23 April 2019

Lording it

  • Greg Barker has gone from being an MP and David Cameron’s climate change envoy to chairing one of the biggest aluminium and energy companies in Russia
  • He used his corporate lobbying experience, and his title of Lord Barker,  to overturn US Treasury sanctions against the company of Oleg Deripaska, a powerful oligarch and one of Putin’s cronies
  • Barker claims that his company, En+, is an example of green energy, but environmentalists say it is one of the biggest polluters in Russia

By Paul Caruana Galizia

Not many people have heard of Greg Barker. Those who have associate him with dogs.

During his short time in the British government, he was most famous for warming a cushion in the ministerial office microwave for his sausage dog, Otto. Barker helped arrange David Cameron’s seminal photoshoot with huskies, part of a trip to the Arctic that burnished the Conservative leader’s green credentials. And then there is the large oil painting he had commissioned of himself in his fox-hunting gear.

Even among his Conservative contemporaries – the Cameroons who championed “Dave” first as leader and then as prime minister – Barker was viewed as something of a joke. If anyone is laughing now, it is in disbelief.

Importantly for this story, Barker is now known as Lord Barker of Battle. Armed with that title and backed by a platoon of lawyers, PR advisers and bankers, he has engineered one of the most successful lobbying efforts in modern multinational business. On behalf of En+, Russia’s largest aluminium producer, he has overturned sanctions that had been imposed by the US Treasury because of evidence about Russian election interference, its supply of weapons to Assad in Syria, and in the wake of Russia’s annexation of Crimea.

Barker orchestrated an army of Washington lobbyists who coordinated political pressure from foreign governments. He juggled the interests of billionaires from Moscow to Zurich. He managed, or at least stage-managed, the repositioning of Oleg Deripaska, one of Russia’s most feared oligarchs.

Oleg Deripaska with the Russian president Vladimir Putin

And today, Barker, once Britain’s climate change envoy, is the executive chairman and pivotal figure at the head of a coal and aluminium conglomerate.

It’s tempting to see Barker as a modern version of Chauncey Gardiner, an airy fool who, like Peter Sellers’s character in the 1979 film Being There, stumbles witlessly into the seat of power. But that’s not who he is. Nor is this the story of a man long underestimated by his peers who discovers his talent as a modern Machiavelli. And it’s not just a tale of opportunism and hypocrisy. For those who find it difficult to see how Barker squares the ardent environmentalism he professed a few years ago with the record of water pollution and the colossal carbon footprint of the company he now chairs, it’s not only about hot air in high places.

The successful effort Barker organised to overturn US sanctions on En+ shows how lobbying really works. It demonstrates how you can exploit the status and access afforded by a British peerage internationally, without being accountable at home in the UK. And, perhaps most alarmingly, it shows that some companies are “too big to sanction”. The awkward lesson for the US is that, when it tried to weaponise its trading relationship with a Russian resources giant, it was in danger of shooting itself in the foot.

This is about money, access and power. It’s the story of the Barker plan.

On 6 April 2018, as evidence was growing of the Kremlin’s “malign activity around the globe”, the US Treasury sanctioned a list of Russian oligarchs. Oleg Deripaska, one of the most powerful businessmen in Russia, was on that list and so were several of his companies. The US Treasury said the reason was that he was an agent of the Russian state, had threatened to kill his rivals, and was linked to organised crime. Deripaska said the designation was “groundless, ridiculous and absurd”.

Aluminium ingots in a warehouse at Rusal's smelter in Krasnoyarsk

This was not Deripaska’s first fight. An orphan from a village in southern Russia, he had conquered Siberia’s aluminium assets during the 1990s “aluminium wars” with the reported helped of Russian gangsters. In the years that followed, his company Rusal – which is half-owned by En+ – bought up mining assets and smelters to become what is now the world’s second largest aluminium producer. Aluminium is everywhere, essential to cars and drinks cans, planes and building cladding.

But the battle that Deripaska faced in 2018 was going to take a different kind of muscle.

