Partnership

KPMG

Mr. Lindsay G. Ellwood,
Managing Partner
of KPMG in St. Petersburg.

        - What does KPMG stand for and how long has the company been in St. Petersburg?
        - It stands for the initials of the founding members of four accounting and audit firms established as early as the 19th century in various countries of the world: the Netherlands, Great Britain, the US and Germany. The founders include P. Klynveld, who headed a Dutch firm, W. B. Peat, who led an English firm, J. Marwick, the head of an American firm, and R. Goerdeler, who was chairman of a German firm. These firms gradually united and, in 1987, the merger was complete with the creation of KPMG.
        At present, KPMG International's member firms have more than 100,000 professionals working in 160 countries throughout the world. We began in St. Petersburg in 1993 with a small office of 10 people. Our office started to expand in 1995, offering a wider range of services, and today we have a staff of 75.
        We are a private company structured as a branch of KPMG Russia, which is a Russian limited joint-stock company. We work relatively independently in St. Petersburg but cooperate fully with our Moscow office and global network to ensure that our clients are offered the full range of KPMG services.
        KPMG's objective in St. Petersburg and in Russia in general is to become recognized as the firm of natural choice of businesses. By this we mean that we would like businesses to turn to KPMG for prime quality business advice on a regular basis. Obviously, this is not something that can be demanded, but rather must be earned through high-quality work. Our ultimate aim in Russia is to build a strong Russian national firm, one with all of the international links and contacts with other KPMG firms around the world. KPMG has a strong national representation in every country, and that is what our aim is here as well.
        - What does the branch office specialize in and what is the range of services offered?
        - If we go back to our structure, KPMG is not just an auditing firm. KPMG offers tax and legal consulting and we have a very large management consulting and financial advisory practice. To a degree, we may provide some labor consulting services as well, although this tends to be an odd-on rather than a primary service. We do not offer recruitment services. We put emphasis on our core services. Our client base tends to be heavily oriented towards some form of foreign investment. This is likely the result of the specialized nature of services that KPMG offers globally. We serve Russian clients but they are predominantly those that have some form of foreign investment or financing. We also work with international companies operating in Russia that are part of our global base.
        - What particularities can you identify about operating in Russia and especially in St. Petersburg?
        - If we speak about the Russian economy, it is subject to ups and downs. This is part of the move from a centralized economy to a market economy. There is a very large learning curve for businessmen, for politicians and for everyone to understand a different type of economy. I think that Russia is such a large country and is so rich in natural resources that it will continue to grow and develop. One of my pet peeves is the attitude of certain Western commentaries, which regard the Russian economy as risky. All business has risks, whether it is business in Russia or in countries in other parts of the world. I believe that if sensible business decisions are made in Russia, it is no more risky to do business in Russia than in any other country. However, I think possibly because the economy in Russia is undergoing change, business planning needs to be more in-depth than perhaps it does in an established market economy.
        Probably the main difficulty in terms of operating in Russia is the current state of the legal base. I personally believe that there are two issues to be addressed. The first is law and order. The second issue involves the notion of a stable, responsible government. If you look behind all of the difficulties, they point to both of these issues, that is, respect for law and respect for government needs to be higher.
        Respect for the law will come from having laws that are clear and consistently applied. Russia has to develop its own laws. Although experience can be drawn from the way laws have been developed in other countries, every country is unique in terms of its legal perspective. Laws should be consistent and free of contradiction. The way in which the law is invoked and applied is also important. This relates especially to tax legislation. There can be situations in Russia where a particular person can give a ruling as to how the law applies in one case, and another person can give a completely different interpretation of that same law.
        Again, respect for the government cannot be demanded - it can only be earned. This means the government has to be seen to be acting in the interests of all of the people. I may regret making these comments, but that is how I feel.
        - Now let us move from general economic and philosophical issues to more personal matters. What do you think of St. Petersburg? What do you like about it and what struck you most of all?
        - Coming from Australia, which has very little history, it is the history of the past that strikes me most. The other thing that impresses me all the time is the cleanliness of the city. Certainly, the infrastructure needs some work and maybe some buildings need some work, but the place is basically clean. I enjoy living here. I feel very comfortable in the city; I have never felt at all threatened. St. Petersburg is a beautiful city and I enjoy showing the city to visitors that we have coming here regularly.
        - What question is missing from our interview?
        - We have not discussed relationships with people. One of the aspects that keeps me here and keeps me interested in working in Russia is our Russian professionals. I am constantly impressed with their willingness to work extremely hard, and together we are able to develop the skills base from what is required in a strictly Russian environment to what is required in a Russian market economy environment.

Interview by Vadim Kruchina