Oleg Deripaska to give up control of GAZ as US sanctions hit home
The controversial Russian businessman remains blacklisted and is suing the US, alleging it overstepped its legal powers in imposing sanctions on him
Nizhny Novgorod — Russian businessman Oleg Deripaska has said he is ready to give up control of GAZ after sanctions against the van (bakkie) maker began to bite and as Western partners, such as Germany’s Daimler, stopped doing business with the company.
Deripaska and some of the businesses he controls were hit by US sanctions a year ago, when Washington imposed sweeping measures on some of Russia’s biggest companies and business figures to punish Moscow for its alleged meddling in the 2016 US election and other “malign activity”.
Sanctions against GAZ, Russia’s biggest van maker, have not yet taken full effect due to licences for extensions issued by Washington, but are impacting the company, Deripaska said.
“It’s a tough time,” he told reporters on Tuesday on a visit to the GAZ factory in Russia’s central region of Nizhny Novgorod. If sanctions are not lifted, he said, there is no chance GAZ will survive, even if the company is granted another extension in early July, because these extensions “do not give you full freedom”.
A lot of suppliers and partners have stopped working with GAZ due to the risk of secondary sanctions, Deripaska said, adding there is also huge pressure on GAZ from its banks.
GAZ, which competes with a joint venture between Ford and its Russian partner Sollers, among others, mainly sells its vehicles in Russia and the former Soviet Union, making it less dependent on dollar sales.
Daimler said on Wednesday that it hopes Mercedes-Benz will restart production of its Sprinter Classic vehicles at GAZ’s site in the near future. The temporary production halt was caused by a lack of components, it added.
GAZ has contracts with Western partners and relies on vital supplies of foreign components. Along with Daimler, Volkswagen (VW) and US-based Cummins have contracts with GAZ. VW and Cummins did not reply to a Reuters’ request for comment.
The company is also losing market share to rivals Toyota and Ford, Deripaska added.
GAZ did not disclose its 2018 sales. According to the AEB lobby group, its sales of light commercial vehicles, or vans and minibuses, rose 4% in 2018 to 60,677.
The US treasury said in March that it was extending a deadline by four months to July 6 for investors to divest from GAZ, giving Deripaska more time to lower his stake and potentially allowing the company to be removed from the US sanctions list.
Washington lifted sanctions on Deripaska’s main assets — aluminium maker Rusal and its parent En+ Group — in January after he dropped control in them. Asked if he was ready to give up control of GAZ, Deripaska said: “Yes, as it was done in En+.”
Shares in GAZ rose 10% in Moscow on Wednesday. Yet GAZ does not have such weight in global markets as Rusal and En+, so talks on any deal are slower and more difficult, sources close to GAZ previously told Reuters.
Deripaska himself remains blacklisted and is suing the US, alleging it overstepped its legal powers in imposing sanctions on him. He admits his suit against Washington “will be a difficult case” but still hopes his name will eventually be cleared, he told reporters.