PwC Ukraine’s 2nd man­ager in 2 years ready for chal­lenge

Kyiv Post - - Business Focus - BY I LYA TIMTCHENKO TIMTCHENKO@KYIVPOST.COM

Ukraine can be an un­sta­ble and un­pre­dictable place to do busi­ness, but that’s just how Ago Vilu likes it.

The PwC Ukraine gen­eral man­ager tar­geted the po­si­tion af­ter his pre­de­ces­sor — Richard Pol­lard — left af­ter only a lit­tle over a year as Ukraine’s coun­try man­ager.

“Ukraine is cer­tainly a very rapidly de­vel­op­ing and vi­brant coun­try, not as sta­ble and bor­ing as Es­to­nia,” Vilu joked dur­ing an in­ter­view at PwC’s of­fice on Kyiv’s Zhylyan­ska Street on Sept. 28.

“There are so many things go­ing on — it’s never bor­ing and you never know what’s wait­ing for you around the next cor­ner. So that’s ac­tu­ally what I like in Ukraine, and I guess this is one of the rea­sons why I came here — to have the chal­lenge of be­ing part of the change that Ukraine is cur­rently ex­pe­ri­enc­ing.”

Vilu said his con­tract is open-ended, but that he plans to stay in Ukraine for at least three years to achieve the goals he has set him­self.

Be­fore com­ing to Ukraine, Vilu had led PwC’s Es­to­nia branch for the last ten years, and says that he achieved “re­mark­able” re­sults. PwC be­came the coun­try’s mar­ket leader “au­dit­ing about 70 per­cent of listed com­pa­nies and 50 per­cent of its pub­lic in­ter­est en­ti­ties.”

Now he hopes to use that ex­pe­ri­ence in Ukraine, although he noted that not all mar­kets are the same and that he “can’t just repli­cate and copy-paste.”

But a few things are uni­ver­sal.

For ex­am­ple, his man­age­ment style is to fo­cus on build­ing strong trust with his em­ploy­ees through mo­ti­va­tion and set­ting re­al­is­tic tar­gets. He also says that one has to be com­pletely hon­est with clients and look for ways to gen­er­ate value in­stead of “just do­ing for the sake of do­ing.”

His first three months have been hec­tic as he set­tles in and gets up-tospeed at his new po­si­tion. In ad­di­tion to man­ag­ing the Ukraine branch, he is also work­ing with some of the coun­try’s big­gest clients.

Pri­vatBank case

But the firm is also deal­ing with the big­gest le­gal chal­lenge it has ever ex­pe­ri­enced in Ukraine: The firm is cur­rently fac­ing a $3-bil­lion law­suit filed against it by Pri­vatBank, Ukraine’s largest com­mer­cial bank, which is now state-owned.

PwC was Pri­vatBank’s au­di­tor for years when the bank was owned by bil­lion­aire oli­garchs Igor Kolo­moisky and Gen­nadiy Bo­golyubov. The gov­ern­ment na­tion­al­ized Pri­vatBank in De­cem­ber 2016 af­ter a $5.5-bil­lion hole in its ac­counts came to light, which the Na­tional Bank of Ukraine blamed on in­sider trad­ing among com­pa­nies closely tied to the pre­vi­ous own­ers, as well as em­bez­zle­ment.

The na­tion­al­ized bank sued PwC through a Cyprus court for fail­ing to un­cover the fraud, and PwC is cur­rently banned from au­dit­ing banks in Ukraine.

Vilu did not want to com­ment on the case, as lit­i­ga­tion is on­go­ing.

“I’m con­fi­dent that this will be re­solved sooner or later, and… I’m fully con­fi­dent about the work my pre­de­ces­sor did in Ukraine. I’m ab­so­lutely con­fi­dent,” Vilu said. “Un­for­tu­nately, I can’t say any­thing more.”

Nice wel­come

Although he was greeted by a multi­bil­lion-dol­lar le­gal case on his ar­rival to Ukraine, Vilu said he got a warm wel­come from the busi­ness com­mu­nity, re­ceiv­ing in­vi­ta­tions to join a range of cham­bers of com­merce. He was also in­vited to din­ner by the heads of all the other Big Four au­dit­ing firms — his com­peti­tors — to dis­cuss Ukraine’s cur­rent au­dit­ing en­vi­ron­ment.

In Ukraine, PwC has a mix of var- ious clients, and a lit­tle more than half of them are lo­cal, rather than in­ter­na­tional com­pa­nies. The client base also in­cludes a good mix of pri­vate and state-owned com­pa­nies, and it is grow­ing, as the firm pro­vides not just au­dit­ing and ad­vi­sory ser­vices, but con­sults on trans­ac­tions, taxes and of­fers le­gal ad­vice ser­vices.

