Russia's Federal Security Service is considering disallowing the world's "big four" auditing firms — Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG — to handle Russian state secrets due to concerns over the way they store data, business daily Vedomosti reported Tuesday.
The big four provide services for numerous Russian state-controlled companies in the aerospace, defense, energy and technology sectors, where their activities often touch upon areas deemed sensitive by the government.
Russian company K-konfident, which provides services for KPMG, has already been stripped of its license for working with state secrets, an unidentified federal official told the paper.
Next the Federal Security Service, a successor agency of the KGB, could revoke the licenses of Deloitte and EY, while simply letting PwC's expire, Vedomosti reported, citing employees at two of the big four companies, a federal official and an individual close to the FSB, none of whom were identified.
The security service has had issues with the auditors' access to sensitive information and data handling methods for some time, the paper said. To assuage those fears, it wants to force them to move their data servers to Russia and stop their foreign branches and headquarters from accessing them.
Since 2000 at least three unsuccessful attempts have been made force the companies to relocate their servers, a source close to the FSB told Vedomosti.
Obliging the auditors to put their servers in Russia is a tool for exerting pressure on them, as it opens up the possibility of the servers being impounded, a former employee of one of the big four firms told the newspaper. It is also considerably cheaper to store information outside Russia, he said.
KPMG told the paper it has long used servers located in Russia, while EY and PwC said their companies strictly comply with Russian legislation. Deloitte declined to comment on the report when contacted by Vedomosti.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.