On 19 December 2018, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) notified Congress that it intended to remove En+ Group plc (En+), UC Rusal plc (Rusal), and JSC EuroSibEnergo (ESE) from the Specially Designated Nationals (SDN) List.
As discussed in our previous client alert, En+ was initially designated in April 2018 for being owned/controlled by Oleg Deripaska, an influential Russian oligarch who was also sanctioned, pursuant to Executive Orders 13661 and 13662. At the same time, OFAC designated Rusal because it was owned/controlled by En+ and ESE for being owned/controlled by En+ and Mr Deripaska, pursuant to the same Executive Orders. Since then, OFAC has issued a number of general licenses authorizing certain transactions necessary to maintenance or wind-down of operations or existing contracts with these companies.
OFAC’s decision to delist these entities comes after En+, Rusal, and ESE submitted to OFAC a proposal whereby they would sever the ownership and control of Mr Deripaska. After extensive negotiations with OFAC, En+, Rusal, and ESE “agreed to undertake significant restructuring and corporate changes to address the circumstances that led to their designation, including significantly reducing Deripaska’s direct and indirect shareholding stake; overhauling the composition of their board of directors; taking other restrictive steps related to their corporate governance; and agreeing to undertake extensive, ongoing auditing, certification and reporting requirements.” Specifically, Mr Deripaska has agreed to reduce his ownership in EN+ from 70 percent to 44.95 percent.