The defeat means the Treasury Department is likely to lift the sanctions in the coming days. Treasury, Deripaska and his companies didn’t respond to requests for comment.
The U.S. sanctioned Deripaska and his companies in 2018, among a group of Russian elites the U.S. said had furthered “the Kremlin’s global malign activities, including its attempts to subvert Western democracy.”
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.
The Treasury Department in December proposed lifting sanctions against the companies while leaving those against Deripaska intact, after protests from European countries that the company sanctions were causing havoc in aluminum markets.
Treasury notified Congress on Dec. 19 that it intended to lift the sanctions because Deripaska had agreed to reduce his stake in En+ Group, the holding company that controls the aluminum giant Rusal, from about 70 percent to 44.95 percent, and to limit his voting shares to 35 percent. This would protect the companies “from the controlling influence of a Kremlin insider,” which had been the goal of punishing the firms, Treasury said.
But Senate Democrats balked at the plan, and tried to stop it through a resolution of disapproval. Some Republicans agreed, breaking with the Trump administration and Senate Majority Leader Mitch McConnell.
“I’ll vote to disapprove Treasury’s easing of sanctions on Russian businesses involving oligarch & Putin ally Oleg Deripaska. He still would maintain significant control given his ties to Putin. Easing the sanctions sends the wrong message to Russia & to Deripaska,” Sen. Susan Collins (R-Maine) tweeted, before voting with Democrats to try to block the Treasury action.
Sen. Steve Daines (R-Mont.) said he supported the resolution to “keep pressure on the Kremlin for their aggressive actions toward Eastern Europe, the Middle East, and around the world.”
Sen. Rubio criticized Treasury’s plan to shift some of Deripaska’s shares to a Russian state-owned bank. Under the Treasury plan to reduce Deripaska’s ownership, Russia’s state-owned VTB Bank or another Treasury-approved entity will take ownership of a block of Deripaska’s shares in En+ that had been pledged against a loan.
“Under this agreement Oleg Deripaska loses shares but not influence or effective control of Rusal,” Sen. Rubio said Wednesday. “Between his 35 percent of voting shares and those held by others close to him, including 7 percent by Putin’s bank, his control over the company remains.”
Treasury Secretary Steven Mnuchin disputed this criticism, saying Deripaska’s influence will be curbed. Mnuchin said career Treasury officials who had worked at the agency more than twenty years negotiated the deal to reduce Deripaska’s ownership, and that it wasn’t a political decision or a favor to Putin to lift the sanctions.
“The only reasons why the companies were [sanctioned] is because they meet certain ownership and control by Deripaska,” which will be reduced, Mnuchin told reporters Tuesday.
Schumer and other Democrats raised concerns about Deripaska’s ties to Manafort. “At the time when it’s becoming public how deep Deripaska’s ties are to Putin, organized crime, but also Paul Manafort, to do this would be a disgrace,” Schumer said Tuesday.
The Treasury Department last year said Deripaska has been “investigated for money laundering, and has been accused of threatening the lives of business rivals” and having ties to organized crime.
Deripaska has denied those allegations in the past. He and his companies did not respond to requests for comment.
Washington’s sanctions on Rusal and En+ Group clobbered the oligarch financially, sinking the market value of his publicly traded companies. En+ Group lobbied the Trump administration heavily to lift the sanctions. The British chairman of the company, Gregory Barker, hired Mercury Public Affairs and former U.S. senator David Vitter to try to gain the support of the State Department and other agencies.
Tom Hamburger contributed to this report.