Treasury spars with House Democrats over Mnuchin allegations

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U.S. Treasury Secretary Steven Mnuchin

The Treasury Department is sharply disputing claims from House Democrats that Secretary Steven Mnuchin had business ties with a Russian businessman who benefited from Treasury’s recent decision to lift US sanctions on three companies.

In a letter responding to California Democrat Rep. Jackie Speier, the Treasury Department on Wednesday denounced any conflict of interest between Mnuchin and Len Blavatnik, a major shareholder in Rusal, the world’s second-largest aluminum producer.

Democrats this week intensified their pressure on Mnuchin over the Trump administration’s decision to remove sanctions on Rusal, En+ as EN+ Group and JSC EuroSibEnergo after Russian oligarch Oleg Deripaska reduced his stake in all three companies.

Speier, a member of the House Intelligence Committee, sent an initial letter to Mnuchin last week questioning his business ties with Blavatnik, including press reports he sold his stake of RatPac-Dune Entertainment to him.

“Your allegation appears to be based on an old, unsourced, uncorroborated rumor reported in the Hollywood Reporter,” wrote Jennifer Bang, deputy assistant secretary for the office of legislative affairs for the Treasury Department on Wednesday.

The letter stated Mnuchin never sold his stake in RatPac to Blavatnik or any of his companies as required under his ethics agreement. Instead, the secretary’s stake was sold to a third party unconnected to Blavatnik.

“The secretary did not sell any interest in his business to Mr. Blavatnik,” Bang wrote.

Treasury’s response prompted a stinging reply letter from Speier, who described the government’s letter as a “mischaracterization.”

“Your financial disclosures clearly state that you sold your interest in RatPac-Dune Entertainment at approximately the same time Leonid Blavatnik’s company acquired an interest in related entity, RatPac Entertainment,” wrote Speier to the secretary.

Speier pressed Mnuchin to disclose who purchased his stake and raised a series of other questions, including whether or not he sought the opinion of the ethics office on his involvement in the sanctions issue.

Democrats have criticized the sanctions deal, arguing that Deripaska still retains “significant influence, if not de facto control, over En+, Rusal and ESE” through his associates and family members.

The letters to Mnuchin come less then two weeks after a hostile briefing with House Democrats on Capitol Hill, which Speaker Nancy Pelosi described a classified briefing on the plan to relax Russian sanctions as a “waste of time.”

Treasury initially notified Congress in December of its intent to lift the sanctions on the firms after months of negotiations to significantly reduce Deripaska’s stake in the companies and after the firms agreed to make “significant restructuring and corporate governance changes.”

Senate Democrats tried last month to reverse the Trump administration’s decision to lift sanctions on the firms, but failed to win the 60 votes needed. Sanctions on the three Russian firms were officially relaxed last weekend, according to an official government notice.