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Gazprom: Russia's Enron?

Gazprom and PricewaterhouseCoopers are under fire

As financial scandals go, this one has everything. A Big Five accounting firm accused of overlooking wildly improper deals in its probes of a client's books. A client that's one of the country's biggest energy firms, and yet is now a symbol for the evils of crony capitalism. The amounts involved? Billions and billions. There's more: leaked documents, infuriated shareholders, threatened lawsuits. Even the President of the country is angry.

Only one thing. We're not talking about Enron Corp. (ENE ) No, the company at the center of this nasty tale is Gazprom (OGZPF ), the biggest company in Russia, with sales of $20 billion in 2001, and one of the largest energy producers on the planet, with reserves six times the size of Exxon Mobil Corp.'s (XOM ). The auditor in question is PricewaterhouseCoopers, the world's largest accounting firm. PwC has been signing off on Gazprom's books since 1996, and fed-up shareholders say it is high time to give the job to someone else. Together, Gazprom and PwC are at the center of a tempest whose resolution could determine whether corporate governance can ever take root in Russia.