US Treasury Signals Intention to End Sanctions against UC Rusal

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The Office of Foreign Assets Control, OFAC, of the US Treasury has indicated that it intends to terminate the sanctions imposed on UC Rusal, the parent company of bauxite alumina plant, Windalco, in Jamaica.

UC Rusal owns and operates Windalco located in Ewarton, St. Catherine.

The sanctions were imposed on the Russian oligarch, Oleg Deripaska, and companies in which he had significant interest. This included UC Rusal and its subsidiary, Windalco. The news came in a written notification by OFAC.

The Treasury intends to terminate the sanctions imposed within 30-days. The Treasury’s notification says UC Rusal has agreed to undertake significant restructuring and corporate governance changes to address the circumstances that led to their designation.

This restructuring includes reducing Mr. Deripaska’s direct and indirect shareholding stake in those entities to below 50-percent. It also involves overhauling the composition of those entities’ board of directors, taking restrictive steps related to corporate governance and agreeing to unprecedented transparency.

OFAC says this will include undertaking extensive ongoing auditing, certification and reporting requirements. OFAC points out that as part of the new agreement, all of Mr. Deripaska’s property and interests in property, including entities in which he owns a 50-per cent or greater interest, will remain blocked.

It says foreign persons will continue to be subject to secondary sanctions should they knowingly facilitate a significant transaction for or on behalf of Deripaska or entities in which he owns a 50-per cent or greater interest.

The sanctions which were announced in April had caused banks to shy away from Windalco in order to avoid backlash from the United States. This led Mining Minister, Robert Montague, to seek a reprieve from the US sanctions to be imposed on Windalco due to its parent company, UC Rusal.

A reprieve was secured by the Minister in mid-year. However, that would have expired on October 23. Windalco had been allowed to continue operations in the face of what were expected to be biting sanctions to be imposed after October 23.

At the time, when no deal was reached and if the government had failed to secure a waiver, sanctions would possibly have adversely affected thousands of Jamaicans who depend on Windalco for their economic survival.

However, it’s not yet known if the government had obtained a waiver or what transpired after October 23.

Efforts to contact Minister Montague were unsuccessful.

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