Sanctions catching up with Ireland’s favourite oligarch

In the summer of 2019, I was chugging along in a small boat with some friends beneath the imposing cliffs of Lindos on the Greek island of Rhodes, when we came across a superyacht moored in a small cove. Superyachts are not unusual in that stretch of the Aegean Sea between Turkey and Greece, but there was something slightly sinister about this one.

Moored near the superyacht was an ugly, vaguely military-looking ship, which gave the impression of a shaven-headed bodyguard on steroids. It was called the Sputnik, and the yacht the Queen K, both of them registered in George Town, capital of the Cayman Islands. It was safe to assume they weren’t part of the Cayman navy.

We weren’t the only ones to notice the odd pair. When we went ashore for lunch on the beach of St Paul’s Bay, the waiters were quick to tell us how the Sputnik’s crew had come in to eat there, wearing, very ostensibly, pistol holsters. When asked, they said their boss was a Cypriot. These days, it’s hard to be an international man of mystery. I opened my phone, and a Google search revealed that both the Queen K and its supply ship Sputnik were the property of Russian oligarch Oleg Deripaska. The name rang a bell, for very good reasons.

The spectacle of our Government lobbying Washington on behalf of people like Deripaska certainly raised the question of our relationship with the oligarchs

Allegedly a close friend of Vladimir Putin, and known as “Putin’s favourite industrialist”, he had had some mixed fortunes in recent years. Once worth $30 billion and considered the richest man in Russia, after the recession he was down to just $3 billion. His name was familiar because he was accused of being a key figure in the chain connecting Donald Trump to Putin, through Paul Manafort, Trump’s campaign manager, who ended up in jail. In April 2018, he had been hit with sanctions by the US, on the basis that “he had been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering”.

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Lower profile

I also learned that the Queen K had hosted both Peter Mandelson and George Osborne, former British chancellor. I was about to close my search, when something caught my eye. Scrolling down, I found a report from The Irish Times dated January 27th, 2019, headed “US waives sanctions on Russian owner of Aughinish Alumina”. Apparently, Deripaska was the founder of and a major shareholder in the Rusal company which owned the Aughinish Alumina plant in Limerick, Europe’s biggest producer of alumina. The sanctions against him posed a direct threat to the 700 jobs associated with the plant. After intense lobbying of Trump by the Irish government, led by Leo Varadkar, the sanctions had been lifted – against the wishes of the Democratic Party in Congress – on condition Deripaska became a minority shareholder in EN+, the majority shareholder in Rusal, which controls the Aughinish refinery, thus safeguarding the Limerick jobs. However, the sanctions continued to apply to him personally.

It was easy to sympathise with the workers in Limerick and their families. As a result of a murky web of connections involving Trump and Putin, their jobs had been directly threatened. But the spectacle of our Government lobbying Washington on behalf of people like Deripaska certainly raised the question of our relationship with the oligarchs.

It is looking increasingly likely that Deripaska could be caught in the next round of EU sanctions and this could have implications for Aughinish

Deripaska has managed to have a lower media profile than his one-time business partner, Roman Abramovich, despite the gravity of the accusations against him. In addition, according to the international media, Deripaska seems to have converted to anti-Putinism in recent weeks, calling for peace in Ukraine.

But it hasn’t been enough to keep him off Liz Truss’s hitlist. On March 10th, the UK’s foreign secretary announced that sweeping sanctions, including travel bans, freezing of assets and a ban on financial transactions were being imposed on seven oligarchs, including Deripaska. He is still the major shareholder – owning 45 per cent – of the London-based EN+.

It is looking increasingly likely that Deripaska could be caught in the next round of EU sanctions and this could have implications for Aughinish. The company is not commenting but it has emerged that it met Varadkar and Paschal Donohoe last week and it seems likely a plan is afoot to keep it open if Deripaska is sanctioned.

As the company is reported to have pointed out to the Government, it is a supplier of refined bauxite [the raw material for making aluminium] to European smelters and sanctions would have more of an impact in France and Germany than Russia.

And, as local county councillors have been quick to point out, not only is there the threat to local jobs, but the pools of “red mud” produced by the refinery need to be disposed of – a very expensive business.

EN+ is looking at hiving off its European assets to mitigate the impact of sanctions but that will take time. Irish bank support in the event of a change of ownership has apparently been discussed within the Government.

It likely that the Government – and by extension the taxpayer – will have to step in to support the company in the short to medium term.

So how far are we prepared to go in implementing sanctions against Putin’s friends and associates? Simon Coveney has quite rightly been quick to sign us up to the sweeping European sanctions. Ireland is clearly keen to raise its international diplomatic profile – witness the intense and successful campaign to get the seat on the United Nations Security Council.

But if you want to play with the big boys, you might need to be be prepared to take some hard knocks.