WASHINGTON — When the Trump administration announced last month that it was lifting sanctions against a trio of companies controlled by an influential Russian oligarch, it cast the move as tough on Russia and on the oligarch, arguing that he had to make painful concessions to get the sanctions lifted.
But a binding confidential document signed by both sides suggests that the agreement the administration negotiated with the companies controlled by the oligarch, Oleg V. Deripaska, may have been less punitive than advertised.
The deal contains provisions that free him from hundreds of millions of dollars in debt while leaving him and his allies with majority ownership of his most important company, the document shows.
With the special counsel’s investigation into Russia’s role in the 2016 election continuing to shadow President Trump, the administration’s decision to lift sanctions on Mr. Deripaska’s companies has become a political flash point. House Democrats won widespread Republican support last week for their efforts to block the sanctions relief deal. Democratic hopes of blocking the administration’s decision have been stifled by the Republican-controlled Senate.
The Treasury Department announced the sanctions last April against Mr. Deripaska, six other Russian oligarchs and their companies, including Mr. Deripaska’s aluminum giant, Rusal, as well as the holding company that owns it, EN+, and another company it controls, EuroSibEnergo. Like other oligarchs, Mr. Deripaska is closely allied with the Kremlin.
The sanctions were in retaliation for “a range of malign activity around the globe” by Russia, Steven Mnuchin, the Treasury secretary, said at the time.
The personal sanctions on Mr. Deripaska went into effect immediately, but those on his companies were delayed several times, and Mr. Mnuchin struck a conciliatory tone toward the companies. He clarified that the goal of the sanctions was “to change the behavior” of Mr. Deripaska, and “not to put Rusal out of business,” given the company’s pivotal role as a global supplier of aluminum.
Mr. Mnuchin indicated that the Treasury Department might be willing to lift the sanctions from Mr. Deripaska’s companies if he reduced his stake to less than 50 percent.
Last month, Mr. Mnuchin announced that the department had reached an agreement to lift the sanctions on Mr. Deripaska’s companies in exchange for a commitment “to significantly diminish Deripaska’s ownership and sever his control.”
The department laid out the broad contours of the agreement in a letter to Congress, which was released publicly. But the confidential document, which was not released publicly but was reviewed by The New York Times, describes the deal in considerably greater detail, including proprietary information about the corporate restructuring, much of it not previously reported.
It shows that the sanctions relief deal will allow Mr. Deripaska to wipe out potentially hundreds of millions of dollars in debt by transferring some of his shares to VTB, a Russian government-owned bank under limited United States sanctions that had lent him large sums of money.
The confidential document, titled “Terms of Removal,” also shows that the agreement would leave allies of Mr. Deripaska and the Kremlin with significant stakes in his companies. The document is signed by executives representing Mr. Deripaska’s three companies as well as the official in the Treasury Department who oversees the division that handled the negotiations.
The new information could lend ammunition to criticism that the Trump administration either knowingly let a Kremlin-allied oligarch off easy, or was outmaneuvered by a sophisticated legal and lobbying campaign funded by his companies.
Mr. Deripaska has attracted particular attention because he has been a bit character in the story lines around the Russia investigation led by the special counsel, Robert S. Mueller III. Mr. Deripaska had a business relationship with Paul Manafort, Mr. Trump’s former campaign chairman. Mr. Manafort has been convicted and pleaded guilty to charges brought by Mr. Mueller’s team.
In response to questions about the details outlined in the confidential document, the Treasury Department issued a statement broadly defending the deal, citing provisions that keep Mr. Deripaska and his allies from exerting voting control of some of their shares.
“Deripaska’s control over these entities is severed by this delisting, and he can no longer use them to carry out illicit activities on behalf of the Kremlin,” the statement said. “En+, Rusal and ESE have committed to provide Treasury with an unprecedented level of transparency into their dealings to ensure that Deripaska does not reassert control. Treasury will be vigilant in ensuring these commitments are met, and failure to comply will bring swift consequences, including the reimposition of sanctions.”
Yet Mr. Deripaska’s associates have privately expressed satisfaction with the deal. And representatives for EN+ suggested to at least one prospective outside buyer who expressed interest in Mr. Deripaska’s shares that the company would only consider selling to an independent investor as a fall back option if Treasury did not approve the restructuring agreement.
