Former PwC partners break ranks to accommodate Russia-linked clients

Three former PwC Cyprus partners have branched off and formed their own firm which takes on Russia-linked clients, after Russia’s invasion of Ukraine up-ended the sector in Cyprus.

The splinter group Kiteserve has since its formation in June hoovered up what was left behind by the Big Four accountancy firms, as PwC runs a “sanctioned anywhere, sanctioned everywhere” policy, leaving lucrative business opportunities open to other players.

The Financial Times reported Kiteserve’s managing partner Theo Parperis as estimating that about half of the new firm’s clients are linked to Russia but expects this proportion to decrease.

He explained that such work is mostly based on assets in the West rather than in Russia.

Parperis said Kiteserve observed EU, US and UK sanctions, but told the FT that: “The Big Four went well beyond the sanctions imposed by these countries…  and, effectively, we’re covering that space to a certain extent, but…  we were very selective.”

He said Kiteserve could have taken on “four times more work if we wanted”.

“These clients…  are serviced also by western banks, by western lawyers,” said Parperis. “So why should we be singled out?”

The founders of Kiteserve came to an agreement with the Big Four and bought themselves out of restrictions on hiring PwC Cyprus staff, along with the five-year ban on former partners selling core services. About two thirds of Kiteserve’s staff are former PwC.

The new firm is based in PwC offices in Nicosia and Limassol, with the PwC stating that they are separate and space is simply being sublet.

“Kiteserve is fully independent of PwC Cyprus and is not a member of the PwC network,” said PwC, adding that it had pivoted its business and found new work as part of a “bounceback” strategy after the impact of international sanctions.

The services sector in Cyprus has suffered following Russia’s invasion and the subsequent sanctions. That was highlighted in a leaked letter reported by Politis in May showing that the legal profession had sought state assistance.

The letter showed that the Bar Association had asked the state for financial support, citing the loss of business resulting from EU sanctions on Russia.

Its head Christos Clerides sent the letter to President Nicos Anastasiades, writing that the sanctions had the effect of drastically limiting the provision of administrative, advisory and trustee services, “and as a result lawyers face a new acute crisis relating to a drastic shrinkage of their business turnover.”

For its part, the Bar Association stressed it never asked for direct financial support for law firms.

Rather, it wanted to discuss with the president “incentives” that could be given to the legal profession.