The Office of Foreign Assets Controls (OFAC) has issued General License (GL)13B to provide additional time for divestment of interests in En+ Group, Gaz Group, and United Company Rusal (the Companies).
The Companies were designated as Specially Designated Nationals (SDNs) on April 6, 2018 for being directly or indirectly owned or controlled by Oleg Deripaska, who was designated the same day. Concurrent with such designations, OFAC issued GL 13, which provided sanctions relief until May 7 for certain activities related to divestment of interests in the Companies. On May 1 OFAC issued GL 13A to extend such relief until June 6, and on May 31 GL 13B extended the relief until August 5. The sanctions relief under GL 13B also applies to certain entities owned 50% or more by the Companies.
As the Companies were designated for being owned or controlled by Mr. Deripaska, divestment of Mr. Deripaska's interests in the Companies would seem to be the most direct route to their de-designation. To that end, according to press reports, efforts to achieve such divestment have been taking place, and the issuance of GL 13B suggests that OFAC believes those efforts may, if given more time, bear fruit.
It remains to be seen, of course, whether OFAC will view divestment efforts taken by Mr. Deripaska as sufficient to warrant removal of the Companies from the SDN list. Among other things, OFAC will almost certainly require reliable evidence that Mr. Deripaska's ownership interests in the Companies have been reduced to below 50 percent, and that he has not retained undisclosed indirect interests through other shareholders.
It also remains to be seen whether, through divestments or otherwise, de-designation can be achieved before OFAC authorizations to wind down business with the Companies expire. Currently, under GL 12C the wind down authorization for En+ Group will expire on June 5, and under GL 14 and 15, respectively, the wind down authorizations for United Company Rusal and Gaz Group will expire on October 23. Under US sanctions, dealings with the Companies as SDNs after the relevant wind down authorizations expire can lead to significant consequences to US persons and non-US persons alike.
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