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PricewaterhouseCoopers' office in Moscow raided

Russian prosecutors and Interior Ministry officers searched the Moscow office of auditing firm PricewaterhouseCoopers on Friday in connection with its work with Yukos, the bankrupt oil company, and with PricewaterhouseCoopers' own tax filings.

Russian officials have compared the Yukos affair to the Enron scandal in the US, with ominous implications for the auditor.

A lawsuit filed by the Russian tax service last year questions PricewaterhouseCoopers' work on Yukos' tax filings, accusing the auditors of helping Yukos disguise profits.

The tax service is seeking about US$500,000 in fines; PricewaterhouseCoopers has denied any wrongdoing.

PricewaterhouseCoopers has been near the center of business growth and wealth in Russia, with a client list that includes the Russian central bank and large, powerful companies like the energy giant Gazprom.

The firm's client list for auditing and consulting includes around 2,000 companies that as a whole generate more than 50 percent of Russia's GDP, according to PricewaterhouseCoopers.

The inspections began on Friday morning, when two groups -- one from the prosecutor general's office, the other from the Interior Ministry -- arrived at the office.

The prosecutors gathered evidence for the criminal case against Yukos' former chief executive, Mikhail Khodorkovsky, Yekaterina Shapochka, a spokeswoman for PricewaterhouseCoopers, said, while the Interior Ministry officers searched for evidence in a tax case against PricewaterhouseCoopers.

Khodorkovsky is already serving an eight-year prison term for tax evasion and fraud; he now faces additional embezzlement charges.

In the case against PricewaterhouseCoopers, tax authorities sued for additional payments for 2002. The case concerned the firm's classification of expatriate staff as consultants rather than employees.

PricewaterhouseCoopers lost at trial and two appeals were denied. The firm paid US$11 million to the tax service. The company plans to appeal again, Shapochka said.

The press officials of the prosecutor general's office and the Interior Ministry declined to comment on the inspections.
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