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Report: Bomber of Moscow Airport Was an Accounting Student ‘Pumped Full of Drugs’

For the love of everything good and holy, we know some of you are depressed but please don’t resort to this:

Forensic experts have determined the identity of the suicide bomber who killed himself and 36 other people at Domodedovo airport – an accounting student from the North Caucasus republic of Ingushetia, Moscow media reports said Friday. The forensic researchers, going by DNA evidence taken from the scene, identified the bomber as a 20-year-old who apparently was ‘pumped full’ of drugs before he carried out the January 24 attack.

Accounting student was airport suicide bomber, Moscow media say [M&C]

Are Big 4 Audits in Russia Worthless?

Maybe not in so many words but this whole PricewaterhouseCoopers/Yukos situation has got some people wondering. The FT and the Wall St. Journal both published articles yesterday about the Mikhail Khodorkovsky and Platon Lebedev trial that is close (?) to wrapping up after 18 months. The two men are accused of embezzling mega bucks from Yukos, the Russian oil company.

Khodorkovsky and Lebedev’s lawyers are now claiming that PwC “acted improperly” by withdrawing ten years worth of audits under pressure from the Kremlin. Pressure, the lawyers say, in the form of “a prriminal investigations and a slew of court cases threatened to undermine its ability to operate in the fast-growing Russian market.” Basically, they threatened to throw PwC out of Russia. And it’s pretty difficult to grow your BRIC business without the “R” so PwC pulled the audits.

The firm claims that they up and changed their minds after the prosecutors showed them some evidence that led them to believe that they had been lied to by Yukos management.

Douglas Miller was the lead partner on Yukos – and who is also reportedly under investigation by the California Board of Accountancy – claims that the accusations are is more or less bullshit and that he stands by his decision to pull the audits.

However, Miller also said in his interrogation by prosecutors that “I believe these issues are being examined not so much by the
company’s Russian office managers, but by executives at PriceWaterhouseCoopers’ global, world level.” The Journal reported, “a PWC official said the decision to withdraw the audit opinions was made by Mr. Miller and others in PWC’s Russia office.” Miller is obviously speculating about what the BSDs at PwC Global were discussing over their muffins but obviously this is a problem.

As is pointed out in the FT, this doesn’t really bode well for audit firms – hell for anyone – trying to do business in Russia:

Regardless of where the truth lies, what is emerging is a situation where global audit firms operating in Russia may all be vulnerable to the double jeopardy of auditing the books of notoriously opaque companies, while being regulated by a government able to launch arbitrary attacks. This lose-lose situation could call into question the value of audits that have been hotly sought as a western seal of approval ever since Russian companies began to access international financial markets.


[I]t underlines how all who operate in Russian finance – from global audit firms to oligarchs to pension fund investors – may still be vulnerable as the legacy of the chaotic era of Boris Yeltsin and the ensuing Putin clampdown lingers on.

In other words, audits seem to have even less value in Russia than they do in the United States. And here in the U.S. more or less everyone agrees that, at best, auditors are of limited usefulness and at worst, they should be stacked alongside the Charmin™.

But as we said before, PwC (or any other firm that wants to take advantage of Russia’s expanding economy) has billions of reasons to buckle to any pressure put on them by the Russkis. And nobody blames them – not even people close to the Khodorkovsky and Lebedev defense team quoted in the FT saying, “We don’t hold anything against them: they had a gun to their heads.”

Wall Street Journal and Financial Times Expose Serious Allegations of PwC Wrongdoing in Auditor’s Reversal on Yukos [Khodorkovsky & Lebedev Communications Center]
Oil Tycoon Says PWC Caved to Pressure [WSJ]
Russia: Chain retraction [FT]
More on PwC and Yukos:
Never Say Nyet – PwC and Moscow Update [Re: The Auditors]