So, when does 44.95+10.55+24=0?

Ken Vogel at the New York Times reports about the “deal” struck between Oleg Deripaska and his firm EN+ Group, and the US Treasury Department (i.e. OFAC). Basically, as you may have read, under the deal, Deripaska reduced his ownership of EN+ Group, which controls the other 2 firms which have been getting passes from sanctions under a recurring series of OFAC General Licenses – United Company Rusal, the world’s largest aluminum firm, and EuroSibEnergo – from 70 percent down to 44.95%.

Let’s forget the fact that 44.95% still represents effective control, even if it’s majority ownership. Believe it or not, it gets worse.

As part of this “deal”, Glencore, one of Rusal’s largest customers, gets 10.55% of EN+ – no conflict of interest there, huh? And VTB Bank, in return for debt forgiveness of $800 million of debt, gets more EN+ shares bringing its total ownership to 24%.

But, you say, how about the OFAC 50 Percent Rule? VTB is sanctioned, no?

Well, yes and no. VTB Bank is subject to sectoral sanctions under Executive Order 13662. Meanwhile, Deripaska is sanctioned under Executive Order 13661 (and 13662), and is on the SDN List subject to an asset freeze. So, because VTB and Deripaska are subject to different sets of sanctions, EN+, Rusal and EuroSibEnergo are subject to none.

Somehow, Mr. Watchlist does not believe this is how the 50 Percent Rule was supposed to work…

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