Why U.S. is Derailing Oleg Deripaska's Aluminum Empire

Why U.S. is Derailing Oleg Deripaska's Aluminum Empire

Photo: http://tass.ru

Chances that sanctions will be removed from Oleg Deripaska, Russia's “Aluminum King” and the owner of the largest aluminum company in the world, are next to none. Apparently, the same is true of the profits of En+ Group, a global leader in low-carbon aluminum production and renewable energy, which earned $20 mln in 2019 against $863 mln a year earlier.

Who is to Blame

The U.S. Department of the Treasury has demanded that the application of the Russian businessman Oleg Deripaska for additional documents be rejected. This is a package of some secret documents which became the basis for the U.S. Treasury to impose sanctions against Oleg Deripaska and all core businesses with his participation. Thus, he was clearly given to understand that his position is not very honorable, even though he is one of the richest people in Russia.

The decision on sanctions against Oleg Deripaska was based on those very secret documents. It was made by the U.S. Department of the Treasury back in April 2018. This happened a few months after En+ Group successfully placed its shares (IPO) on the London Stock Exchange in 2017. This corporation has combined Oleg Deripaska's aluminum and electricity assets.

At the moment, the “black list” included not only Oleg Deripaska himself, but also companies under his control such as Rusal, Basic Element, En+ Group, Russian Machines, Eurosibenergo and GAZ Group. It dealt a telling blow to Deripaska’s entire business. Those on the “black list” are denied entry to the U.S. Their assets in the country are frozen, and the American citizens are forbidden to run any business with them. At the end of 2017, 70% of the aluminum produced by Rusal was exported to the U.S.

In theory, this might mean the instant collapse of the entire aluminum business of En+ which owns Rusal, the second largest aluminum company in the world.

In response to the U.S. sanctions, Oleg Deripaska assailed the Russian authorities with criticism for some reason. In his opinion, they are “totally indifferent” to the economic pressure from the U.S.

Krasnodar Territory Court

At the same time, Deripaska’s lawyers were trying to somehow change the situation. In March 2019, they filed a lawsuit against the U.S. Treasury Department. In September of the same year, a claim was also filed against The Nation, the U.S. publication, and two British media flagships, The Times and The Telegraph. In their opinion, the articles of these media outlets gave reason to introduce personal sanctions against Oleg Deripaska. Pursuing legal actions against the media in the U.S. and the UK is costly, so the lawsuit was filed in Russia’s southern Krasnodar territory, known for its selective approach even on the Russian legal scene.

The offensive on the information front turned out to be a simple “cover-up” for a setback on the front of real relations with the U.S. Treasury.

Oleg Deripaska made unprecedented concessions to the US authorities, reducing his stake in En+ from 70% to 44.95%. Through this holding he owns UC Rusal and Eurosibenergo. In response to this initiative, Washington lifted sanctions on Deripaska's companies, but not on Deripaska himself. Moreover, the decision to lift the sanctions made by the U.S. Treasury Department which is subordinate to Donald Trump's administration was opposed by democratic lawmakers both in the Senate and in the House of Representatives. The fact means that the “aluminum case” smelled of big politics. Therefore, there is no simple solution.

In March 2019, an extremely important event for Oleg Deripaska took place in the U.S. Paul Manafort, Donald Trump's former campaign manager and a man closely associated not only with Trump but also with Deripaska, was sentenced to 7.5 years in prison as he received money from the latter when working in Ukraine as an advisor on the election race of former Ukrainian President Viktor Yanukovych.

Details of Oleg Deripaska's “cooperation” with Paul Manafort were scrutinized by the U.S. Intelligence Committee and published a few days ago.

Numerous moments are crosshatched in the publication for reasons of secrecy, but even those that are available clearly demonstrate the U.S. Senate’s political attitude towards Deripaska. According to the Senate, Konstantin Kilimnik was the main link between Deripaska and Manafort. In the report, he was referred to as an intelligence officer and at the same time a close aide to Oleg Deripaska.

Imminent Reprisal

In 2016, the friendship between Paul Manafort and Oleg Deripaska came to an end. The latter filed a lawsuit against Manafort, accusing him of losses of the joint venture. In reality, this lawsuit could be a simple attempt to defend himself against the imminent reprisals by the American legal system. The fact is that, according to the Senate investigation, Paul Manafort paid Oleg Deripaska by sharing classified information. It was received from none other than Konstantin Kilimnik. According to the Senate, this relationship continued after Donald Trump was elected President. As the report says, the Kilimnik—Deripaska strategy was aimed at fixing the results of the Russian election campaign in 2014. The main problem for the Senate was that Konstantin Kilimnik, an agent of the Russian security services and a mercenary to the oligarch, managed to get a top executive position at the International Republican Institute, an organization funded by the U.S. Congress. Formally, this is a nonpartisan foundation but in reality, it is used to finance and coordinate very specific programs of the state department. Konstantin Kilimnik managed to work for the International Republican Institute for a whole decade from 1995 to 2005. At the end of his career, he even headed this Institute. Thus, Oleg Deripaska had not only an information source, but also a real special agent, who could pursue his agenda with the help of a powerful American foundation.

There is no specific new information in the investigation files in this regard, as most of it has already been described in online publications. However, it should be understood that the Senate Committee has a different status and weight for American politics.

In addition, according to the Senate’s report, the trail of investigation also lead to the story of the publication of the well-known “Steele dossier,” a small report on the adventures of Donald Trump in Moscow, collected by Christopher Steele, a British former intelligence officer, for the Democratic Party. The dossier was published by the BuzzFeed News portal. It grabbed the headlines because of the notorious allegations of “golden shower” -- the girls with low social responsibility who supposedly paraded in front of Trump in the Ritz-Carlton Hotel in Moscow. It is claimed that the agents of the omnipotent Federal Security Service (FSB) recorded the misadventure.

Misled Management

From the very beginning, this story looked a bit strange for a serious analytical report written by the Senate’s staff. According to them, this is one more manipulation on the part of Oleg Deripaska. The supposedly close connection between him and the former agent Steele, who presented the report to the Democratic Party, became the basis for the claim of this kind.

In other words, it is assumed that Oleg Deripaska deliberately misled the helmsmen of the U.S. Democratic Party by feeding them outright disinformation.

The final report of the Senate Intelligence Committee is a thousand pages long. It is a political document where Oleg Deripaska is shown exclusively in the role of a financial sponsor of “enemies of the American people.” Probably, the same documents were presented as evidence in an American court by the U.S. Treasury Department. In this case, the nature of the argumentation is of little importance, since the U.S. political machinery is already working towards destruction of Deripaska's business. Chances are that in order to survive Oleg Deripaska will have to learn how to do without the American market. And this situation is extremely difficult to imagine.

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