In late December 2018, the US Treasury Department’s Office of Foreign Assets Control (OFAC) removed Russian companies Rusal, En+ and EuroSibEnergo from the Specially Designated Nationals and Blocked Persons List (SDN list). The companies had been added on April 6, 2018, not because they violated any of OFAC’s regulations, but because of their ownership by Oleg Deripaska, who has been linked to facilitating Russia’s interference in the 2016 US election. In order for the Rusal and En+ to move forward, and stay in business, they were required to diminish Deripaska’s ownership and control and in return OFAC would remove them from the SDN list. Rusal and En+ agreed to change their corporate governance, such as seeking “unprecedented transparency” by undertaking extensive, ongoing auditing the US Treasury said in December when they removed the companies from the SDN list.
Fast forward to today, OFAC has hired a US firm to begin the initial audit into if Rusal and En+ have severed all ties with Deripaska. Part of the deal to get the companies off the SDN list was that Deripaska’s ownership would be reduced and regular audits would be conducted to prove that all ties have been cut. The deal also required Rusal and En+ to maintain all records of any contact with Deripaska between the boards, management, employees or agents of the companies.
Deripaska will remain on the SDN list and all of his property, interests in property, including entities in which he holds a fifty percent or greater interest, will remain blocked. His investments in these companies are effectively frozen and he can’t receive cash either in return for his shares or future dividends from Rusal, En+ or EuroSibEnergo. Foreign individuals will also be subject to secondary sanctions if they try and facilitate a transaction for, or on behalf of Deripaska. US individuals will continue to be prohibited from dealing, directly or indirectly, with Deripaska.
Deripaska sued the US earlier this month, alleging that it overstepped its legal bounds in imposing sanctions on him and made him the “latest victim” in the US probe into Moscow’s alleged election interference. As stated by OFAC, “Deripaska was the intended target of the US economic sanctions and not the companies.”
More Details: https://www.reuters.com/article/us-usa-russia-sanctions-rusal-exclusive/exclusive-u-s-hired-firm-audits-russias-rusal-for-compliance-with-sanctions-deal-idUSKCN1R9121 and https://home.treasury.gov/news/press-releases/sm576