U.S. trustees for Russia's En+ to be paid by En+

* Graphic with En+ shareholder/voting structure


NEW YORK/MOSCOW, Feb 13 (Reuters) - A veteran U.S. congressman has criticised what he calls a lack of accountability in a deal to restrict Russian tycoon Oleg Deripaska’s control over his En+ Group after Reuters established that three independent trustees would be paid by En+ itself.

The previously unreported compensation arrangement is the latest detail to emerge about a decision by the administration of U.S. President Donald Trump to lift sanctions on En+ and aluminium giant Rusal, which En+ controls.

While the names of the trustees - U.S. citizens D.J. Baker, Arthur Dodge and David Crane - were disclosed by En+ in January, little has been revealed about how they were selected, their independence vetted or who would pay them.

It is standard for a company to compensate its own trustees, and not problematic in this case, given that U.S. sanctions on En+ were removed in January as part of a deal to limit Deripaska’s control over the firm, sanctions experts said.

But the lack of disclosure about the deal has frustrated lawmakers trying to conduct oversight, said Lloyd Doggett, a Democratic congressman from Texas who opposed lifting sanctions on Deripaska’s firms.

Doggett said he could not evaluate the arrangement between En+ and its trustees without more information, the lack of which he said reflected a larger “Deripaska favouritism” problem in how Treasury Secretary Steven Mnuchin has overseen the sanctions relief.

“The more we learn about this sordid deal the more it becomes apparent why Treasury has gone to such great lengths to dodge accountability,” said Doggett, who joined a failed attempt last month by Congressional Democrats to block the move to lift sanctions on Deripaska’s empire.

“On the advice of our independent legal advisers and executive search counsellors, the trustees will be paid a standard industry fee for such a role,” En+ said in response to questions from Reuters.

En+ added that the payment arrangement was similar to that for recently appointed independent board members and would not hinder their independence, stressing that Deripaska “has no links whatsoever” to the trustees.

“We do not intend to publicly comment on individual board members, independent third party decisions, or internal processes at these companies,” a U.S. Treasury spokesperson said.

The Office of Foreign Assets Control (OFAC), the Treasury unit that oversees sanctions, will vigorously monitor and ensure compliance with all the requirements of the deal reached between OFAC, En+, and Rusal, including entities they own or control, the Treasury said.

“This includes ensuring that these companies take the necessary steps to ensure that Oleg Deripaska doesn’t have influence or control over board members or the independent third parties voting En+ shares,” the Treasury added.

The three U.S. citizens, together with Jersey-based law firm Ogier, form a voting block responsible for 37.7 percent of En+ shares and ensuring a key objective of the sanctions: preventing Deripaska from controlling his firms from behind the scenes.

Ogier has worked with Deripaska for years but the U.S. Treasury said previously that it is “obligated to vote in the same manner as the majority of shares held by shareholders other than Deripaska.”

Crane is in charge of 14.33 percent in En+, held by Russian bank VTB, according to Reuters analysis of En+’s already disclosed shareholder and voting rights structure.

Dodge will be voting with 6.75 percent of En+ held by Deripaska’s former family members, while Baker will vote with 6.64 percent owned by Deripaska’s charity fund and other shareholders.


En+ and Rusal were hit by sanctions in April when Washington blacklisted Deripaska along with several other influential Russians because of their ties to Russian President Vladimir Putin. Sanctions were lifted in January after Deripaska reduced his stake in En+ to almost 45 percent from 70 percent.

The appointment of the trustees, as well as independent directors to make up a majority of the board, is central to ensuring that Deripaska can’t covertly pull strings.

Baker, a restructuring expert and retired partner of the Latham & Watkins law firm, Dodge, chief executive of a rubber flooring maker, and Crane, former CEO of NRG Energy, all declined to comment.

En+ said the trustees were chosen on advice of independent U.S. legal counsel and approved by OFAC.

Baker, Dodge and Crane submitted signed affidavits to OFAC attesting to their independence from Deripaska, a person familiar with the matter said.

Michael Dobson, who worked on Russian sanctions at OFAC through late 2018 and is now with the Morrison & Foerster law firm, said he did not see a problem with En+ paying the trustees, noting that it was standard for a company to play that role and that En+ was no longer under sanctions.

Reporting by Nathan Layne, Polina Devitt and Katya Golubkova Editing by Giles Elgood