Politics & Government

Senate Democrat increases scrutiny of Russian investment in a Kentucky mill

A top Senate Democrat is asking the owner of a controversial Kentucky aluminum mill to provide more details about a Russian oligarch’s investment in the project, including whether the partnership could provide the Russian company with access to sensitive information.

In a letter to Craig Bouchard, Braidy Industries’ chief executive officer, Sen. Ron Wyden, D-Oregon, says recent reports about the plant have raised questions about whether there were discussions with the Russian company’s investment in the plant before the U.S. Treasury Department lifted sanctions on the company.

The Russian firm Rusal, which has pledged a $200 million investment in a Braidy Industries proposed $1.68 billion aluminum mill near Ashland, was taken off a Treasury sanctions list in late January, despite assertions that it and a large shareholder, Oleg Deripaska, are closely tied to Russian leader Vladimir Putin.

Rusal’s parent company, En+, noted Thursday that Deripaska had already relinquished his control of the company and “has no any management or day-to-day involvement in Rusal.” It said his stake has been reduced to a minority investment with no access to dividends.

Wyden’s letter notes that according to a recent report in Time, Bouchard met in Switzerland with a Rusal sales executive in January, although the Russian company was then facing U.S. sanctions. The letter notes that the day after the Switzerland meeting, the Senate blocked a bill to keep the sanctions in place and three months later, Rusal announced plans for a partnership with a Braidy subsidiary, Braidy Atlas.

“Was a potential investment by Rusal in Braidy Atlas discussed during this dinner, or at any other time prior to sanctions being lifted?” asked Wyden, the top Democrat on the Senate Finance Committee.

The company said in a statement that it had “previously made the facts widely known concerning Rusal’s direct minority investment” in the aluminum rolling mill, including on its website. But it said it looks forward to providing Wyden “with a timely response to his inquiry and interest in our example of leadership in the economic revitalization of Appalachia.”

Braidy said the investment and the supply contract with Rusal would allow Braidy Atlas “to create the most sustainable aluminum production in the world for the automotive and food and beverage industries” and says it would create 600 jobs and boost Kentucky’s economy by $2.8 billion.

It noted that Bouchard last week addressed the United Nations Global Climate Action Summit and that Braidy Atlas “has taken a leadership role in the international coalition to bring the aluminum industry to zero net carbon emissions by 2050. The health and prosperity of our community are of a higher priority than political partisanship.”

Rusal’s investment in Kentucky came months after Senate Majority Leader Mitch McConnell, R-Kentucky, helped defeat a House-approved measure to keep the sanctions on the Russian entities. Wyden’s letter to Bouchard asks whether the January meeting was disclosed to any state or federal government officials before the sanctions were lifted.

McConnell has told reporters that his action was “completely unrelated to anything that might happen in my home state.” He said that a number of senators backed the measure to lift the sanctions, as proposed by the administration.

“The administration took the position and I talked to the Secretary of the Treasury about it, that the conditions that they thought needed to be met were met,” McConnell said.

The U.S. Treasury Department had sanctioned Deripaska, a former business partner of onetime and now convicted Trump campaign chief Paul Manafort, in April 2018. The sanctions targeted so-called oligarchs believed close to Putin and were designed to punish him for subverting Western democracies.

Treasury reversed itself unexpectedly in December 2018, lifting the sanctions a month later because it said Deripaska had significantly reduced his stake in Rusal’s parent company.

The decision was puzzling because the other major shareholder in En+ is VTB Bank, a Russian bank still under U.S. sanctions since Russia’s invasion and annexation of Crimea in 2014. En+ and Rusal had been sanctioned due to their ties to the Kremlin, leading to questions about Treasury’s decisions.

In his letter, Wyden references a 2009 book, America for Sale, that Bouchard wrote with James Koch, in which the steel executive warns that “if Prime Minister Putin harbors a nasty wish to throw a wrench into the works of the U.S. economy, then he now has acquired the means to do so because of significant ownership in the U.S. steel industry.”

And Wyden asks whether Bouchard believes “that the major ownership interests in Rusal by Deripaska and VTB might enable Prime Minister Putin to someday ‘throw a wrench into the works of the U.S. economy?’ If not, why not?”

He also asks whether the Russian Direct Investment Fund, a Russian sovereign wealth fund that invested in Rusal’s parent company, En+ in 2017, still has an interest in En+ or Rusal.

“If so, what safeguards are in place to prevent the Russian sovereign wealth fund from accumulating “political and economic muscle” over the U.S. aluminum industry through its affiliation with Rusal?” Wyden asked.

En+ said in the statement it had no knowledge of Braidy prior to March 2019. And it said the negotiation between Rusal and Braidy executives on a potential investment and supply contract only began after the sanctions were removed on Jan. 27, 2019.

The plant has been touted by Kentucky officials as a potential lifeline for Eastern Kentucky’s faltering economy.

Kentucky Gov. Matt Bevin, an avid supporter of Braidy Industries, in April predicted that the mill would help spur growth in counties far from the plant. Bevin in 2017 helped coordinate a $15 million direct investment in Braidy, using state tax dollars, making every Kentuckian a partial owner of the company.

The company also benefited from a $4 million Abandoned Mine Lands federal grant that will build support piers and columns at Braidy’s industrial site.

Lesley Clark works out of the McClatchy Washington bureau, covering all things Kentucky for McClatchy’s Lexington Herald-Leader. A former reporter for McClatchy’s Miami Herald, she also spent several years covering the White House.