sense.

“I do not think they are crazy. I think what they are trying to invoke is in fact the European  conventional human rights because it's a big body of case law in the convention which essentially  says that a legal entity is equally is protected by the convention as a  private individual,” reminded Mr Tutykhin.

He says a Russian subsidiary of a multinational has no obligation to provide data on the structure and employees of its parent company.

According to him, “PricewaterhouseCoopers in Russia is an independent legal entity and under Russian law and Russian corporate act they can only furnish the documents which are in their custody. Frankly I do not think the full list of employees of the Dutch office or the New York office and some other offices are in their custody”.

According to the daily Kommersant, the prosecutors could launch a criminal case against the PwC management for refusing to provide the data and could fine the company. Tutykhin believes that is unlikely.

“I do not think it is really likely that the court will try to use its punishing powers although in theory they may. It is not the case they will look good  in the general context of the Yukos case,” he concludes.

PricewaterhouseCoopers has repeatedly denied any wrongdoing. But the investigation forced it to withdraw a decade worth of Yukos audits, saying it now has the information that could have influenced its reports, had it become known earlier.

PwC is the biggest auditor in Russia, employing more than 1,500 people. Its clients include companies such as the Central Bank, Gazprom and Alfa Group.