US Indicates Intent to De-List Entities Owned or Controlled by Oleg Deripaska After months of delaying the onset of sanctions through repeated license extensions, on December 19, OFAC notified Congress of its intention to terminate sanctions against EN+ Group, United Co. Rusal PLC, and JSC EuroSibEnergo, three entities owned or controlled by sanctioned Russian oligarch Oleg Deripaska. The delisting of these entities comes as the companies agreed to make certain changes that would bring them into compliance with US sanctions policy. Most significantly, the proposals diminish Deripaska's ownership and remove his controlling stake in each company. Both EN+ Group and United Co. Rusal committed to make additional structural changes, including an overhaul of each company's board of directors; a commitment to extensive auditing, certification, and reporting requirements; and other changes to their corporate governance.
In connection with the commitments to make the changes in control, this quarter OFAC continued to extend the grace period for the maintenance of business activities with, and permission of divestment activities in, Deripaska-linked companies Rusal, GAZ Group, and EN+ Group. As of mid-January, the deadline was extended to March 7, 2019 with respect to GAZ Group and to January 28 for Rusal and EN + (via the issuance of General License 13(J)). Similarly, General Licenses 14(E) and 15(D), licenses permitting maintenance and wind-down transactions were extended to the same dates. The de-listing of Rusal, EN+ Group, and EuroSibEnergo is expected to take place by the end of January. As of this date, however, there is no word on when or if GAZ will be similarly delisted.
US lawmakers from both parties expressed disagreement over OFAC's decision to de-list these companies, but Congress was unable to garner sufficient votes to compel the Administration to take a different course. In early January 2019, Treasury Secretary Steven Mnuchin delivered a classified briefing to the House of Representatives in which he defended the planned de-listing. Following the briefing, Democratic leaders in the House and Senate introduced resolutions to reject the Treasury Department's plan. While the resolution won a broad majority of bi-partisan votes in the House, the measure failed in the Republican-controlled Senate, clearing the path for de-listing as early as this month.
Despite its intention to de-list Rusal, En+Group Plc and EuroSibEnergo, the Treasury Department emphasized that Deripaska, individually, will remain sanctioned. OFAC underscored this by newly designating additional associates of Deripaska: on December 19, OFAC designated Victor Alekseyevich Boyarkin. Boyarkin, a former FSB officer, business associate, and direct report to Deripaska allegedly assisted Deripaska in providing Russian support to a political party in advance of Montenegro's 2016 election.
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