“It’s very en­cour­ag­ing that our client busi­ness is grow­ing and be­com­ing more prof­itable. I think it’s a pos­i­tive sign in gen­eral about the Ukrainian busi­ness en­vi­ron­ment,” Vilu said.

He said it was dif­fi­cult to say what PwC’s mar­ket share in Ukraine is, as there is no re­li­able data.

“All of us are guess­ing, based on some rough num­bers of peo­ple or rev­enues that we think the oth­ers might have, and that we have, but there isn’t any trans­par­ent data about this.”

PwC has of­fices in Kyiv, Dnipro and Lviv, which to­gether em­ploy around 500 peo­ple, and this year it is cel­e­brat­ing its 25th year of busi­ness in Ukraine. In Lviv, PwC opened a re­gional “Shared De­liv­ery Cen­ter” about half a year ago, of­fer­ing au­dit­ing and con­sult­ing re­lated ser­vices not only to clients in Ukraine, but to ones within the re­gion, in­clud­ing in Ro­ma­nia, Poland and the Czech Repub­lic. Within the six months, the of­fice’s staff has grown to al­most 100 peo­ple.

“This shows PwC’s com­mit­ment to Ukraine,” Vilu said as the com­pany had the choice of open­ing the of­fice in a num­ber of other coun­tries. Vilu still hasn’t vis­ited the of­fices in Lviv and Dnipro, but says this is “ab­so­lutely” on his agenda.

De­spite the suc­cess of its Ukraine ex­pan­sion, Vilu says PwC is fac­ing the same prob­lem that al­most ev­ery other in­ter­na­tional com­pany is fac­ing in Ukraine — brain drain, the flight of pro­fes­sion­als out of the coun­try in search of bet­ter jobs else­where.

“We’re not so much fight­ing with the other Big Four or pro­fes­sional firms in Ukraine, but we’re very much com­pet­ing with other coun­tries,” Vilu said.

Some of th­ese pro­fes­sion­als might even leave to other PwC branches out­side of Ukraine. “For ex­am­ple, we have a big group of Ukraini­ans in the PwC of­fices in the Nether­lands.”

So the chal­lenge is to work out how to keep the best tal­ent in the coun­try now that Ukraini­ans are freer than ever to roam the globe.

“It’s not like it used to be in Soviet times, when you could keep peo­ple in one place. Now, if there are at­trac­tive of­fers else­where, then of course peo­ple go,” Vilu said.

An­other change that has been af­fect­ing the au­dit­ing mar­ket in Ukraine is the new au­dit­ing reg­u­la­tion that came into ef­fect this year, which al­ters the rules of the game some­what. For ex­am­ple, a num­ber of com­pa­nies are now im­ple­ment­ing In­ter­na­tional Fi­nance Re­port­ing Stan­dards, which is chang­ing the ser­vices land­scape on the au­dit­ing mar­ket, pro­vid­ing new op­por­tu­ni­ties for au­di­tors. How­ever, the new reg­u­la­tion also im­poses some re­stric­tions on the kind of ser­vices au­dit­ing firms can pro­vide to clients.

Chang­ing en­vi­ron­ment

An­other chal­lenge is the rapidly chang­ing busi­ness en­vi­ron­ment, with par­lia­ment adopt­ing new laws and chang­ing reg­u­la­tions re­lated to au­dit­ing, the pri­va­ti­za­tion of sta­te­owned en­ter­prises, or the bank­ing sys­tem.

“I’m keep­ing my fin­gers crossed that th­ese will pro­duce some good re­sults, but cer­tainly any re­form takes lots of time, and there’s al­ways a risk that the pop­u­la­tion won’t have the pa­tience to wait for th­ese re­sults.”

Orig­i­nally from Es­to­nia, Vilu lived and worked in var­i­ous coun­tries in­clud­ing Ger­many and the UK. Be­fore tak­ing his po­si­tion in Es­to­nia, he worked for PwC’s Moscow branch for three-and-a-half years.

Vilu prefers Kyiv to Moscow, es­pe­cially now that Rus­sia’s econ­omy is not per­form­ing as well as it was 10 years ago. He said he finds Kyiv more “flex­i­ble” and “tol­er­ant,” with many nice cafes, res­tau­rants, friendly peo­ple and good weather.

His hobby is trav­el­ling: so far Vilu has been to al­most 100 coun­tries, and he is plan­ning to in­crease that num­ber. His favourites so far have been Nepal, South Africa and the Ama­zon jun­gle of Brazil.

“It’s al­ways a dif­fi­cult choice — whether to go some­where for a sec­ond time, or to ex­plore some­thing new,” Vilu said.

Vilu’s fam­ily is dis­persed through­out Eu­rope: his three chil­dren are all ei­ther work­ing or study­ing in the UK, while his wife is a psy­chol­o­gist in Es­to­nia. They visit each other ev­ery other week­end.

Age: Na­tion­al­ity: How to suc­ceed:

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