Russia’s largest commercial carmaker GAZ Group might go bankrupt and may be nationalized due to U.S. sanctions, Russian businessman Oleg Deripaska said in an interview at the company’s headquarters.
Deripaska said there are currently no talks with U.S. Office of Foreign Assets Control over the terms of lifting the sanctions since the company filed a proposal in October.
It might go bankrupt and may be nationalized," Bloomberg cited Deripaska as saying. The businessman said that even if the company is taken over by the Russian state, thousands of workers will still likely lose their job.
Deripaska said he’s prepared to reduce his influence at GAZ, but admitted that for now there’s a "low chance" of success in the talks with the Treasury.
GAZ currently operates with licenses from OFAC that allow other companies to keep working with the carmaker. However, if the licenses expire as scheduled in July, anyone doing business with GAZ will be subject to harsh U.S. penalties.
Whether GAZ will be subject to the full weight of U.S. sanctions is still an open question. In the case of United Co. Rusal, the aluminum giant that Deripaska previously controlled, the U.S. granted several extensions to avoid disruption in the metals market. Those sanctions were officially lifted in late January after Deripaska agreed to cede control of the companies.
There’s less incentive for the U.S. to lift the sanctions on GAZ, which operates entirely in Russia, than Rusal, which runs plants around the world.
GAZ is still working with Volkswagen AG and the two companies recently held talks to deepen an eight-year-old automaking partnership, according to people familiar with the matter. Early negotiations focus on VW making a substantial investment in Russia, said the people, who asked not to be identified because the discussions are private.
GAZ has seen other customers withdraw as a result of the sanctions. For example, an assembly line at Nizhny Novgorod for Mercedes-Benz owner Daimler AG was halted a year ago.
Deripaska, who is still under personal sanctions, said he doesn’t communicate with anyone at Rusal or En+ Group Plc and obeys the terms of the agreement with OFAC. Still, he finds the situation unfair. He argued that the reasons to impose sanctions were "absurd" and "raving" and has sued the Treasury last month in response.