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. Last Updated: 07/27/2016

PwC Office Search Declared Illegal

Itar-TassThe Tverskoi District Court ruled that no court warrant had been obtained for the March 9 search of PwC's offices.
A Moscow court on Friday declared that a police raid of PricewaterhouseCoopers' audit office was illegal.

The Tverskoi District Court said the search by Interior Ministry investigators had not been sanctioned by a court warrant.

The court ordered the authorities to rectify the violations.

PwC spokeswoman Vera Totskaya expressed satisfaction with the court's decision Sunday, and said the company had always believed the search "was unjustified and infringed on audit confidentiality, which is protected by Russian law."

The March 9 search of the company's offices was connected with a PwC audit of Yukos from 2002 to 2004, and a separate investigation into whether PwC evaded taxes of 243 million rubles ($9.3 million) in 2002.

Friday's court ruling came one day after state-owned Rosneft bought Yukos production unit Tomskneft for $6.8 billion in the penultimate auction for the bankrupt firm's oil units. Most of Yukos' assets have been sold to state-linked energy firms.

A lawsuit filed by the Federal Tax Service last year questioned PwC's audit of Yukos' tax filings and claimed that the auditor had helped Yukos disguise profits.

In December, the tax service demanded $145,000 from PwC, the amount that Yukos had paid for the audit.

In March, the Moscow Arbitration Court increased the fine to $480,000.

PwC has consistently denied any wrongdoing.

In the case against PwC over its own tax payments, authorities sued for additional payments for 2002, which investigators said the company had incurred for classifying its expatriate staff as consultants rather than employees.

Since that ruling, state-run Gazprom and Sberbank have retained PwC as their auditors, but oil pipeline monopoly Transneft dropped the company in favor of KPMG, and carmaker AvtoVAZ said its board would recommend that shareholders replace PwC with Ernst & Young.

PwC says it audits more than 2,000 companies countrywide, which together account for nearly half of gross domestic product.