The Treasury Department said Sunday that it has lifted sanctions on three Russian companies tied to an ally of Russian President Vladimir Putin, despite sharp objection from both parties in Congress.
Treasury said it has lifted sanctions it imposed last year on one of the world’s largest aluminum companies, Rusal, and two other firms in which Russian businessman Oleg Deripaska owns large stakes. Sanctions imposed last year against Deripaska himself will remain in force, as punishment for what Treasury has called his support for “the Kremlin’s global malign activities, including its attempts to subvert Western democracy.”
Treasury said it agreed to lift the company sanctions because Deripaska has reduced his “direct and indirect shareholding stake in these companies and severed his control.” Deripaska’s stake in the holding company that controls Rusal — En+ Group — has been cut from 70 percent to 44.95 percent, En+ Group said Sunday.
Shares in both companies shot up in early trading in Moscow on Monday. En+ shares rose more than 9 percent, while Rusal was up nearly 7 percent.
But congressional Democrats and some Republicans have loudly objected to Treasury’s deal, saying it doesn’t go far enough to sever Deripaska’s control because the businessman’s stake in En+ Group, together with that of his ex-wife, ex-father-in-law and a foundation Deripaska launched years ago will still amount to over 50 percent of the shares.
A Russian state-owned bank included on a U.S. sanctions list during the Obama administration will also gain a 14 percent stake in En+ as part of Treasury’s plan to reduce Deripaska’s holdings, a move some members of Congress decried. VTB Bank had previously held the shares as collateral against a loan it made to Deripaska’s empire.
Congressional Democrats narrowly failed to pass a measure that would have stopped Treasury from lifting the sanctions, despite attracting the support of many Republicans, in a rare GOP split with the White House. The measure passed in the House, drawing support from 136 Republicans in a significant rebuke to the Trump administration. But the measure fell a few votes shy in the Senate.
“The Trump Administration is working seven days a week with favoritism for Russia. This represents just one more step in undermining the sanctions law, which President Trump has obstructed at every opportunity, while Russian aggression remains unabated.” Rep. Lloyd Doggett (D-Tex.) said in a statement Sunday, referring to the agreement as a “sordid deal.”
Some Democrats said they were wary about relaxing sanctions on Deripaska’s companies, in part because of his ties to former Trump campaign chairman Paul Manafort, who pleaded guilty last year to conspiring to defraud the United States and obstruct justice in the investigation of special counsel Robert S. Mueller III. Deripaska helped fund consulting work Manafort did for a Ukrainian political party, invested in a Manafort investment fund and lent Manafort millions of dollars, according to court records.
When they were imposed last year, the company sanctions caused gyrations in global aluminum prices, sparking criticism from European allies, who have pushed Treasury to lift them.
En+ Group’s British chairman has argued that Deripaska’s control is severed by the deal because the agreement limits his voting rights in En+ to 35 percent. The deal also transfers the voting rights of the shares held by Deripaska’s ex-wife, ex-father-in-law and foundation, and the 14 percent stake held by VTB Bank, to third-party trustees with “no personal or professional ties to Deripaska,” according to Treasury and En+ Group.
The agreement also mandated a new slate of Treasury-approved board members for En+ Group, whose names the company released Sunday. Several are American or British. They include Christopher Bancroft Burnham, chairman and chief executive of Cambridge Global Capital LLC and former vice chairman of Deutsche Bank Asset Management; Carl Hughes, former vice chairman of Deloitte’s global energy and resources business; Joan MacNaughton, a former U.K. government official and current chair of the Climate Group; and Nicholas Jordan, former co-CEO of Goldman Sachs’s business in Russia, En+ Group said Sunday.
Other board members will include Igor Lojevsky, former chairman of two Deutsche Bank divisions in Eastern Europe; Alexander Chmel, a senior adviser to executive search firm Spencer Stuart in Russia, and Andrey Sharonov, president of the Moscow School of Management Skolkovo and a Russian economics ministry official from 1996 to 2007, during the Boris Yeltsin and Putin governments.