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-to-speed 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 various 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.
PwC Ukraine General Manager Ago Vilu speaks with the Kyiv Post on Sept. 28 at his Kyiv office. (Volodymyr Petrov)
“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 state-owned 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.
Ago Vilu
Age: 51
Nationality: Estonian
How to succeed: “You certainly need to be very flexible and adaptive to ever-changing circumstances. So if you are just looking for stability, then most likely Ukraine is not your place… You have to be very close to your clients and people (to build trust).”
