Deripaska’s Rusal Flouts Sanctions Pledge With New Kremlin Stooge
The move further concerned lawmakers already worried that the changes made to comply with Treasury’s demands would prove cosmetic.
Putin-friendly oligarch Oleg Deripaska’s aluminum empire is trying to make nice with the U.S. in a bid to get out from sanctions, and that includes trying to clean up its corporate leadership. But the firm has quietly installed a new board chairman who has expressed support for the Russian aggression that got Deripaska sanctioned in the first place.
Last year, the Treasury Department sanctioned Deripaska’s aluminum company, Rusal, in part because of Russia’s occupation of Crimea. Deripaska reduced his holdings in the company in hopes of winning relief from those punishing sanctions. But one of its new leaders has defended Russia’s occupation of Crimea. He’s also become a regular on Russian state TV, pushing a conspiracy theory about chemical weapons in Syria, and asserting that the Russian government couldn’t have been involved in the poisoning of one-time spy Sergei Skripal. That background, which has not been previously detailed, has concerned congressional lawmakers as well as Western intelligence officials.
Jean-Pierre Thomas, the new chairman of Rusal’s board, previously advised former French President Nicolas Sarkozy. More recently, he helped launch a group pushing for international recognition that Russia’s occupation of Crimea is legal (it isn’t). Russian President Vladimir Putin praised the organization, which openly aims to get sanctions against Russia dropped.
“To me, it’s just ironic,” one Western intelligence official told The Daily Beast, discussing Thomas’ appointment to the Rusal board. “I think it’s a message, if you want to be cynical, from Deripaska’s side.”
The official added: “It raises questions about who ultimately controls Rusal.”
Sen. Richard Blumenthal, a Connecticut Democrat, told The Daily Beast that Thomas’ installation adds to his concerns about lifting sanctions on Rusal.
“The new chairman is not really a change of management of the kind that would lead me to support lifting these sanctions,” he said. “One of the conditions of lifting sanctions is that there be a change of governance, and this new chairman is hardly a major shift.”
Deripaska is best known in the U.S. for his connection to Paul Manafort, Trump’s former campaign chief who has pleaded guilty to a number of crimes revealed by Special Counsel Robert Mueller’s investigation. Manafort at one point owed the oligarch $10 million, according to a court filing, and fretted about the debt. Two weeks after Manafort became Trump’s campaign chief, he emailed his longtime lieutenant Konstantin Kilimnik—alleged to have links to Russian intelligence—about his “media coverage.”
“How do we use to get whole?” Manafort wrote, according to The Atlantic. “Has OVD operation seen?”
“OVD” are the initials for Oleg Vladimirovich Deripaska; a key question in the investigations into Russian election interference is whether Manafort intended to use his perch on the campaign to do favors for Deripaska.
But after the election, the oligarch’s relationship with Trumpworld took a twist.
On April 6, 2018, President Donald Trump’s administration sanctioned three firms—Rusal, EN+, and EuroSibEnergo—that Deripaska owned or controlled. That same day, the Treasury Department announced sanctions against Deripaska himself, along with a number of other powerful Russians. Treasury specifically cited Russia’s occupation of Crimea as one of several reasons for the designation.
At their crux, the sanctions stemmed from Congress’ response to Russian meddling in the 2016 elections. As The Daily Beast reported, the roll-out of sanctions against Rusal and EN+ was poorly planned; after Treasury Sec. Steve Mnuchin impulsively promised Congress he would sign off on more sanctions of oligarchs, his department scrambled to find suitable targets, neglecting to fully coordinate with other government entities. The sanctions on Deripaska and his companies had immediate, major impact on global aluminum markets. Western European allies, including Sweden and Ireland, felt the brunt of it. Treasury, meanwhile, opened talks with Deripaska’s companies and negotiated the terms for sanctions relief: Deripaska would need to reduce his holdings in the companies and step down from his leadership positions with them.
Last month, Treasury announced that Deripaska had fulfilled his end of the bargain, and that it would move to lift the sanctions on his companies. The announcement, which came just days before the Christmas holiday, set off alarm bells on Capitol Hill amidst some lawmakers’ concerns that the changes made to comply with Treasury’s demands would prove cosmetic, with Deripaska maintaining de facto control over the company.
