On April 23, 2018, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued General License No. 14 (“GL 14”) related to United Company RUSAL PLC (“RUSAL”), to supplement and expand an existing authorization under General License No. 12A (“GL 12A”). GL 14 authorizes US persons to engage in specified transactions ordinarily incident and necessary to the maintenance or winding down of operations, contracts, or other agreements that were in effect prior to April 6, 2018, and that involve RUSAL or any entity in which it owns a 50% or greater interest (together, “RUSAL Entities”). GL 14 is valid until October 23, 2018. Along with GL 14, OFAC also issued updated FAQs.
RUSAL is one of the world’s largest aluminum producers and was previously designated as a Specially Designated National (“SDN”) on April 6, 2018 for being owned or controlled, directly or indirectly, by the EN+ Group and the Russian oligarch Oleg Deripaska. Please see our blog post on the original designation here.
In its April 23 announcement, OFAC explained that it had issued GL 14 in part because RUSAL had submitted a petition for delisting, which would require Deripaska to reduce his ownership interest in the company below the 50% threshold. OFAC also emphasized that Deripaska, rather than RUSAL, was the primary target of the sanctions. Accordingly, it appears that divestment by Deripaska and EN+ Group in the company is likely to lead OFAC to delist RUSAL as an SDN.
Under GL 12A (as was the case under GL 12 as well), all amounts owed to the SDNs listed in GL 12A and any entities that are owned 50% or more by those SDNs must be blocked. That is not the case for the RUSAL Entities, for which GL 14 authorizes the use of blocked funds in which the RUSAL Entities have an interest, for wind-down and maintenance of pre-April 6 arrangements with the RUSAL Entities, as described above. Another difference implemented in GL 14 is that exports of goods from the United States to RUSAL Entities are not prohibited, but exports from the United States to the SDNs covered by GL 12A remain prohibited. OFAC is expected to issue further guidance around the scope of activities that could qualify as “maintenance… of operations” involving RUSAL Entities.
The authors thank Daniel Andreeff for his contribution to this blog.