A Trump administration plan to lift sanctions on the aluminium empire controlled by the Kremlin-linked billionaire Oleg Deripaska has come under threat from Democratic lawmakers, who have demanded it be delayed for further scrutiny.
Seven Democratic chairs of House of Representatives committees on Tuesday sent a letter to Steven Mnuchin, the Treasury secretary, expressing reservations about the plan in which Rusal, En+ and EuroSibEnergo — which together form one of the world’s largest aluminium producers — would be released from sanctions in return for various governance changes intended to distance them from Mr Deripaska.
“We have a number of concerns about the agreement,” the members of Congress wrote. They complained that it “appears to keep intact significant ownership” of Rusal’s holding company, En+, by Mr Deripaska.
They also asked that a 30-day window for Congress to oppose the Treasury’s recommendation, which was delivered in late December, just before the holiday break, be scrapped so that Mr Mnuchin could “fully brief” members to resolve their concerns.
On Wednesday, Russian investors appeared spooked by news of the congressmen’s letter. Shares in Rusal were down 1.4 per cent on the Moscow market at 1100GMT, after recovering from a 4 per cent fall at the open.
The Kremlin said work was being carried out regarding the lifting of the sanctions against Mr Deripaska’s companies.
“Painstaking work is being done on this, and let it continue,” said Dmitry Peskov, the spokesman of President Vladimir Putin. “We would prefer to be very cautious with regard to any statements concerning sanctions on Mr Deripaska’s companies.”
A representative for Mr Deripaska did not respond to a request for comment from the Financial Times.
Along with dozens of other Russian officials and corporate entities, Mr Deripaska and his companies were placed under US sanctions in April in retaliation for Moscow’s alleged interference in the 2016 US election.
The case has been fraught with complexities for an administration already under heavy scrutiny over the president’s ties to Russia and its efforts to influence the election. While not wanting to appear soft on Russia, the administration has been forced to address disruptions to the aluminium market that have resulted from the sanctions, affecting US businesses and allies.
Democrats had been weighing whether or not to confront the administration over the deal. On Friday, Charles Schumer, the Senate minority leader, fired a warning shot by filing a motion disapproving the agreement and preserving his procedural ability to challenge it.
While Mr Schumer said he had not yet made up his mind, he raised “critical questions” that it would not do enough to separate the company from Mr Deripaska. He also gave voice to a widespread frustration among Democrats that the deal had been rushed through just before the holiday break to minimise their opportunity to oppose it.
Even with a Democratic majority in the new House, blocking the agreement may be a tall order; it would also require support from the Republican-controlled Senate.
The government shutdown may pose an additional obstacle, say people involved in the case, by making it more difficult for Treasury staff to respond to requests for information in a timely manner before the January 17 deadline.
Still, with Tuesday’s letter, Democrats appeared intent on at least bringing greater public attention to the deal that Mr Deripaska secured after an intensive lobbying campaign aided by Greg Barker, chairman of En+ and a former UK climate and energy minister.
The agreement calls for the Russian billionaire to reduce his stake in En+, Rusal’s holding company, from 70 per cent to 44.95 per cent. His voting rights would be capped at 35 per cent, and two-thirds of the company’s board of directors would be independent.
“These companies have committed to significantly diminish Deripaska’s ownership and sever his control. The companies will be subject to ongoing compliance and will face severe consequences if they fail to comply,” Mr Mnuchin said in a statement when the deal was announced.
