Russia inspects PwC office over tax claims, YUKOS

MOSCOW, March 9 Fri Mar 9, 2007 7:39am EST

MOSCOW, March 9 (Reuters) - Russian police inspected the Moscow office of PricewaterhouseCoopers (PwC) [PWC.UL] on Friday over back-tax claims and a criminal investigation into the auditors' former client YUKOS YUKO.MM, a spokeswoman for PwC said.

"There are checks from the interior ministry to do with tax claims for 2002," the spokeswoman said, adding PwC were accused of owing the Russian tax authorities around $11 million.

"The tax authorities did not recognise our expenses to do with paying for foreign experts' services," she said.

PwC denies it owes outstanding tax. The firm had lost three legal cases over the tax claims and intended to appeal to the Higher Arbitration Court, she added.

"The second inspection is by the Prosecutor-General's office and is linked to the continuing criminal investigation into the activity of YUKOS," the spokeswoman said.

No-one at the federal law enforcement authorities in Moscow could be reached for comment.

Last December, Russian tax authorities filed a suit against the local branch of PwC accusing it of producing a false audit for YUKOS, once Russia's largest and most profitable oil firm.

Responding to that suit at the time, PwC said it acted strictly in line with Russian law and was ready to defend its position in court.

But the PwC spokeswoman said the checks on Friday were not related to the suit and that prosecutors were seeking data to help with their inquiry into YUKOS.

YUKOS's main shareholder Mikhail Khodorkovsky is serving eight years in prison for fraud and tax evasion and his firm's biggest assets have been auctioned off to pay off huge back tax demands.

Khodorkovsky says he and his firm are the targets of a Kremlin campaign to punish him for his political ambitions. Officials deny any political motive.

PwC audits the accounts of many major Russian oil and gas firms. In December, the firm said its clients were responsible for one-half of Russia's overall gross domestic product.