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Business Vs COVID19: The Oleg Deripaska story

Business Vs COVID19: The Oleg Deripaska story

Oleg Deripaska is a well-known industrialist and philanthropist who has established companies including RUSAL, a major global producer of low-carbon aluminium and GAZ Group, Russia’s leading manufacturer of commercial vehicles. Deripaska is also the creator of the Volnoe Delo, one of the largest Russian organisations involved in charity, patronage and volunteer projects.

 

 

In 2018, the United States imposed sanctions on Deripaska and his companies. Officially, the reasons given were alleged links to the Kremlin and ‘malign activity’ in the 2016 US election through political operatives Paul Manafort and Konstantin Kilimnik. Deripaska has constantly denied these allegations and the alleged link to Kilimnik has since been disproved. Some analysts have speculated that the sanctions were the result of pressure from RUSAL’s competitors trying to gain market share.

 

 

The placement of RUSAL on the sanctions list triggered a collapse in aluminium prices, destabilised the global market and threatened about a million jobs. In order to free RUSAL from the sanctions, Deripaska had to reduce his stake in the company. Although in 2019 the US Treasury lifted the sanctions on RUSAL and En+(an electrical utility company Deripaska founded), he has been unable to negotiate a similar deal, along with his other company GAZ Group.

 

 

Despite having taken a large financial loss, Deripaska doesn’t seem to have slowed down his charitable work. His Volnoe Delo Foundation invested hundreds of millions of US dollars in education, science, culture and peace work, including support for the Orthodox Church in both Russia and abroad. The foundation has also been very active in fighting the spread of the coronavirus. (Deripaska gained considerable relevant experience from his efforts in fighting the Ebola virus in Western Africa in 2015. The medical centre he built in Guinea managed to stop the spread of the virus and successfully developed a vaccine against the virus.) He has put a lot of money and effort into helping local hospitals in Russia this spring: he purchased dozens of ventilators and over a million pieces of personal protection equipment. He is also financing the construction of nine infectious disease hospitals in Russia and abroad.

 

 

Recently, Deripaska has been making headlines in Cyprus over the issue of his Cypriot citizenship being potentially rescinded as part of the stricter measures and review process involved in the citizenship-by-investment programme. But who is the man behind the headlines?

 

 

Deripaska started his career in the early 1990s, aspiring to become a theoretical physicist. However, amid the collapse of the Soviet Union, the government withdrew academic funding while business opportunities began to open up. In contrast with many others who came into wealth in Russia in the early 1990s, Deripaska is essentially self-made. For example, he never took part in the now infamous loans-for-shares auctions, the early-1990s privatisation scheme that enabled many Forbes-listed Russians to acquire their first assets for a negligible fraction of a price. He began work as a metal broker, before becoming the head of a small aluminium smelter in Siberia by the age of 26. This small company led to the creation of RUSAL, which now produces about 6 percent of the world’s aluminium.  

 

 

The environment is another important topic for Deripaska. The companies he set up, RUSAL and EN+, are notable for their use of green technologies. And Deripaska personally has been very outspoken on the topic. One initiative he has consistently advocated for is the introduction of a global emission tax (a universal mechanism to finance climate change programmes) and the creation of an international carbon fund to support innovative programmes for environmental protection.

 

 

Speaking at the World Economic Forum in Davos earlier this year, Deripaska told Bloomberg:  “We’ve gotten to the point where children like Greta [Thunberg] are swearing on the stage of the biggest forum. Until payments are imposed for CO2, nothing in the world will change. All this talk at Davos about climate change is just words. In reality, nobody’s doing anything.”

 

 

En+ is developing green energy projects in Cyprus and has purchased solar farms in Nicosia and Limassol. The company is also in talks with potential partners about the promotion of environmental projects, including those relating to waste management.

 

 

The citizenship-by-investment programme is being scaled back amid growing political pressure from the US and the EU. But is this in Cyprus' best interest? At a time when the economy is under pressure, and foreign investment is thin, an argument can be made for focusing on the country's own needs and leave political squabbling to others.

 

 

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