March 14, 2019

U.S. Treasury: Russian oligarch list not meant to punish IPG CEO Gapontsev

Photo | Courtesy
Valentin Gapontsev

In a 55-page document, the U.S. Department of the Treasury said IPG Photonics and CEO Valentin Gapontsev's lawsuit to remove the wealthy physicist from a list of Russian oligarchs lacks merit.

The Treasury, however, did not dispute Gapontsev's dual U.S. and Russia citizenship, his home in Worcester, his source of wealth or challenge him on his alleged distance from Russia and President Vladimir Putin.

Instead, the Treasury said the Oxford company and Gapontsev failed to show specific cases where being included on the Kremlin list has had negative effects on the company.

Gapontsev's complaint, filed in December, claims companies, U.S. government contractors and financial institutions have been hesitant to do business with with a firm led by an alleged Russian oligarch.

The Treasury, at the behest of Congress, compiled a list of Russian oligarchs and political operatives last year to comply with a law imposing sanctions on Iran, North Korea and Russia.

"Dr. Gapontsev's wealth comes from his invention of market-leading industrial laser technologies, not from any corrupt parceling out of public assets to cronies of President Putin," IPG's December court complaint said.

In Wednesday's motion to dismiss Gapontsev's suit, the Treasury pushed back on his claim that the Treasury simply copied a Forbes list of Russian billionaires, saying at most, it consulted Forbes when compiling the list.

The Treasury repeatedly said the list was not meant to punish anyone or introduce sanctions, but was simply a response to Congress asking for such a list.

In an audit report on the Treasury's drafting of the list, using the Forbes list -- a public source -- helped distinguish the list from a sanctions list.

The Treasury was considering two options to form the list, one which included compiling more information on the malign Russian actors using classified information, but that, Treasury officials said, could telegraph to the world who the government was keeping its eyes on.

However, the audit report said U.S. Department of State officials said using that approach could misidentify wealthy individuals with no connection to the Russian regime.

Other court filings from both sides are due later this month, and a court hearing at a U.S. court in the Washington, D.C. is set for April 23.

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