For weeks, the Treasury Department has been attempting to relax sanctions against companies owned by Russian oligarch Oleg Deripaska. In making this change, the Trump White House has insisted that it had made big demands on Deripaska concerning ownership in those firms. However, as the details emerge, that turns out not to be the case.
The New York TImes reports that the deal that Trump and Treasury Secretary Steven Mnuchin have offered the Russians is much, much kinder to the oligarch than previously advertised. Far from having to divest himself of ownership of Russian aluminum giant Rusal, Deripaska gets to keep it. And far from losing money in the process, “The deal contains provisions that free him from hundreds of millions of dollars in debt.”
Deripaska was Trump campaign chair Paul Manafort’s boss when Manafort was working for the Russians in Ukraine. Manafort also acted as a money launderer for Deripaska and seems to have ended up owing him several million dollars. In the middle of the Trump campaign, Manafort attempted to pay back some of his debt to Deripaska by sharing internal polling information — demonstrating the apparent value the Russians placed on this information. Manafort also offered to broker a private discussion between Trump and Deripaska. In fact, Manafort met with Deripaska’s representative, Konstantin Kilimnik, in the month just before he joined the Trump campaign, suggesting that his signing on to Team Trump might not have been his own idea.
Sanctions against Rusal and other Deripaska-connected companies have been delayed multiple times. Mnuchin made a point of saying that the sanctions were not intended to “put Rusal out of business,” which is an extremely odd thing to say about a sanction put in place supposedly to punish Deripaska and his firm for “a range of malign activity around the globe.”
That malign activity never really resulted in much against Rusal, and Trump’s representatives have been negotiating with Deripaska’s representatives for a way to simply walk away from the sanctions while claiming victory. Mnuchin has now sent a letter to Congress claiming that, through negotiation, Treasury had reached a deal that would “sever [Deripaska’s] control of these entities.” But instead, the restructuring agreement appears to leave the oligarch in charge, while mostly shuffling shares among his own companies.
Critics of the deal pointed out that, after Treasury announced it, the share prices of Rusal and EN+ rose sharply, providing a boost to the portfolios of Mr. Deripaska, his family and VTB.
While the restructuring deal appears on the surface to reduce Deripaska’s control, the change in control consists mostly of two things: selling some of Deripaska’s stock to Russian-government-owned bank VTB in exchange for forgiving debts he already owed, and moving ownership around in his own family. For example, after the deal, control of the EN+ holding company would include shares owned by Deripaska’s ex-wife and his former father-in-law. Put those shares together with those Deripaska is keeping, and it’s still 57 percent of the company.
The confidential document, titled “Terms of Removal,” also shows that the agreement would leave allies of Mr. Deripaska and the Kremlin with significant stakes in his companies. The document is signed by executives representing Mr. Deripaska’s three companies as well as the official in the Treasury Department who oversees the division that handled the negotiations.
Mnuchin and Trump have coddled Deripaska and his firms from the outset, repeatedly postponing the start of sanctions … until they were ready to get rid of sanctions. Which certainly makes it seems as if there are “malign activities” in progress … just not necessarily on the Russian side.