Yukos shareholders sue accountants for millions

Accoutant PricewaterhouseCoopers faces a multimillion pound lawsuit from Yukos shareholders over its work as auditor for the embattled Russian oil company.
News of the court action in the US comes as Yukos teeters on the verge of bankruptcy - and as Russia itself is threatened by the prospect of its worst banking crisis since 1998.

Small shareholders in Yukos - led by the investment fund Roxwell Holdings - allege that PwC wrongly certified accounts which later left the company vulnerable to a government tax evasion investigation that now threatens it with insolvency. The accounting firm declined to comment yesterday.

Mikhail Khodorkovsky, the oil tycoon who was controversially jailed last year and is on trial for alleged fraud, has reportedly offered to hand over his controlling stake in Yukos to the government in lieu of tax demands against the company that could rise to $10 billion.

But there has been no official response to the proposal, stoking fears that President Vladimir Putin is determined to break up Russia's biggest oil firm in what critics allege is a politically motivated campaign.

Khodorkovsky and other senior executives are also being sued by the small investors, who have seen their shares plummet in value over the past 12 months. Their class action, filed in a New York court, alleges the defendants falsi fied Yukos's financial position and 'deceived the investing public' between February and October last year.

Separately, banking customers in Russia have been withdrawing deposits at alarming rates following the temporary closure of one bank by regulators.

Moody's, the ratings agency, last week warned that it might downgrade the long-term foreign currency ratings on several Russian financial institutions, amid fears of a full-blown run on the banks.

Alexei Kudrin, Russia's finance minister, denied this weekend that a banking crisis was looming. Problems with some banks would not spread throughout the whole system, he insisted.


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