How a British Lord Helped Push Trump to Lift Rusal Sanctions

(Bloomberg) -- The champagne corks were already popping by lunchtime on Monday at the London offices of the Russian company that until the last week was controlled by Oleg Deripaska.

Less than 24 hours after the U.S. lifted sanctions on three companies tied to the Russian oligarch, his erstwhile holding company En+ Group Plc was opening bubbly for exhausted staff and advisers at its office just meters away from Buckingham Palace.

How a British Lord Helped Push Trump to Lift Rusal Sanctions

The host was Greg Barker, the British lord and former marketing man who spearheaded a massive lobbying push to have the sanctions lifted. That involved months of painstaking negotiations: coaxing Deripaska, a hard-bitten veteran of Russia’s bloody aluminum wars during the 1990s, to surrender his controlling stake at the same time as haggling with the technocrats of the U.S. Treasury Department over the deal.

“This is an extraordinary event for a London-listed company that is a Russian business,” Barker told Bloomberg Television on Monday. “I’m not pretending that Deripaska is removed from the company altogether, but we have removed control.”

Barker is perhaps an unlikely savior for En+, one of Russia’s largest conglomerates and the holding company for United Co. Rusal, the top aluminum producer outside China.

A former associate partner at public relations firm Brunswick Group, he moved to Russia in the late 1990s to work for another oligarch: Roman Abramovich, who would later go on to buy the Chelsea football club. Barker was hired as head of international investor relations at Sibneft, Abramovich’s oil company, around the same time that Abramovich was merging his aluminum assets with Deripaska’s to form Rusal.

Alexey Firsov, director for communications as Sibneft at the time, remembers Barker as “soft, calm, intelligent and correct.”

“He wasn’t snobbish towards Russian business and he understands well the logic of Russian businessmen, their way of thinking,” he said.

Two decades later, a recommendation from Abramovich’s group helped persuade Deripaska to appoint Barker as chairman of En+, according to a person familiar with the matter. He took the role in October 2017, just a few weeks before the company floated in London.

His green credentials also helped. Barker, a close ally of former British Prime Minister David Cameron and member of the Conservative Party, had served as the U.K.’s minister for energy and climate change. Deripaska’s companies, which rely mainly on hydroelectric power, were promoting themselves as the environmentally-friendly face of the aluminum industry.

For a while, it seemed like Barker’s job at the helm of En+ could end up being largely symbolic. Deripaska controlled more than two thirds of the shares and Barker was one of just two independent directors on a nine-person board.

But then in April, the U.S. slapped sanctions on Deripaska, citing his close ties to the Russian government as well as allegations that he “bribed a government official, ordered the murder of a businessman, and had links to a Russian organized crime group.” Deripaska has denied those charges, calling them “absolutely groundless, ridiculous and simply absurd.”

Most non-Russians linked to Deripaska’s companies rapidly departed after the sanctions were announced. Barker, who once described himself as a “sucker for the underdog,” stayed. He had only met Deripaska in person a couple of times when the sanctions hit. 

On Monday, he said he was persuaded by people saying “you can’t just walk out the door” on the shareholders that invested in En+’s initial public offering a few months earlier.

“You’ve got to be absolutely damn sure that you’ve tried everything in your power to try and rescue the minority shareholders,” Barker recalled.

He hired a raft of financial and legal advisers and lobbyists, from blue-blood investment bank Rothschild & Co. to lobbyist Mercury LLC. They hatched a plan -- dubbed the “Barker Plan” -- to persuade the Treasury to drop sanctions against Deripaska’s companies, if the Russian oligarch would relinquish control.

If the Treasury needed persuading, so did Deripaska. “When I started out I thought there was no way that the man who had sat at the helm of this group and founded it and controlled over 70 percent would actually consent to going back to being a minority shareholder,” Barker recalled.

The Russian oligarch was initially resistant to the deal, hoping to redirect Rusal’s aluminum sales to China or to get support from the Russian government. Only after those ideas proved unworkable did he grudgingly accept the sacrifices envisaged by Barker.

How a British Lord Helped Push Trump to Lift Rusal Sanctions

In Washington, Barker, together with Mercury lobbyist and former Senator David Vitter, helped coordinate a political push from foreign governments against the sanctions. The restrictions had triggered panic in Germany, France and Greece, where manufacturers depend on Rusal aluminum, and in Ireland and Jamaica, where Rusal owns plants.

Mercury shepherded letters from representatives of France, Australia and Ireland, according to U.S. Department of Justice disclosures. Mercury’s briefing documents warned of dire consequences should the sanctions fail to be lifted -- such as the nationalization of En+ by the Russian government or its sale to “Chinese interests.”

In September, Barker and his team of negotiators had all but reached a deal with the U.S. But the talks dragged on as U.S. politicians waited until after the mid-term elections in November to move forward with the deal.

Barker’s shuttling between London, Washington and Moscow on behalf of En+ has not gone unnoticed by his colleagues in the British legislature. He is under investigation by the House of Lords Commissioner for Standards for “alleged breach of the Code in relation to personal honour, parliamentary services and paid advocacy,” according to Parliament’s website.

Barker argues that the complaint was based on a factually inaccurate article and expects it to be thrown out very shortly, according to a person familiar with his position.

Barker may be exhausted after the effort of negotiating the sanctions deal, but he will be well remunerated. According to people familiar with the matter, the U.K. peer will receive a success fee for his efforts on behalf of the Russian company.

©2019 Bloomberg L.P.