US Sectoral Sanctions

US Direct Sanctions - SDNs (cont'd) Such individual-person listing Bars US persons' dealings with them or their controlled companies, blocked assets etc. generally measured by ≥50% shareholding including by two or more SDNS (see OFAC FAQs 398-402) note in particular the serious knock-on effect of the 2018 designations of Messrs. Deripaska and Vekselberg-given their vast direct and indirect controlled-company holdings Doesn't bar dealing with non-SDN company where SDN person is just officer/director, etc. (e.g. Mr. Sechin - Rosneft... and also Messrs. Miller, Kostin, Bogdanov, etc.) except is now clearly interpreted to bar having an SDN-individual executive signing a contract on behalf of a non-SDN company with US person (OFAC FAQS 398, 400 - and see FAQ 585) and US companies must also be cautious even re "mere" negotiating with such SDN-individual executive (or his/her signing non-binding preliminary documents) acting on behalf of a non-SDN company, or transactions where the SDN-individual is otherwise directly involved - note the 2017 OFAC $2 million penalty imposed on a leading US energy company for Mr. Sechin's signing Rosneft JV documents in 2014 – but see Dec. 2019 US federal court decision vacating that penalty, while reinforcing that now US persons are on fair notice in light of the above, is a US person serving on a Russian company board of directors together with an SDN person still OK? (in any event there is a clear bar on US person's serving on the board of an SDN company - FAQ 568, slide 37) also need to keep in mind separate SSI sanctions / restrictions re such companies (e.g., Gazprom, Surgutneftegaz and VTB) Compare with new EU June 2020 Commission Opinion on the same subject - which has important broader definition of "control" (see link at slide 82 below) Morgan Lewis 34

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