The UK has been banning the export of various services, such as, accountancy, public relations and management consultancy to Russia, UK foreign minister Liz Truss has said.
“Cutting Russia’s access to British services will put more pressure on the Kremlin and ultimately help ensure Putin fails in Ukraine,” Truss said. The new measures mean Russia will be cut off from a wide range of the UK’s professional services, she added.
“By restricting Russia’s access to our world-class management consultants, accountants and PR firms, we’re ratcheting up economic pressure on the Kremlin to change course,” business secretary Kwasi Kwarting said.
Accountancy and management consultancy firms came under huge pressure to close their Moscow offices following the Russian invasion of Ukraine on February 24.
The Big Four accountancy firms – EY, PwC, KPMG and Deloitte – have all since said they are closing their Russia businesses. However, the pull-out has been slow, and none of the firms have fully cut off their Russia firms from their international network yet. A spokesperson for accountancy firm Mazars, which has committed to retaining its Russia operations for now, said the firm would look carefully at the details of the new measures.
The firm said in a statement: “Mazars in Russia employs 500 people and our clients in this region are essentially international companies with operations in Russia. Going forward, we will solely focus on these international clients who need our help to navigate the consequences of this crisis and comply with international and local regulations and sanctions. Our Mazars team in Russia will continue to support these clients for the time being.” Professional services giant Accenture said last month that it had completed the transfer of its Russian business to local leadership, that is, to hand over its firm to its local management. At the time, the new firm was given until May 9 to change its name and a further two weeks to finalise its rebranding, Accenture said.
Managing director for reputation and influence at the Institute of Chartered Accountants in England and Wales (ICAEW), Iain Wright, said: “Many of our individual members and member firms have already taken proactive steps to disengage as appropriate with Russia. ICAEW is confident that chartered accountants, whether in practice or in business, will be ready and willing to play the fullest possible role in making these further measures effective.” Also closing down its operations in Russia is Credit Suisse. The Swiss bank placed its staff on paid leave as it looked to wind down, its chief executive Thomas Gottstein said. The bank in Russia had a staff of around 125. International banks have had to take tough decisions on cutting jobs in Russia.
Both Bank of America and JPMorgan paid their employees four months’ salary in advance, amid a broader retreat from the country. Goldman Sachs and Morgan Stanley have relocated the majority of their Russia-based employees to other countries.
While the majority of international banks including Societe Generale, JPMorgan, Citigroup, and Goldman Sachs had unveiled plans to pull back from Russia, quitting the country has been complex. Banks have been unwinding a web of loans and positions in Russia and some have yet to formally close their operations.
Back in March, in a note to clients, Credit Suisse had said that it was not pursuing any new business in the country and was assisting clients in winding down positions. It was also relocating staff out of Russia the document had added. Credit Suisse slumped to a loss of 273 million Swiss francs ($284m) in the first quarter, and booked CHF703 million in legal costs and CHF206 million related to its Russia exposure.
Andy Jalil
andyjalil@aol.com
The writer is our foreign correspondent based in the UK
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