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Steven Mnuchin Draws Claims of Conflict of Interest in Decision on Russian Oligarch

Democratic lawmakers raised concerns about a potential conflict of interest on the part of Treasury Secretary Steven Mnuchin in his decision to lift sanctions on companies controlled by the Russian oligarch Oleg V. Deripaska.Credit...Yuri Gripas/Reuters

WASHINGTON — Democrats in Congress raised ethical concerns on Tuesday about connections between Treasury Secretary Steven Mnuchin and a billionaire Republican donor who stands to benefit financially from the Trump administration’s decision to lift sanctions on the Russian oligarch Oleg V. Deripaska’s companies.

In a letter to Mr. Mnuchin, two senior Democratic lawmakers said the Treasury secretary’s connection to an entertainment business owned in part by the donor, Len Blavatnik, a major investor in Mr. Deripaska’s giant aluminum company, Rusal, was a potential conflict of interest.

“We are seeking an explanation as to how you managed your own potential conflicts of interest arising from your personal and professional relationships with major Rusal shareholder Len Blavatnik, a key beneficiary from your decision to delist Rusal,” the lawmakers, Representative Elijah E. Cummings of Maryland, the chairman of the House Oversight and Reform Committee, and Senator Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, said in the letter.

The questions about Mr. Mnuchin’s possible conflicts came as Democrats put new pressure on the Trump administration over the terms of its deal to lift the sanctions on Rusal, its parent company and another associated company.

A confidential document disclosed last week by The New York Times showed that the terms of the agreement may have been less punitive toward Mr. Deripaska than advertised, leaving family members and allies with substantial stakes in the company and potentially freeing him from hundreds of millions of dollars in debt.

Tony Sayegh, the Treasury Department’s assistant secretary for public affairs, said that Mr. Mnuchin had “no business relationship” with Mr. Blavatnik and that any implication of a conflict of interest or ethical problem was “absurd.” A spokesman for Mr. Blavatnik said he had never done business directly with Mr. Mnuchin.

Mr. Sayegh said Mr. Mnuchin and Mr. Blavatnik “did know each other personally,” adding that “Mr. Blavatnik is a well-known Republican donor,” and was when Mr. Mnuchin served as finance chairman for President Trump’s 2016 campaign.

The administration had announced the sanctions in April 2018 on seven Russian oligarchs and their companies, including Mr. Deripaska, his giant aluminum company, Rusal, and two linked companies in retaliation for “a range of malign activity around the globe” by Russia, Mr. Mnuchin said at the time.

The Treasury Department repeatedly postponed implementing the sanctions against Mr. Deripaska’s companies, citing the risk of collateral economic damage from the disruption of global markets. The department ultimately moved to lift them entirely after striking a deal to restructure the companies that it said forced major concessions by Mr. Deripaska. The process of lifting the sanctions was concluded on Sunday.

One of Rusal’s major shareholders, SUAL Partners Limited, was founded by Mr. Blavatnik and the Russian oligarch Viktor Vekselberg. Mr. Blavatnik, a dual American-British citizen who was born in Soviet-era Ukraine, has not had sanctions placed on him. But Mr. Vekselberg, like Mr. Deripaska, came under sanctions from the Treasury Department last year and also has drawn the interest of the special counsel investigating Russian interference in the 2016 election.

The administration’s decision to delay and ultimately lift the sanctions on Mr. Deripaska’s companies sparked outrage on the part of Democrats and Russia hawks while also leading to a surge in the stock price of Rusal.

The document outlining the terms of the deal to lift the sanctions showed that SUAL will own 22.5 percent of Rusal after the restructuring of Mr. Deripaska’s holdings. The rise in Rusal’s stock price has increased the value of SUAL Partners’ holding in the company by about $800 million relative to the value last year shortly after the sanctions were announced.

In a separate letter to Mr. Mnuchin on Monday, Senator Mark Warner of Virginia, the top Democrat on the Senate Intelligence Committee, expressed concern about the influence that could be exerted on Rusal under the Treasury deal by SUAL and a Russian bank under sanctions, VTB, as well as by Mr. Deripaska, his family and entities connected to them.

On Tuesday, the Democrats who lead the House Ways and Means, Foreign Affairs, Intelligence and Financial Services Committees said in a statement that they were “considering additional legislative actions to ensure that Treasury and these companies comply with the agreement in letter and in spirit, and to prevent something like this from happening again in the future.”

And in a letter sent to Mr. Mnuchin last week, Representative Jackie Speier, Democrat of California, who sits on the House Intelligence Committee, asked if the secretary had “ever influenced deliberations on sanctions applications when they involved an entity in which you had a financial interest or with which you had a relationship.”

