Britannia Radio

rom The Times

October 21, 2008

Lord Mandelson and Oleg Deripaska dined together 'a year before they met’

David Robertson, Business Correspondent

Lord Mandelson’s friendship with Russia’s richest man has come under renewed scrutiny after The Times learnt that the pair had known each other for much longer than he implied.

The Business Secretary’s friendship with Oleg Deripaska, the aluminium oligarch, has raised questions of a possible conflict of interest because he signed off rule changes that benefited the Russian’s company while he was European Trade Commissioner.

The relationship has come under the spotlight since Lord Mandelson returned to the Cabinet for a third time. He was asked by The Times how long he had known Mr Deripaska and the minister instructed his spokesman to say that he had met the Russian billionaire at a number of social gatherings in 2006 and 2007.

However, The Times has since learnt that the two men got to know each other at least a year earlier and had dinner at an exclusive Moscow restaurant in 2005.

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A few months before this dinner, the European Commission began an investigation into whether Mr Deripaska’s company, Rusal, should continue to pay punitive import tariffs on aluminium foil.

Lord Mandelson signed off a decision to remove the 14.9 per cent tariff in December 2005 and it was ratified by the Council of Ministers the following month. Lord Mandelson’s former spokesman in Brussels told The Times that there could have been no conflict of interest in the decision to drop the tariff because the two men had not met.

Asked by The Times to clarify when Lord Mandelson first met Mr Deripaska, his press officer at the European Commission, Michael Jennings, replied on his behalf: “Mr Mandelson has met Mr Deripaska at a few social gatherings in 2006 and 2007. He has never had a conversation with Mr Deripaska about aluminium.”

However, two reliable sources have confirmed that Lord Mandelson and Mr Deripaska had dinner at Cantinetta Antinori in Moscow in late January 2005.

Lord Mandelson is thought to have flown to Moscow with Nathaniel Rothschild, the financier, after the 2005 World Economic Forum in Davos. Mr Rothschild attended the dinner along with Peter Munk, the chief executive of Barrick Gold, the world’s largest gold producer. Mr Munk and Mr Deripaska are planning to build a resort for the super-rich in Montenegro.

Cantinetta Antinori is described by the Moscow Times as the “darling of the fashionable crowd” and is located just behind the Ministry of Foreign Affairs – one of the city’s iconic Stalin-era skyscrapers. A huddle of chauffeurs and bodyguards can be seen outside most nights, waiting next to top-of-the-range sports utility vehicles, BMWs and Mercedes while their owners enjoy the Tuscan-style food inside.

Alan Duncan, the Shadow Business Secretary, said: “It will dismay a lot of people that Peter Mandelson’s early statements about hardly knowing Oleg Deripaska now turn out to be completely untrue. What on earth is going on here? We need a full disclosure of all Lord Mandelson’s interests and associations while he was EU commissioner.”

Lord Mandelson declined to clarify the discrepency in his statements about knowing Mr Deripaska.

Before the recent stock market turmoil Mr Deripaska had a fortune estimated at $28 billion (£16 billion). His largest asset is Rusal, the world’s biggest producer of aluminium.

The European Commission imposed a tariff on Russian and Chinese aluminium foil producers in 2001 because they were allegedly dumping cheap foil into the European market. The companies were accused of selling the foil at artificially low prices, which was damaging European producers.

After a year-long investigation, the EU decided that Rusal was no longer dumping and should therefore not pay the tariff, saving the company tens of millions of dollars.

Rusal produced 72,000 tonnes of aluminium foil last year and analysts estimate that nearly half is exported to Europe.

During Lord Mandelson’s term as European Trade Commissioner, he also agreed to reduce tariffs on all imported raw aluminium.

The tariff was reduced last year from 6 per cent to 3 per cent and could be removed completely from next year.

Rusal is a leading exporter to Europe and sells about a million tonnes there a year. At current aluminium prices the tariff reduction will save about $200 million a year.

Lord Mandelson is understood to have stayed on board Mr Deripaska’s £80 million superyacht, the Queen K, in Corfu during the summer, although he has refused to confirm this.

David O’Sullivan, the European Commission’s director-general of European trade, said: “Decisions regarding these cases have been taken in full transparency and are firmly rooted in EU law and in the interests of EU companies.”

Lord Mandelson was recalled to the Cabinet three weeks ago by Gordon Brown despite having resigned from the Government on two previous occasions. He quit in 1998 over an undisclosed £373,000 interest-free loan from another minister, Geoffrey Robinson. He left again in 2001 after allegations surfaced that he had helped to get Srichand Hinduja, the Indian businessman, a British passport. He was subsequently cleared of any wrongdoing by an independent inquiry.