EY exits Russian operations over Ukraine invasion
EY has axed its 4,700-person business in Russia, becoming the third of the Big Four accounting firms to announce a divorce from its operations in the country since the invasion of Ukraine.
PwC and KPMG had announced similar moves on Sunday night, citing the Russian government’s actions in Ukraine. The other Big Four firm, Deloitte, said last week that it was reviewing its “business and presence in Russia”.
The withdrawals are the most significant exits of professional services firms from the country since the conflict in Ukraine began last month.
“In light of the escalating war, the EY global organisation will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world,” EY said on Monday.
The firm said it had begun a restructuring to separate its Russian member from the group. “This is not something we take lightly,” it said, calling the decision “heartbreaking” and the war “shocking and abhorrent”.
EY’s Russian staff account for a little over 1.5 per cent of its global workforce of 299,000. It also employs 700 people in Ukraine.
Between them, EY, KPMG and PwC had more than 12,000 staff and partners in Russia.
The Big Four are structured as networks of locally-owned partnerships meaning that their Russian operations will continue to exist as standalone entities under new names and will be free to work for both Russian and international clients.
Russian businesses are not prohibited from working for entities placed under sanctions by western governments. Complying with western sanctions is an offence under Russian law and auditors in the country also face significant penalties if they resign from contracts with state-owned entities, said people in the industry.
The Big Four, which provide tax and consulting advice as well as accounting and audit services, are generally free to refer work to independent firms in countries where they do not have a presence.
Accountants and consultants that have announced they will pull back from Russia are likely to face scrutiny this week over the detail of their plans. Neither PwC nor KPMG committed to ending overseas audit work for Russian state-owned entities, for example.
Consultants McKinsey and Boston Consulting Group announced last week that they were suspending work for Russian clients but said they would continue work on some existing projects in the country and have kept their Moscow offices open.