While Mr. Blavatnik had given mostly to Democrats through the end of 2014, his giving has escalated drastically and shifted sharply right since then. He did not donate to Mr. Trump’s campaign or the “super PACs” that supported it, but family members gave $243,000 to the Republican National Committee during the campaign. And two of Mr. Blavatnik’s companies, including his main United States-based company, Access Industries, donated $2.5 million to the super PAC supporting Republican Senate candidates in 2016, plus another $1 million in 2017, according to Federal Election Commission records.

After Election Day, Access Industries donated $1 million to Mr. Trump’s inaugural committee, and Mr. Blavatnik attended inaugural events.

The questions from Democrats about a possible conflict of interest stem from an acquisition, announced in April 2017, by an arm of Access Industries, of a stake in a movie production company called RatPac Entertainment. The deal gave Access “a piece of” a joint film deal venture that RatPac had formed in 2013 with one of Mr. Mnuchin’s companies, Dune Entertainment, to finance Warner Bros. films, according to an article by the Hollywood Reporter posted on Access’s website.

By the time Mr. Blavatnik’s acquisition was announced, Mr. Mnuchin had been serving as Treasury secretary for more than two months. He had stepped down as chairman of Dune Entertainment before his confirmation, at which time Louise Linton, who was then his fiancée and is now his wife, was named “interim C.E.O. in an uncompensated capacity,” while Mr. Mnuchin worked to divest from the company, according to a letter sent by the Treasury Department last year to Mr. Wyden, whose 2016 re-election campaign received nearly $11,000 from Mr. Blavatnik and his wife.

Mr. Mnuchin has fully divested from Dune Entertainment and RatPac-Dune, Mr. Sayegh said. Mr. Mnuchin valued the RatPac-Dune partnership with Warner Bros. at between $5 million and $25 million, according to his personal financial disclosure filings, one of which showed that he sold entities associated with the venture in May 2017.

The statement did not list buyers for the entities, but Mr. Sayegh said they were not sold to Mr. Blavatnik or Access.

Mr. Sayegh also said that neither Mr. Mnuchin nor Ms. Linton were aware of or involved in Mr. Blavatnik’s purchase until it was publicly announced, so it was “not necessary” for Mr. Mnuchin to seek ethics guidance or to recuse himself from the decision-making process on the sanctions.

Representative Lloyd Doggett, a Texas Democrat who pressed Mr. Mnuchin on his relationship with Mr. Blavatnik this month, said it was “very troubling” that he did not seek ethics guidance or recuse himself from the sanctions deliberations. Mr. Blavatnik’s spokesman said “there was never at any point any contact between Mr. Blavatnik and Mr. Mnuchin in connection with the sale or operations of RatPac-Dune.”

In their letter, Mr. Cummings and Mr. Wyden sought details on Mr. Mnuchin’s sale of Dune Entertainment, including the identity of the buyer. They also asked about reports that Mr. Mnuchin had “frequented” Mr. Blavatnik’s yacht before becoming Treasury secretary, and that Mr. Mnuchin’s brother, Alan Mnuchin, a financial adviser, had represented RatPac-Dune in a deal to sell its film library to Warner Bros., which was finalized this year.

The Treasury Department said that Mr. Mnuchin attended only one party on Mr. Blavatnik’s yacht, but would not provide details about the circumstances.

Alan Mnuchin rejected any suggestion that he had been brought into the deal by Mr. Blavatnik or that Mr. Blavatnik might have purchased the stake in RatPac to try to curry favor with his brother.

In mid-January 2018, Ms. Linton attended an exclusive 50-person charity dinner in London that was also attended by Mr. Deripaska.

At the time of the dinner, which was for the anti-poaching organization Space for Giants, the Treasury Department had been directed to put together a report on oligarchs on which it might place sanctions, which would come to include Mr. Deripaska.

A spokesman for Space for Giants said that the guests — including Prince William, the former New Mexico Governor Bill Richardson, the Russian-British newspaper owner Evgeny Lebedev and a member of the Saudi royal family — were not provided one another’s names before or after the event.

Mr. Sayegh said that Ms. Linton, who donated $50,000 to Space for Giants in 2017, according to its annual report, “was unaware” that Mr. Deripaska was at the dinner that she “never interacted with” the oligarch.

“She recalls sitting next to Prince William at the dinner,” Mr. Sayegh said.

A version of this article appears in print on  , Section A, Page 7 of the New York edition with the headline: Mnuchin Faces Ethical Concerns in Decision to Lift Sanctions on Oligarch. Order Reprints | Today’s Paper | Subscribe

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