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Putin ally Oleg Deripaska denies Kremlin encouraged his lawsuit against US Treasury sanctions

Key Points
  • The metals tycoon launched a lawsuit against the U.S. Treasury Department on Friday, in an attempt to cast off sanctions placed on him last year.
  • "I personally was taken in this step by full surprise and I hope that sooner or later people will recognize it is wrong," Deripaska told CNBC's Geoff Cutmore in Moscow, Russia on Sunday. 
  • The Trump administration lifted the sanctions on Rusal and En+ in January — against Democrats' objections — but not the sanctions on Deripaska himself.
VIDEO3:0703:07
Why Oleg Deripaska is suing the US Treasury department

Oleg Deripaska, a Russian billionaire known to have ties to the government of President Vladimir Putin, said on Sunday he would fight the U.S. government in court for "weaponizing the financial system" against him.

The metals tycoon launched a lawsuit against the U.S. Treasury Department on Friday, in an attempt to cast off sanctions placed on him last year.

On Sunday he told CNBC's Geoff Cutmore in Moscow that he launched the suit to clear his name, and he denied that the Kremlin encouraged his legal action against the sanctions. He expressed surprise at U.S. actions against him.

"I personally was taken in this step by full surprise, and I hope that sooner or later people will recognize it is wrong," Deripaska said.

"It is getting worse and worse," he said. "Last hearing in Congress, when people start blaming me personally for any sort of things which I had no connection … (it is) just fantasy."

VIDEO2:4402:44
Oleg Deripaska: US sanctions have left me 'totally isolated'

"So, it has given me total understanding that the legal system in the U.S. may be the last resort where people could assess the facts and to see, you know, what justice will be," Deripaska said.

When asked whether he had taken the decision to sue the U.S. Treasury Department at the instruction of the Kremlin, Deripaska said anyone who believed that was "totally wrong."

The sanctions, which fall under Washington's CAATSA (Countering American Adversaries Through Sanctions Act) legislation, were levied on several Russian individuals and their businesses in April 2018 as part of a wider measure to punish Russia for its interference in the 2016 U.S. election and what Treasury Secretary Steven Mnuchin described as its "malign activity around the globe."

Putin denies that Russia tampered with the U.S. presidential election.

"Weaponizing the financial system … can be justified if its drugs, nuclear proliferation, trafficking. But, to apply the same means (or) the same tools on entrepreneurs, and crushing all concept of presumption of innocence and fair process, I don't think it is something which will stay long," Deripaska said.

A 'new reality'

Deripaska, whose net worth is valued at $3.6 billion, is suing for what his court filing describes as "unlawful action" that led to "utter devastation of Deripaska's wealth, reputation and economic livelihood." Among the companies sanctioned were Rusal, the world's second largest aluminum producer, and En+, in which Deripaska owned majority stakes.

The commodities magnate claims his wealth dropped by 81 percent, or $7.5 billion, as a result of the sanctions, and that he's "a victim of this country's political infighting."

Cannot see a strategy of taking on the U.S. Treasury ending well. That's an affront to the whole U.S. sanctions regime.
Timothy Ash
senior emerging markets strategist, Bluebay Asset Management

Deripaska said the impact of the sanctions — which he described as "a very strong instrument" — had forced him to adapt to a "new reality."

The Trump administration lifted the sanctions on Rusal and En+ in January — against Democrats' objections — but not the sanctions on Deripaska himself.

Deripaska's lawsuit demands that his name be removed from a list of sanctioned individuals, and that the Treasury's Office of Foreign Assets Control, or OFAC, cancel their decision to label him an "oligarch" and disclose records related to him. The legal complaint, filed in U.S. District Court in Washington, names Mnuchin and OFAC Director Andrea Gacki as defendants.

A Treasury Department spokesperson contacted by CNBC on Friday declined to comment on the pending litigation.

OFAC's addition of Deripaska to a list of "Designated Russian Oligarchs" last April was based on allegations that he acted on behalf of "a senior official of the Government of the Russian Federation," as well as for allegations of "money laundering ... threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering," as well as his operation in the Russian energy sector.

But the billionaire's lawsuit is unlikely to be successful, according to Timothy Ash, a Russia expert and senior emerging markets strategist at Bluebay Asset Management.

"Cannot see a strategy of taking on the U.S. Treasury ending well. That's an affront to the whole U.S. sanctions regime," Ash told CNBC in an email. "Resistance is futile, as they say, when it comes to fighting OFAC and the U.S. Treasury."

Read Deripaska's legal complaint below:

CNBC's Kevin Breuninger contributed to this article.