On Tuesday, according to Fox News, Mnuchin huddled with Republican senators to try to sell them on sanctions relief. Despite the effort, the Senate voted later in the day to move forward a resolution to bar Treasury from lifting those sanctions.
Jean-Pierre Thomas’s public statements and positions indicate he is a booster of the Kremlin’s agenda in Eastern Europe—including some of the activity that got Deripaska sanctioned in the first place. In November 2017, at the Yalta Forum on the Crimean peninsula, Thomas moved to start a group called the International Association of the Friends of Crimea, according to a write-up of the remarks on the Forum’s website. He proposed that the group would help “open up Crimea and make the peninsula a most interesting place for tourists and business people”—in other words, blessing Russia’s occupation of the peninsula.
At the same event, he criticized Western sanctions on Russia for their occupation of the peninsula.
“This is a futile game,” he said. “There is no alternative to cooperation.”
“Friends of Crimea” immediately received Putin’s seal of approval; he sent a telegram to be read out at the group’s opening ceremony at Yalta hailing it as a testament to the “growing interest” among other nations in strengthening ties with Crimea.
In the telegram, posted on the Kremlin’s website, Putin took a thinly veiled shot at the West, describing the association as a sign that more people are coming out against “double standards” in the world.
The group looks like part of a Kremlin propaganda campaign to convince its own people that Crimea is flourishing under Russian rule and attracting foreign investment.
“Friends of Crimea,” which claims to comprise representatives from 30 different countries, now meets regularly on the sidelines of the Yalta forum, according to the forum’s official website.
The official declaration of the group’s establishment defines one of its goals as “advocating for the total abolition of anti-Russian sanctions that are complicating the global situation and the liquidation of economic and humanitarian blockades against the Crimean peninsula.”
The organization also aims to force the West to recognize “the legitimacy of the Crimea referendum of 2014 and the right of the Crimean people to choose their own fate.” The “Crimea referendum” has been widely recognized as a sham, as it was held after a Russian military takeover of Crimea and the only election observers who recognized it were obscure European politicians and figures with ties to far-right groups. The OSCE, whose observers were repeatedly turned away and faced warning shots while attempting to enter Russian-controlled Crimea ahead of the referendum, deemed it unconstitutional.
“There is no doubt that the referendum was legitimate and that it complied with the United Nations principles on the right of people to self-determination,” Thomas said at the association’s opening ceremony.
Thomas has also featured heavily on Moscow-funded propaganda TV network RT’s international channel in recent months, usually spewing Kremlin talking points. In one interview, he echoed a conspiracy theory suggesting a deadly chemical attack in Syria’s Douma last year was carried out by “activists,” and not the Moscow-backed Assad regime. In another, he backed Russia’s claims it had nothing to do with the poisoning of former spy Sergei Skripal on British soil, lamenting “Russiaphobia” and saying, “I don’t believe one second in this story.” He also urged European countries to “decrease sanctions” against Russia, describing them as “unacceptable” in another RT interview last March.
Rep. Jim Himes, a Connecticut Democrat, told The Daily Beast Thomas’ appointment as chairman of the board of the company adds to his pre-existing questions about Treasury’s agreement with Rusal.
“This certainly adds to the many unanswered questions about Treasury’s proposed transactions,” he said.
And Texas Democrat Rep. Lloyd Doggett, who has also vocally criticized Treasury’s decision to lift sanctions, said these revelations about Thomas raise his concerns.
“The Administration continues to offer only doubletalk and delay regarding its Christmas gift to the Kremlin, lifting sanctions on Rusal and other companies long controlled by Putin buddy Oleg Deripaska,” he said in a statement. “The more light we shine on this sordid arrangement, the worse it looks. The Administration would lift sanctions, imposed in part because of Russian aggression in Crimea, for a company headed by an occupation cheerleader. Congress should adopt a resolution of disapproval.”
People with knowledge of Treasury’s sanctions process also expressed concern about the control Deripaska may maintain over Rusal.
“Lingering de facto control is definitely something Office of Foreign Assets Control (OFAC) cares about and takes care to guard against,” said a former Treasury senior staffer with direct knowledge of the Deripaska sanctions. “In a situation like this (Deripaska), OFAC would have carefully scrutinized all parties involved to satisfy itself that the potential replacements weren’t simply cat’s paws for the Specially Designated Nationals list.”