Ben Butler and Daniel Hurst

Thu 17 Mar 2022

The Morrison government is facing questions over why it has not included two Russian oligarchs, who have assets in Australia, among those it has imposed sanctions against over the invasion of Ukraine.

Oleg Deripaska, who has a stake in an alumina refinery in Gladstone run by Rio Tinto, and Viktor Vekselberg, who has an interest in a gas project in the Beetaloo Basin, were not among 41 oligarchs and family members Australia’s department of foreign affairs and trade hit with sanctions on Monday.

Deripaska and Vekselberg were among oligarchs sanctioned by the US in 2018 for reasons including Russia’s invasion of Crimea in 2014, and last week the UK government included Deripaska among seven influential business figures sanctioned over the war against Ukraine.

The head of Ukraine’s embassy in Canberra, Volodymyr Shalkivskiy, said he hoped the sanctions were extended to include them, although he stopped short of criticising the Australian government for the omission.

“The government of Ukraine is grateful to the government of Australia for its proactive and extensive sanctions policy against Russia, which is the biggest among the Indo-Pacific countries,” Shalkivskiy told Guardian Australia.

“We hope that those Russian oligarchs will be included in the next round of sanctions.”

Director of climate and environment at activist investor group the Australasian Centre for Corporate Responsibility, Dan Gocher, said Australia should impose sanctions on Deripaska and Vekselberg.

“Their links to Putin are well-established and have been for years,” he said.

“We can’t make sense of Dfat’s list, to be honest.

“We would hope that Dfat adds them to the list and we would hope that Australian companies haven’t been lobbying to keep them off the list, that would be untoward.”

National director of transparency advocacy group Publish What You Pay, Clancy Moore, said:

“The involvement of Russian oligarchs in Australia’s resources sector raises serious red flags for communities, investors and government regulators.

“Since the invasion, the foreign minister has announced sanctions on almost 500 oligarchs, economic entities and influential supporters of Putin’s regime. Why has the Australian government chosen to not introduce sanctions on Viktor Vekselberg and Oleg Deripaska when they are sanctioned by the US and UK respectively?

“It’s in Australia’s national interest to have greater transparency for our natural resources sector. This includes a public beneficial ownership register so that communities know who ultimately owns and profits from mining, oil and gas projects.”

An Origin Energy spokesperson said it would be “shocking and offensive” to suggest the company would seek to influence government sanctions.

“We are appalled by the Russian invasion of Ukraine and will abide by rules set by the Australian government with respect to sanctions that might be put in place,” the spokesperson said.

A Rio Tinto spokesperson declined to comment on whether the company had lobbied for or against any person being included on the sanctions list and Guardian Australia does not suggest that it has.

Billionaire mining magnate Andrew Forrest said anyone doing business with Russia was profiting from “blood money”.

“So I certainly reach out to all my fellow business leaders and say, if you’re still making money in Russia, if you’re not getting out, if you are even considering not getting out quickly, then you must know … that you are taking the receipts of blood money, that Ukrainians are suffering at the hands of your business,” he told CNBC.

The government has not ruled out further expanding sanctions.

When asked to explain the failure to sanction Vekselberg and Deripaska to date, a spokesperson for Dfat said the government would “not speculate about future potential listings”.

“Sanctions considerations are continuing,” the spokesperson said.

“We have so far sanctioned more than 460 individuals, businesses and entities, including 41 oligarchs and their immediate family members.”

Dfat’s position was first reported by ABC News.

Following media coverage of the issue, the government signalled it was likely to act soon.

A spokesperson for the foreign minister, Marise Payne, told the Nine newspapers on Thursday she was “waiting on advice on further sanctions measures from her department and will consider that advice as soon as possible, once it is received”.

As Guardian Australia has previously reported, Vekselberg has an interest in an exploration project in the Beetaloo Basin, an area in the Northern Territory touted by the Morrison government as a key part of a gas-led recovery from the Covid crisis, through his shareholding in a London-listed company, Falcon Oil & Gas.

Falcon is the junior partner in a joint venture to explore gas tenements with Australia’s Origin Energy.

Vekselberg’s representative on the Falcon board, Maxim Mayorets, stepped down on 1 March. At the time, Origin said it had raised concerns about Vekselberg’s 16% stake in Falcon with the company.

A company founded by Deripaska, EN+ Group, owns 20% of Queensland Alumina Limited, which operates a plant in Gladstone that refines bauxite into alumina, the remainder of which is owned by Rio Tinto.

Deripaska formerly controlled EN+ but after he was sanctioned by the US in 2018 reduced his stake in it to 45% so that it was not captured by the measures against him.

Rio Tinto and an EN+ subsidiary, Rusal, pay QAL to refine the bauxite in proportion to their ownership of the plant. Rusal also buys its share of the bauxite refined by QAL from Rio. In addition, the partners provide debt finance to QAL, also in proportion to their ownership, and in return receive interest payments from the refinery.

In the event of sanctions taking in Rusal, Rio Tinto would take over operation of QAL