Russian oligarch quits board of his sanctioned aluminum giant

Alexander Shcherbak  TASS

Alexander Shcherbak TASS

On May 24, Russian aluminium manufacturer Rusal announced its CEO and seven members of its board of directors would step down.

Russia's largest aluminium producer, United Company RUSAL Plc (0486.HK), said on Friday non-executive director Oleg Deripaska had resigned with effect from May 25.

The sanctions, announced April 6, target seven high-profile Russian businessmen, 12 companies they own or control, and 17 senior Russian officials.

"The moves are rather formal, but they show that Deripaska is ready to give the U.S. an excuse to at least ease the sanctions", said Kirill Chuyko, an analyst at BCS Global Markets in Moscow. It also said it would consider lifting the sanctions against GAZ altogether if Deripaska cedes control of the company.

The U.S. Treasury Department on Tuesday gave Americans until October 23 instead of June 5 to wind down operations and contracts with GAZ and said it would consider lifting the sanctions if Deripaska ceded control of the company. The company competes with firms including a joint venture between Ford Motor Co and its Russian partner Sollers.

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A Putin aide confirmed on Friday a proposal to support Rusal, a day after a government source told journalists Deripaska had sought to have the state buy some of its aluminium.

In April, the United States imposed sanctions on Mr Deripaska and seven other oligarchs.

Treasury issued an update to its Russian sanctions program on Tuesday directed at GAZ, which Deripaska controls. Evgeny Nikitin, head of its aluminium division, will act as chief executive until a permanent replacement is found. Treasury is also giving those with existing contracts with Rusal and its entities until October to wind down and comply with sanctions. Rusal declined to comment.

The exodus means that Rusal's 18-strong board prior to sanctions being imposed in April has been reduced to just six.

In order to take up the U.S. deal and avoid sanctions, Deripaska's shareholding in EN+ would need to be reduced to below 50 percent, and a majority new board of independent directors would also need to be appointed. "Opportunities to provide financing to the Group on commercially reasonable terms will be very limited", the statement said.

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