US may reconsider promise to lift sanctions given Deripaska family share in Rusal

US may reconsider promise to lift sanctions given Deripaska family share in Rusal
Oleg Deripaska

The oligarch’s family owns 11% of En+ Group that presented its plan to survive the sanctions in late April.

The US Treasury may disapprove the plan to lift the sanctions from UC Rusal that is represented by the controlling En+ Group, RBC reports. The plan to make the company unaffected by the sanctions lies in reducing Oleg Deripaska’s share to less than 50% and his leaving the board of directors so that non-executive directors become the board majority. One of the reasons the US Treasury may refuse is the fact that 11% of En+ belongs to Deripaska’s immediate family.

As of December 31, 2017, Oleg Deripaska owned a 68.5% stake in En+. According to the Group's annual report, 66.08% belonged to the oligarch through a company affiliated with the Basic Element Group and B-Finance. Another 2.4% belongs to Eastern Carriers Trading Element, also run by Deripaska, according to the offering prospectus of En+ in London in November 2017.

On April 27, En+ informed that Deripaska was willing to reduce its share in the capital to below 50%. This is how the Group is going to fulfill the condition of the US Treasury making sure the oligarch no longer controls Rusal so that the Group could be excluded from the SDN (Specially Designated Nationals).

Experts, however, believe that the US Treasury might take into account the fact that another 11.4% of En+ belong to Deripaska’s family. According to Artem Zhavoronkov, a partner of the international law firm Dentons, the United States may assess the shares of the oligarch and his family as a whole, that is, if Deripaska reduces his share to 40%, with 11% remaining in his family, the sanctions will not be lifted.

As of January 1, 2018, 5.8% of En+ belonged to Deripaska’s wife Polina, and 1.75% belonged to his father-in-law Valentin Yumashev. In addition, 1.84% and 1.99% of shares belong to Eclipse Star Holdings and Orandy Capital (BVI), respectively. Their beneficiaries are anonymous; however, from the En+ prospectus it follows that the companies belong to members of Oleg Deripaska's family. The En+ prospectus stated that before the placement, Deripaska's relatives owned a 13% stake, a share that reduced to 11.4% after.

The US Treasury made it clear on April 27 that reducing Oleg Deripaska's stake in En+ below 50% will not be enough to have the sanctions lifted. According to Zhavoronkov, Deripaska will have to either become a minority shareholder, or completely withdraw from the capital.

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