On the 27 January the US Treasury Department excluded Rusal, En+ and EuroSibEnergo (ESE) from the special designated nationals (SDN) list. The regulator took this decision on 19 December last year. Within 30 days the US Congress had the chance to block this action, but failed to so.
This is more news which supports our conviction that there is a low risk of material sanctions against Russia. The US authorities take into consideration back-fire strength of sanctions .
All sanctions against Mr Deripaska personally remain in place.
The companies were included in the SDN list in April 2018. The reason was that Russian billionaire Oleg Deripaska owned more than 50% of those companies through direct or indirect control. He controlled En+, which controlled Rusal and ESE. Mr. Deripaska was included in the sanction list himself for the interference in the US 2016 presidential elections. The US Office of Foreign Assets Control (OFAC) had extended the date of the sanctions to come into effect eight times, from the 7 th May 2018 until the 28th January 2019.
The main conditions for lifting sanctions are:
- Mr. Deripaska does not have the right to increase his stake in En+ above 44.95%. He cut his stake to this level from 70%
- Mr.Deripaska should have no more than 35% of voting rights of En+ shares. His family and friends with ownership in En+ are not able to vote either
- At least 8 of the 12 En+ board members should have no connections to Mr.Deripaska
- Mr.Deripaska is not allowed to hold more than 0.01% of Rusal through direct ownership
- Mr. Deripaska has no right to appoint board members of Rusal. No members of the board should have any ties to him
- Mr.Deripaska should not have direct shareholding interest in ESE.
OFAC will closely monitor companies’ compliance with those commitments and will be able to bring sanctions back if any are breached.
Authors: Vladimir Tsuprov, CIO; Egor Kiselev, Head of International Business & Investment Marketing; Maria Rybina, Investment Specialist