In spite of the ongoing shuffling of its senior staff and ownership, Rusal, the world’s leading aluminum producer and the cash cow of one of Russia’s leading oligarchs, has not been able to dodge US sanctions.

In early April, the United States Treasury Department announced that it would impose extensive sanctions against a particular group of Russian individuals and businesses.

In a statement, Treasury Secretary Steven T. Mnuchin asserted that, “The Russian government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities. Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.”

The U.S. Treasury declared:

“All assets subject to U.S. jurisdiction of the designated individuals and entities, and of any other entities blocked by operation of law as a result of their ownership by a sanctioned party, are frozen, and U.S. persons are generally prohibited from dealings with them.  Additionally, non-U.S. persons could face sanctions for knowingly facilitating significant transactions for or on behalf of the individuals or entities blocked today.”

On the list were seven well-known Russian businessmen, a dozen of their companies and 17 senior government officials. The men listed are popularly known as oligarchs. Amongst those are Oleg Deripaska. In addition to being the founder and owner of Basic Element, one of the largest Russian industrial groups, he was also the president of En+ Group and United Company Rusal.

Rusal stood to be hit the hardest by the sanctions, as it is the second largest aluminium company in the world, and a majority of its customer base is in the West.

The sanctions could, if fully enforced, come to cut Rusal off from its global market. Rusal produces an estimated 8 percent of the world’s aluminium supplies, and more than 10 percent of its sales go to the US, with a further 8 percent to Europe.

In the days following the announcement, the U.S. Treasury directed and authorized U.S. persons “to engage in specified transactions related to winding down or maintaining business with [Rusal] and its subsidiaries until October 23, 2018.” On May 1st, the U.S. Treasury authorized certain activities “incident and necessary” to wind down existing operations and contracts with various sanctioned entities, including Rusal, which includes all trading, until a deadline of June 5th 2018.

The sanctions caused Deripaska to reduce his stake in the holding company that owns Rusal, from his previous 70 percent to below 50 percent. The U.S. Treasury Department stated in response to the announced reduction that “[a] reduction in the percentage of ownership by a sanctioned individual is not necessarily in and of itself a basis for delisting. Ofac conducts a thorough review of the facts and circumstances of each removal request in every individual case,” according to the Financial Times.

In an attempt to further appease the American government, the Hong Kong-listed company announced last Thursday that Deripaska’s long-standing associate and Rusal’s CEO, Alexandra Bouriko had left the company along with seven other executives.

According to the announcement:

“Since April 2018, the Company, acting in the best interests of its creditors, shareholders and partners, has been in continuous discussions with various authorities in an attempt to seek relief from the sanctions regime imposed by OFAC or to be removed from the Specially Designated Nationals (“SDN”) List.”

The company announced that Evgeny Nikitin, previously the head of Rusal’s aluminium division, had taken over the role of CEO effective immediately, while the other seven directors’ posts remain vacant. The company indicated that it is in renewed discussions with various authorities, seeking sanctions relief.

The following day, Rusal posted the announcement that “Mr. Oleg Deripaska, non-executive director of the Company, has tendered his resignation as a director of the Company with effect from 25 May 2018” with the Board expressing its gratitude “for his contribution during his term of office with the Company.” Notice followed on Monday to Rusal shareholders that it would be holding a meeting June 28th to vote for the election of directors.

Yesterday, the U.S. Treasury agreed to extend the June 5th deadline to end trading with Rusal and En+ to August 5th.

According to Reuters, En+ Chairman Greg Barker had requested the extension to carry on trading shares until September “while he works on a plan to get En+ and Rusal off the sanctions list.”

“We are seeking an extension of the general licence to allow us the time to put together the remaining building blocs in order to present a finalised proposal to the U.S. government by mid-summer,” as per Reuters.

Today, TASS reported that Russia is considering the “re-registration” of Rusal in one of the country’s offshore zones, “which are to be established on the Oktyabrsky and Russky islands,” according to a government source. According to TASS, on Friday, Economic Development Minister Maxim Oreshkin said that a number of large Russian holdings “expressed interest in re-registration in special administrative regions” which “will be created after the fashion of foreign offshore zones.”

John Sjoholm, Lima Charlie News

[Anthony A. LoPresti contributed to this story]

John Sjoholm is Lima Charlie’s Middle East Bureau Chief and founder of the consulting organization Erudite Group. He is a seasoned Middle East connoisseur, with a past in the Swedish Army’s Special Forces branch and the Security Contracting industry. He studied religion and languages in Sana’a, Yemen, and Cairo, Egypt. He lived and operated extensively in the Middle East between 2005-2012 as part of regional stabilizing projects, and currently resides in Lebanon. Follow John on Twitter @JohnSjoholmLC

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