The publicly released letter sent to Congress said the under the agreement to lift the corporate sanctions, Mr. Deripaska would reduce his ownership stake in EN+ from approximately 70 percent to 44.95 percent. That would include a “restructuring transaction” with a Swiss mining company with which he has worked closely, Glencore, and the transfer of one block of his EN+ stock to VTB Bank and another to a charitable foundation.
The letter did not identify either the number of shares to be transferred, or the name of the foundation. And it stressed that “none of the transactions to be undertaken consistent with the agreement will allow Deripaska to obtain cash either in return for his shares or from future dividends” issued by his companies, which “will be placed into a blocked account.”
But the unreleased, confidential document contains raw numbers, names and other details that raise questions about the degree to which the deal is penalizing Mr. Deripaska.
The document identifies the foundation as Volnoe Delo, which was founded and funded by Mr. Deripaska. It supports programs ranging from stray dog rescue to archaeological excavations to book fairs. Under the deal, it will receive nearly 21 million shares of EN+, amounting to 3.22 percent of the company.
The confidential document reveals that Glencore, which is among Rusal’s biggest customers for aluminum, will receive 67.4 million shares of EN+, good for 10.55 percent of the company.
And VTB, which reportedly already owned nearly 10 percent of EN+, will receive nearly 92 million additional shares, bringing its total stake in the company to about 24 percent.
In return for the additional shares going to VTB, which were worth nearly $800 million at the close of trading Friday on the Moscow stock exchange, Mr. Deripaska would be released from debts he owes the bank, the document shows. Mr. Deripaska had secured the loans with stock in one of his companies before the sanctions were announced. The stock prices of Rusal and EN+ plummeted after the sanctions were announced last year, but rose on the news of the deal to lift them — in effect allowing Mr. Deripaska to pay off more of the loans than he would have been able to do absent a deal with the administration.
Notably, VTB would be able to collect dividends from its EN+ shares, according to the confidential document, despite the bank being under limited United States sanctions.
Another Russian oligarch who faces sanctions by the United States and has attracted the interest of Mr. Mueller’s investigators, Viktor Vekselberg, also has a stake in Mr. Deripaska’s empire through a company called SUAL Partners Limited. Another investor in SUAL Partners is Len Blavatnik, a Ukrainian-born billionaire who has British and American citizenship. He donated $1 million through another company he controls to the committee that funded Mr. Trump’s inaugural festivities, which Mr. Vekselberg attended and to which Mr. Blavatnik was invited.
According to the confidential document, under the restructuring agreement approved by the Treasury Department, SUAL would own 22.5 percent of Rusal, while EN+ would own 56.88 percent of Rusal.
The document specifies the precise ownership stakes in EN+ of other people and entities with personal relationships to Mr. Deripaska. That includes shares owned by his ex-wife, Polina Yumasheva, a British-educated daughter of the chief of staff to Boris N. Yeltsin, a former president of Russia. She owns 5.19 percent of EN+, while her father, Valentin Yumashev, owns 1.57 percent, and a firm called Orandy Capital Limited, which reportedly has links to the family, owns another 1.78 percent, according to the document.
Taken together, Mr. Deripaska, his foundation, his ex-wife, her father and Orandy Capital would own nearly 57 percent of EN+ under the deal.
In its letter to Congress outlining the deal, Treasury stressed that independent trustees with “no personal or professional ties” to Mr. Deripaska will control the EN+ board votes associated with the shares owned by Mr. Deripaska’s foundation, his ex-wife, her father and the family-linked Orandy Capital, as well as those being transferred to VTB.
The deal also requires Mr. Deripaska to hand over voting authority for 10 percent of his shares to “a voting trust obligated to vote in the same manner as the majority of shares held by shareholders other than Deripaska.”
Critics of the deal pointed out that, after Treasury announced it, the share prices of Rusal and EN+ rose sharply, providing a boost to the portfolios of Mr. Deripaska, his family and VTB.
“Score that a win for Putin,” tweeted Michael A. McFaul, a former United States ambassador to Russia, referring to the Rusal share price surge.