The US Treasury announced that it intends to lift sanctions against EN+, Rusal and EuroSibEnergo, saying the companies had implemented enough corporate governance changes to distance themselves from Oleg Deripaska, the Russian billionaire.
“Treasury sanctioned these companies because of their ownership and control by sanctioned Russian oligarch Oleg Deripaska, not for the conduct of the companies themselves,” Steven Mnuchin, US Treasury secretary, said in a statement.
“These companies have committed to significantly diminish Deripaska’s ownership and sever his control. The companies will be subject to ongoing compliance and will face severe consequences if they fail to comply.”
The terms of the delisting dramatically reduce Mr Deripaska’s control over the aluminium empire he built from decrepit former Soviet state-owned factories into the world’s second-largest producer of the metal.
Congress now has 30 days to decide whether to approve the agreement.
The Treasury department’s Office of Foreign Assets Control said that VTB, a sanctioned Kremlin-controlled bank, was permitted to play a role in the restructuring as the transactions required would not breach the restrictions imposed upon it. However, some Democratic senators have already expressed reservations that the deal would not do enough to ensure Mr Deripaska was no longer closely involved in the companies. VTB’s involvement could also be a point of contention.
Under the agreement with Treasury, the three groups have agreed to reduce Mr Deripaska’s ownership stake, overhaul their boards of directors and commit to “full transparency with Treasury by undertaking extensive, ongoing auditing, certification and reporting requirements”
Mr Deripaska’s stake in EN+ — his main holding company — will be reduced from about 70 per cent to 44.95 per cent through corporate restructuring transactions, which will give ownership of a block of Mr Deripaska’s shares to VTB. Separately, the Swiss group Glencore will revive a deal to swap shares in Rusal for a stake in EN+, further diluting Mr Deripaska’s stake.
Mr Deripaska will not be entitled to cash in return for his shares. He will hold no more than 35 per cent of EN+ group’s voting shares. Mr Deripaska and VTB’s voting stakes will be handed to independent US nationals.
Treasury said Ofac would “continue to aggressively enforce its sanctions on Deripaska” and closely monitor the companies’ compliance with the promised corporate governance changes. Mr Deripaska would remain a “specially designated national”, it added.
Mr Deripaska, EN+, Rusal and EuroSibEnergo have been under US sanctions since April. Those sanctions, which overall targeted 24 Russian businessmen and Russian political officials along with any related entities, were designed to punish Moscow for alleged interference in the 2016 US presidential election.
The deal comes after months of intensive negotiations with Ofac by EN+ and Rusal, and between Mr Deripaska and the two companies’ chairmen: EN+’s Greg Barker, a former UK energy and climate change minister, and Rusal’s Matthias Warnig. The talks were aimed at securing a deal that would both meet regulatory requirements and be palatable to the Russian oligarch.
A spokesperson for Mr Deripaska did not immediately respond to a request for comment from the Financial Times. Glencore and EN+ declined to comment.
Separately on Wednesday, the Treasury also announced new sanctions against 15 Russian individuals for “malign activities”, including interference in the 2016 US election.