PwC has implemented a “sanctions anywhere, sanctions everywhere” policy worldwide since shortly after Russia invaded Ukraine in February, going beyond what is legally required. This had a particularly big impact on PwC Cyprus, given the extensive ties between Russia and Cyprus, reducing the firm’s client roster and prompting three partners to quit in June to start Kiteserve, a boutique whose roughly half of its clients have a Russian connection . Kiteserve chief executive Theo Parperis said his new company had noted the EU, US and UK sanctions, but added: “The Big Four have overcome the sanctions imposed by these countries. . . and, essentially, we cover that space to some extent, but . . . we were very selective.” He said Kiteserve could have taken on “four times as much work if we wanted to”. He estimated that about 50 percent of Kiteserve’s customers had ties to Russia, but predicted that this would decrease over time. The work involved mostly assets in the West rather than Russia, Parperis added. “These customers . . . they are also served by western banks, by western lawyers,” said Parperis. “So why single us out?” Unlike PwC Cyprus, Kiteserve does not voluntarily comply with sanctions imposed by countries such as Australia and Canada. It provides services to EU-sanctioned entities when allowed under a derogation, although this represents only a “small percentage” of Kiteserve’s clientele, Parperis said, adding that the “majority” were not subject to EU sanctions. the USA or UNITED KINGDOM. Kiteserve’s founders struck a deal with the Big Four to buy out PwC Cyprus’ hiring restrictions and the usual five-year ban on former partners selling audit, tax or compliance services. The deal to lift the restrictions gave PwC Cyprus a profit in exchange for allowing the departing partners to work for any firm they wished. Neither PwC nor Kiteserve disclosed the value of the agreement to lift the non-compete restrictions. The amount was intended to offset upfront costs for PwC Cyprus to make regular pension payments to departing partners, a person with knowledge of the deal said. PwC said the amounts were “in accordance with normal market practice or contractual obligations” and “the net payment to the retired partners is not material to PwC Cyprus or its partners”. Parperis said he and his co-founders were nearing PwC’s mandatory retirement age and the war in Ukraine had accelerated plans to strike out on their own. Kiteserve operates from the PwC offices in Nicosia and Limassol. PwC said the space was separate and sublet to Kiteserve on terms mirroring PwC’s lease while it negotiates the transfer of the leases. Kiteserve hired about 20 of its approximately 30 staff members from PwC. “Kiteserve is completely independent from PwC Cyprus and is not a member of the PwC network,” PwC said. Apart from the “trade” agreements for separation and subletting “there are no agreements between PwC Cyprus and Kiteserve and the partners have no financial interest in each other’s respective businesses,” it said. PwC Cyprus said it had turned around its operations and found new work as part of a “bounceback” strategy after the impact of international sanctions. If you have insight into relevant issues in the professional services sector that could inform our reporting, please contact [email protected] We want to hear from you. If your information is particularly sensitive, please consider contacting us using one of these secure methods.
