The US is planning to lift sanctions imposed on companies owned or controlled by Russian billionaire Oleg Deripaska and has once again postponed the introduction of sanctions against the Russian carmaker Gaz Group, in which Deripaska has a controlling interest.
The US Treasury department’s office for Foreign Assets Control (FAC) notified Congress in December of its intention to stop the sanctions and that “significant restructuring and corporate governance changes would enable them to meet the criteria for delisting”, although Gaz has yet to meet those criteria.
In particular, the companies affected, including Russian aluminium giant UC Rusal and mining operator En+ Group, “have committed to significantly diminish Deripaska’s ownership and sever his control”, according to the department. Given that the US government decided to eliminate all sanctions in the coming 30 days.
In a separate statement the US Treasury has extended the deadline for investors to divest from and close down business with Gaz from January 21, 2019 to March 7, 2019. It has previously acknowledged that these extensions were because of Gaz “proposing substantial corporate governance changes that could potentially result in significant changes in control and its removal” from the sanctions list.
New ownership is necessaryGaz will not be able to keep operating if the US sanctions are introduced, Russian deputy prime minister Dmitry Kozak said, speaking during a press conference in Moscow in 2018.
The carmaker has around 600 non-Russian components suppliers, including some US-based companies, and all of them would be forced to cease trading with the company, according to Kozak. In this scenario, Gaz would not be able to maintain operations for longer than a few weeks.
Kozak has said elsewhere that Deripaska’s share in Gaz could be sold to the Russian government, Volkswagen or some other carmaker. There are different options to save the company, he stressed.
Volkswagen runs an assembly line at the Gaz plant in Nizhniy Novgorod. In a statement released in December 2018, Gaz also said that it planned to expand cooperation with Volkswagen in the coming several years by localising production of the Volkswagen 2.0 TDI diesel engine in Nizhniy Novgorod.
Russian news outlet Investing, citing its own sources in the industry, reported that discussions on the possible lifting of sanctions against Gaz were still on the way and they were not directly linked to the negotiations regarding Deripaska’s other companies, because “this was a different market, and different partners are interested in lifting these sanctions”.
That does not change the main point however, that Deripaska must reduce his stake in the company and absolve himself of direct control, according to Investing.
