The Trump administration on Wednesday notified Congress of its plans to lift sanctions on two Russian firms, including Rusal, the world’s second-largest aluminum producer.
The Treasury Department said that Rusal and EN+ Group, the company that holds Russian oligarch Oleg Deripaska’s stake in the Russian aluminum giant, and GAZ Group, a Russian automotive conglomerate, had made “significant restructuring and corporate governance changes” to allow them to meet the criteria to be delisted within the next 30 days.
It explicitly said Deripaska will remain on the sanctions list and his property would remain blocked as required under law.
“Treasury sanctioned these companies because of their ownership and control by sanctioned Russian oligarch Oleg Deripaska, not for the conduct of the companies themselves,” said Treasury Secretary Steven Mnuchin in a statement. “These companies have committed to significantly diminish Deripaska’s ownership and sever his control.”
Treasury also announced Wednesday that it would impose new sanctions on Russian individuals, including a former officer of Russia’s intelligence directorate associated with Deripaska, over interference in the 2016 US presidential election, hacking and other “malign activities.”
The changes that Rusal and En+ agreed to included reducing Deripaska’s both direct and indirect stake in the companies and overhauling the composition of the board, among other fixes.
In April, the Trump administration announced it would impose sanctions on Deripaska, who has close ties to Russian President Vladimir Putin and his business empire, to prevent him and his companies from using the dollar and doing business with US citizens.
Deripaska was sanctioned earlier this year as part of a wider effort by the Trump administration to punish the Kremlin over interference in the 2016 election.
Deripaska, who had a longstanding business relationship with former Trump campaign chairman Paul Manafort, faces claims from Treasury of bribery, extortion, racketeering, ordering the murder of a rival businessman and having links to organized crime. In statements provided to London High Court, Deripaska has denied the “alleged basis” of US sanctions.
Sanctions were supposed to take effect immediately in April, but Rusal quickly asked the Treasury Department to lift them. The US government agreed to consider it and gave Rusal until October 23 to unwind its ties to Deripaska. Since then, the Treasury Department has extended the deadline multiple times to allow Deripaska additional time to give up control of his stakes in both firms.
Treasury has been trying to balance its effort to squeeze Russia with its desire not to tank the markets. In November, Treasury said licenses allowing Rusal to continue to do business with existing supply deals would be extended to January 7, 2019. The previous deadline was December 12.
Enforcement of the economic penalties against Russia, including Rusal, have been a priority for the Trump administration and are required under a law passed by Congress last summer to punish the Kremlin.
The law passed last year gives Treasury new powers to go after Russian oligarchs. Trump reluctantly signed the bill, which was passed with a veto-proof majority, despite criticizing the legislation and previously questioning the effectiveness of sanctions against Russia.
Mnuchin has committed to enforcing the Russia sanctions, but has made a point of saying the intent is not to put Rusal out of business. “The objective was to impact oligarchs, not to impact the hardworking people of Rusal as a result of sanctions,” Mnuchin told CNN in an interview in July.
While seeking sanctions relief, Rusal has taken steps to water down Deripaska’s involvement in the company. Deripaska has previously agreed to reduce his stake to below 50% and resign from the firm’s board in order to give Rusal a shot at getting off the sanctions list. Seven other members of the board, nominated by a Deripaska-owned company, also resigned in May.