A group of PwC partners has broken away from the firm to set up a new company in Cyprus that will service Russia-linked clients. 

Kiteserve, set up by three former PwC partners, will work for clients connected to Russia that “big four” accountancy firms do not want to touch, owing to a “sanctioned anywhere, sanctioned everywhere” policy.

This policy has particularly hit accounting and consulting firms in Cyprus since Vladimir Putin’s invasion of Ukraine in February, as the Mediterranean nation has extensive financial links to Russia. 

The boutique advisory firm has poached around 20 of its 30 employees from PwC and about half of its clients will have a Russian connection. 

The firm will operate out of PwC’s offices in Nicosia and Limassol, but the big four firm said that the space was separate to its own office space and was being sublet to Kiteserve. 

Theo Parperis, managing partner at Kiteserve, told the Financial Times that the firm will observe EU, US and UK sanctions, but added: “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 that about 50pc of Kiteserve’s clients had links to Russia but predicted this would reduce over time and that the work was mostly related to assets in the West rather than in Russia.  

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

The Kiteserve founders struck a deal for an undisclosed sum with PwC to buy themselves out of restrictions on hiring PwC Cyprus staff and a five-year ban on former partners selling audit, tax or compliance services, the FT reported. 

In early March, PwC announced that it would exit the Russian market following the invasion and has since cut ties with clients who have been sanctioned in any jurisdiction. 

PwC said: “Kiteserve is fully independent of PwC Cyprus and is not a member of the PwC network.”

Apart from the “arm’s length” agreements on separation and subletting “there are no agreements between PwC Cyprus and Kiteserve and the partners do not have any economic interest in each other’s respective businesses”, it said.