Reader Steven Montgomery points out the concern being expressed in Washington as pro-Kremlin oligarch Roman Abramovich seeks to enter the U.S. steel market. The Financial Times reports (from London):
US authorities are to examine Roman Abramovich’s ties to the Kremlin as part of a national security review of a $2.3bn (£1.18bn) bid for Oregon Steel by a company controlled by the Russian billionaire.
Experts in Washington say the US government panel that reviews foreign deals will scrutinise the proposed takeover, announced last month, more closely if Mr Abramovich is found to be acting with the backing of the Russian government.
Mr Abramovich is believed to be close to Vladimir Putin, Russian president. The Russian steel company, Evraz, is controlled by Mr Abramovich and Alexander Abramov, group director.
Evraz and Oregon Steel said in regulatory filings that the companies intended to submit their deal to a voluntary review by the Committee on Foreign In-vestment. The committee is a secretive executive branch agency that vets deals on national security grounds.
If successful, the bid will be the largest Russian takeover of a US company.
The companies have said they do not anticipate that the deal will be blocked. Steel has traditionally not been considered a particularly sensitive asset.
But attorneys who work on such cases say the US government is likely to focus on Mr Abramovich’s relationship with the Kremlin.
“The government may not need to know every last special purpose vehicle [Mr Abramovich controls] but what they do need to know is whether Evraz is owned, controlled or influenced by a Russian or other government interest,” said Daniel Lucich, a former deputy assistant secretary at the Treasury.
Concern is increasing in Washington about Russia’s economic policies and its commitment to democracy. The White House is also under pressure to vet any politically sensitive transaction more carefully in the wake of the Dubai Ports World debacle, when the administration was heavily criticised for approving an unpopular transaction.
Toby Gati, a former official with the Clinton administration and adviser at Akin Gump, said the deal would intensify the US government’s interest in Russia’s drive to create national champions in key economic sectors.
Mr Abramovich sold his stake in oil company Sibneft to Gazprom, the Russian energy group, last year for $13bn.
When the owner of Chelsea football team then acquired a 41 per cent stake in Evraz in June, many in the market suspected Kremlin involvement.
Pavel Tatyanin, Evraz chief financial officer, told the FT the companies were committed to co-operating with regulatory authorities and securing regulatory approval in a “timely manner”.
The company has gained the support of an important ally in the United Steelworkers labour union, whichsaid the acquisition would improve job security for its members.
The John Birch Society offers further analysis.