EY Joins Big 4 Exodus From Russia

In the span of 24 hours or so, we’ve gone from the Big 4 practically saying nothing about separating themselves from their member firms in Russia over the country’s attack on neighboring Ukraine to three of the four—PwC, KPMG, and now EY—saying their affiliates in Russia would be leaving their global networks.

EY released the following statement earlier this morning:

As the shocking and abhorrent war in Ukraine continues to escalate, our priority continues to be the safety of our people in Ukraine, Eastern Europe and across the region, and actively supporting those impacted. We continue to support our 700 EY colleagues with financial support, relocation, transportation and immigration services. In addition, the entire global EY family has come together to offer refugee support, including logistical assistance, volunteer work and financial donations to the wider Ukrainian community.

In light of the escalating war, the EY global organization will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world. EY has commenced a restructuring of its Russian member firm to separate it from the global network.

This is not something we take lightly. This is heart-breaking as we have over 4700 colleagues in Russia, who have been a part of our global network for over 30 years and worked side by side with our global, Eastern European and Ukrainian colleagues. As we go through this change, we will work to support those colleagues, as well as our clients in fulfilling our legal obligations and commitments.

The resulting suffering of this conflict across Ukraine, Eastern Europe and elsewhere is deeply concerning to all of us at EY. We strongly encourage all parties to urgently work towards a peaceful resolution in Ukraine.

But the one big difference between EY’s statement and the ones released by PwC and KPMG on Sunday is this part: EY global organization will no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world. In their statements yesterday announcing they were severing ties with their Russian-member firms, neither PwC nor KPMG said anything about ending their relationships with Russian government clients or state-owned companies. However, in a post on LinkedIn last week, Jon Holt, CEO of KPMG UK, wrote there will be client relationships that will be ending due to the situation in Ukraine, although he didn’t mention Russia by name. He said: “We are reviewing and adapting our client work and operations to align with sanctions and comply with all new laws. This will mean ending some of our client relationships in the UK and globally. The situation is fast-moving and is being kept under close review on a daily basis.”

As the Financial Times noted today, the Big 4 are structured as networks of locally owned partnerships with most of the profits retained in each country, meaning their Russian operations will continue to exist as stand-alone entities under new names. They just won’t have the cache of the Big 4 brand name behind them anymore or resources from the network of the Big 4 firm they were previously affiliated with.

Also, it’s worth noting that KPMG is the only Big 4 firm that publicly announced it was divorcing itself from its affiliate in Belarus, a country that has been a key ally to Russia during its invasion of Ukraine. While PwC’s statement doesn’t mention Belarus, the Financial Times reported yesterday that PwC Belarus was also being kicked out of the firm’s network. EY’s official statement didn’t mention the status of its firms in Belarus.

It’s been quite the turn of events over the last week, as up until yesterday, Deloitte was the only one of the Big 4 that announced it was “currently reviewing our business and presence in Russia,” hinting last week that it was considering cutting ties with its member firm there. Now its biggest competitors have left Deloitte in the dust. Not one to be left out of the party, Deloitte is probably crafting its “we’re leaving Russia” statement as we speak.

Related articles:

Reports: PwC Is Withdrawing From Russia and Belarus
KPMG Is Pulling the Plug On Its Operations In Russia and Belarus
Big 4 Firms Condemn Russia’s Invasion of Ukraine, But Will They Sever Relationships With Any Russian Clients?
Grant Thornton Drops Its Russian Affiliate Over Conflict In Ukraine
Ex-Big 4 Partner On Why the Big 4 Firms Should Pull Out of Russia: ‘It’s the Right Thing to Do and You Know It’

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