January 18, 2019

Crapo Statement on Treasury Sanctions Agreement

WASHINGTON – U.S. Senator Mike Crapo (R-Idaho), Chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, delivered the following remarks on the Senate Floor regarding a resolution disapproving the Treasury Department's planned removal of sanctions on several Russian companies. 

As prepared for delivery: 

"Mr. President, I rise to speak against the resolution to disapprove the Administration’s agreement to delist Rusal, the Russian Aluminum giant, from the SDN list. "I will vote no today because this was a hard fought negotiation resulting in one of the strongest agreements ever associated with a sanctions delisting, which supports long-standing U.S. sanctions policy and foreign policy toward Russia. 

"This agreement does nothing to change the sealed fate of Deripaska, the direct target of the sanctions. He remains sanctioned. His current assets remain blocked. The primary and secondary sanctions imposed against him dash any hope of future deals or income, either by operation of his divestiture obligations or future dividends based on his remaining shareholder interests. His ability to transfer his shares, use his shares as collateral, or even receive cash from dividends are all effectively frozen. 

"The sanctions which put Deripaska on the SDN list and froze his investments in Rusal, EN+ and ESE, and make him personally radioactive to future transactions with just about anyone, forced these companies to disentangle themselves from Deripaska’s control and influence or face financial devastation. 

"In fact, the Treasury agreement appropriately reflects how U.S. sanctions policy uses smart sanctions to change the behavior of those sanctioned to build pressure behind the ultimate goals of U.S. policy toward Putin’s Russia. 

"The agreement itself is more akin to a Deferred Prosecution Agreement, in that a failure in its terms can result in an immediate re-listing to the SDN list, while it assures that EN+, Rusal and ESE undertake significant restructuring and corporate governance changes to reverse the circumstances that led to their designation, in the first place.  

"These actions include: reducing Deripaska’s direct and indirect shareholding stakes; overhauling the composition of the relevant Boards of Directors, which control the companies’ operations and strategic direction; restricting the steps that can be taken related to their governance; and agreeing to broad and unprecedented transparency that requires ongoing auditing, certification and reporting requirements. 

"Part of keeping a smart sanctions program 'smart' is to ensure that the world understands that the U.S. sanctions architecture is fair, and respects America’s extraterritorial sanctions reach, and provides an off-ramp from the SDN list for those listed who can prove deserving, is not only good sanctions policy, but the law, because if Treasury fails in its ability to render fair judgments, erstwhile petitioners for removal will simply resort to either the U.S. courts or worse, evasion. 

"In the circumstances of this case, keeping Rusal on the sanctions list could lead to a Putin nationalization of the Russian aluminum industry which would not only work to enrich Deripaska but all but guarantee unfettered Kremlin influence in a global concern that would also invite a set of unintended consequences involving wider economic and security costs for our nation and our European allies. 

"So today I am voting against Senator Schumer’s resolution to disapprove the Administration’s agreement to delist Rusal, the Russian aluminum giant, from the SDN list because Treasury spent the last eight months getting it right and winning the hard fought divestiture agreement.  

"It is among the most robust and verifiable delisting determinations ever devised by Treasury, worthy of Senate approval, and not a gift to the Kremlin."