Treasury lifts sanctions on Rusal, En+, ESE

The Treasury Department’s Office of Foreign Assets Control (OFAC) imposed the sanctions in April 2018. At that time, OFAC said Deripaska “has said that he does not separate himself from the Russian state,” and that “Deripaska has been investigated for money laundering and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering.” It’s also believed that Deripaska “bribed a government official, ordered the murder of a businessman, and had links to a Russian organized crime group,” according to OFAC.

OFAC designated En+ Group for being owned or controlled by, directly or indirectly, Deripaska. ESE was designated for being owned or controlled, directly or indirectly, by Deripaska and En+ Group, and Rusal was designated for being owned or controlled, directly or indirectly, by En+ Group.

Under the terms of their removal from OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List), En+, Rusal, and ESE have reduced Deripaska’s direct and indirect shareholding stake in these companies and severed his control. “This action ensures that the majority of directors on the En+ and Rusal boards will be independent directors—including U.S. and European persons—who have no business, professional, or family ties to Deripaska or any other SDN, and that independent U.S. persons vote a significant bloc of the shares of En+,” OFAC stated.

The companies have also agreed to “unprecedented transparency” for Treasury into their operations by undertaking extensive, ongoing auditing, certification, and reporting requirements, OFAC said. All sanctions on Deripaska continue in force.

New En+ board

Relative to OFAC’s announcement, En+ announced the appointment of seven new members to its board of directors following the lifting of the sanctions that same day.

In addition to Independent Chairman Lord Barker and Independent Director Philippe Mailfait, whose statutory term is ending, the following individuals have been appointed as independent directors:

• Christopher Burnham: Chairman and CEO of Cambridge Global Capital and former Under Secretary General for Management of the United Nations [where he worked alongside Donald Trump’s current national security adviser John Bolton] and Under Secretary of State for Management (acting). [En+ did not disclose that Burnham also was formerly a member of Trump’s Presidential Transition Team at Department of State.]
• Nicholas Jordan: Former co-CEO of Goldman Russia at Goldman Sachs and CEO of Russia and the Commonwealth of Independent States at UBS Group.
• Alexander Chmel: With extensive experience as an independent director and a chairman or audit committee member of Russian public companies, Chmel currently holds the position of senior advisor to board practice of Spencer Stuart in Russia and CIS.
• Andrey Sharonov: Sharonov has been president of the Moscow School of Management, SKOLKOVO, since September 2016, having originally joined the Business School team as dean in September 2013.
• Carl Hughes: With over 30 years’ experience in the oil and gas, mining, and utilities sectors, Hughes is a non-executive director and audit committee chairman of EnQuest, and a member of the finance and audit committee of the Energy Institute.
• Joan MacNaughton: An influential figure in international energy and climate policy, MacNaughton worked in the U.K. government until 2007 in a wide number of leadership roles, including as director general of energy and subsequently as director general, international energy security at the Department of Trade and Industry. MacNaughton currently chairs The Climate Group and the advisory board of the New Energy Coalition of Europe.
• Igor Lojevsky: With extensive experience of board-level governance in large, complex organizations with international scope of operations, Lojevsky previously served as vice chairman of Eastern Europe for Deutsche Bank’s Asset & Wealth Management and Corporate Banking & Securities divisions.

“The board now comprises eight first-class independent directors, who together have the requisite skills and experience to enforce the new robust reporting and verification regime, put in place in cooperation with OFAC,” Lord Barker of Battle, the company’s independent chairman, said in a statement.

Barker added that the new board will take additional actions, “above and beyond what OFAC has mandated for the company, to demonstrate the board’s absolute commitment to transparency, accountability, and good corporate governance.”

Measures to be implemented by the directors include establishing a separate board committee focused on regulatory and compliance oversight, including the company’s response to OFAC’s requirements; and retaining independent expert counsel to advise the independent directors on governance matters.