Stripping of Cypriot Citizenship adds to Deripaska’s Woes
A bad few months just got a whole lot worse for Oleg Deripaska, the infamous Russian tycoon with close ties to the Kremlin. Last week he was unceremoniously stripped of his prized Cypriot citizenship, which gave him free rein to waltz around the EU unimpeded.
For the Russian oligarch, it all started to go downhill in April 2018, when the U.S. slapped crippling sanctions on him and several of his businesses, including EN+, Russian Machines, GAZ Group and Agroholding Kuban.
By way of justification, the U.S. Treasury cited his complicity in the Russian government’s “range of malign activity around the globe.” Treasury Secretary Steven Mnuchin was unequivocal in his pronouncement: “Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.”
In Deripaska’s case, that complicity has allegedly included interference in the U.S. presidential election (via Trump’s disgraced campaign chairman Paul Manafort), and backing an attempted coup in Montenegro.
The aluminum magnate’s subsequent legal complaint against the Treasury details the “utter devastation of [his] wealth, reputation and economic livelihood.” This, according to Bloomberg’s Billionaire’s Index, translates into a $5.8 billion shrink in his net worth last year alone.
While the vaults might not be empty yet, Deripaska’s wealth has most certainly taken a battering.
Then came a crushing legal defeat in October. The case saw Deripaska lose out on $600 million he claimed he was due by the state of Montenegro. According to the oligarch, the Balkan state had breached an obligation to safeguard his investment in the country’s only aluminum plant – the arbitration tribunal disagreed, unanimously rejecting the claim.
And now, as if to add insult to injury, the Cypriot government decides to strip him and his family of citizenship.
Deripaska was reported to have gained citizenship in 2017, as part of a “golden passport” scheme that grants wealthy foreigners full citizenship in return for an investment of at least $2.2 million in the local economy.
The scheme has been a lucrative source of revenue for the island-nation – generating upwards of $4.3 billion since 2013 – but it has also been a source of intense scrutiny in recent years.
Of the 3,336 individuals who have been granted citizenship under the scheme since 2008, a large portion have come from China, Iran, Saudi Arabia or Russia. And it is felt that the vetting process has not been nearly vigorous enough, particularly when considering that citizenship of Cyprus equates to citizenship of, and free travel within, the EU.
Pressure has subsequently been mounting on Cyprus (and Malta, which offers a similar scheme) from the EU to tighten up access to the program. There is a broad consensus that the ease of access to citizenship undermines controls on money laundering, tax evasion and other security and corruption risks affecting the entire bloc, and that a clampdown is necessary.
As a man who has been accused of all these misdemeanors, Deripaska’s expulsion can be seen as a product of this push – a drive to curb the ability of wealthy and influential foreign individuals to simply buy their way into the EU.
The colourful track records of several of those involved in these schemes certainly gives reason to be suspicious – not least that of the aluminum magnate.
For Deripaska, it’s yet another blow, as the dizzying downward spiral continues apace. Another few setbacks and it won’t just be his reputation that suffers, but his wealth and political clout too.
For the man who once topped Russia’s rich list, and was often described as “Putin’s favourite industrialist,” this is quite a reversal.