Deripaska’s Pain Shows Trump Is Tough on Putin, Treasury Says

(Bloomberg) -- The U.S. has rendered Russian billionaire Oleg Deripaska’s businesses “radioactive,” the Treasury Department’s top sanctions official said Tuesday, rebutting criticism that the Trump administration hasn’t done enough to rein in Vladimir Putin’s Russia.

“Targeting these Russian individuals and entities have made them radioactive, as we have made clear to the world that those who choose to continue to do business with them do so at their own peril,” Treasury’s Sigal Mandelker told senators at a hearing.

Tensions with Russia remain high as the federal investigation continues into interference in the 2016 U.S. presidential election and whether the Kremlin colluded with President Donald Trump or members of his campaign. Lawmakers from both parties on Tuesday called on Treasury to turn up the pressure on Putin amid fresh allegations from Microsoft Corp. that hackers linked to the Russian military may be trying to meddle in the upcoming U.S. midterm elections.

The Trump administration has targeted a “who’s who” of Russia’s most prominent companies, including its largest aluminum producer, United Co. Rusal, and En+ Group Plc. The U.S. sanctioned Deripaska, along with dozens of Russian tycoons, companies and key allies of Putin in April in the administration’s most significant action to date.

Earlier this month, Deripaska agreed to cut his share in En+ to 48 percent, from 70 percent, and give a majority of the board seats to independent directors, but Treasury rejected the proposal, according to a person familiar with the matter. Deripaska’s net worth has dropped 64 percent this year, according to data compiled by Bloomberg.

Deripaska has since told Treasury that he is willing to cut his share to just below 45 percent but no further, the person said. Deripaska is concerned that going lower than that could open up the company to a hostile takeover, according to the person. Treasury has signaled to Deripaska that a decision is expected within weeks, the person said.

Deripaska would sell his shares after EN+’s stock has more than halved under pressure from U.S. sanctions. The loss for the Russian tycoon would amount to billions of dollars, the person said.

In the Senate hearing Tuesday, Republican Senator John Kennedy of Louisiana asked how Russia’s economy could be “brought to its knees,” while Sen. Tim Scott said “our efforts have just not been effective enough.” Senator Bob Menendez, a New Jersey Democrat, told Mandelker: “Congress is going to act.”

Earlier Tuesday, Treasury announced sanctions against the owners of six Russian ships over claims they helped transfer refined petroleum products to North Korea. In a separate announcement, Treasury also levied sanctions against Russian individuals and entities under anti-hacking authorities.

In a separate hearing on Tuesday, Marshall Billingslea, Treasury assistant secretary for terrorist financing, told Menendez he’s “unaware of any intention to delist Rusal" from sanctions, adding that “far from easing up, we continue to accelerate” penalties on Russia.

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