At first, he tried to circumvent the sanctions and redirect Rusal’s aluminium sales to China. Glencore’s chief executive, Ivan Glasenberg, resigned from the board of Rusal. Two board members resigned from En+. Soon only Barker and one other non-Russian were left on the board. They, too, tried to come up with a Plan B, this time to sell Rusal. Again with no luck.

But it soon became clear that the US sanctions were having unintended consequences.

The US Treasury had announced the sanctions on a Friday afternoon when markets were closed. “Compliance lawyers couldn’t get clarification over the weekend and investors woke up on Monday and panicked,” said former State Department sanctions expert Richard Nephew. “Under Obama, we never announced sanctions on a Friday.”

As another former State Department sanctions expert, Jarrett Blanc, put it: “The aluminium market is extremely tight.” The world’s largest aluminium refinery in Brazil had been ordered to shut shortly before the sanctions were announced after admitting to dumping toxic waste water. “There was no free capacity.”

European ambassadors in Washington started to warn the Treasury of serious market and industrial problems if the sanctions remained in place. Ireland feared for its Rusal-owned Aughinish Alumina plant, which provides 30 per cent of Europe’s total supply of alumina, an intermediate product for smelters.

The Treasury’s hands were tied, pressure from the market and European allies was mounting, and Barker knew it.

Barker hired the lobbyists Mercury Public Affairs, a firm that cropped up more recently in Robert Mueller’s investigations: Paul Manafort, President Trump’s former campaign manager, had used Mercury to lobby for Kremlin-backed Ukrainian politicians and oligarchs. In Washington, Mercury registered Barker as a “foreign principal”. Their registration document stated that Barker represented and was funded by a company owned and controlled by “Russian national” Oleg Deripaska, “a ‘Special Designated National’ by the United States Government and subject to economic sanctions”.

Anna Massoglia of the Center for Responsive Politics, working off US Foreign Agent Registration Act filings, calculates that Barker has spent $2,197,522 on Mercury so far.

One of his Mercury lobbyists was Bryan Lanza, another veteran of the Trump 2016 presidential campaign.

Lanza represented Barker in relation to the En+ sanctions. He was among the most active of his lobbyists, logging 48 contacts with US officials and journalists in April and May 2018 alone.

David Vitter, one of Barker's Mercury lobbyists in Washington

David Vitter, a former Republican Louisiana senator, was another of Barker’s Mercury lobbyists. He provided the ambassadors of Australia, Germany, Jamaica, France, Ireland, Italy and Sweden with the letters that warned the Treasury of En+’s potential takeover by “Chinese interests” or the Russian government.

Rothschild & Co, the investment bank, was hired to advise on selling Deripaska’s shareholding. The headhunters Russell Reynolds were hired to look for new board members, and the law firm Latham & Watkins, to which Barker paid multiples more than to Mercury, advised on negotiations with the Treasury.

Michael Dobson, a lawyer who worked on Russia sanctions at the Treasury until September 2018, described the Barker plan as “unusual in that it had so many fronts – the bankers, lawyers, lobbyists, PR advisors”. In London, Barker hired the public affairs consultants Hawthorn Advisors and Hudson Sandler.

All of them, in one way or another, emphasised that they did not work for Deripaska but for Barker. More specifically, Lord Barker. Or, as one person involved in the business put it, “The Lord”.

Barker’s title gave him status both in Moscow and Washington. But why was he made a member of the House of Lords, the UK’s upper house? What had he done to earn a title that served him so well on the international stage?

Greg Barker was not an obvious member of David Cameron’s so-called “mateocracy”. He wasn’t an old Etonian; he didn’t go to Oxford. He was born in Shoreham-by-Sea and grew up on England’s south coast, where he went to state primary and secondary schools. In his last two years of school he switched to private school, but a lesser one, Lancing College, “a small public school of ecclesiastical temper on the South Downs”, as Evelyn Waugh described it. From there, he went to Royal Holloway, one of the loosely affiliated colleges that make up the University of London.

In 1992 he married Celeste Harrison, heiress to a brewing fortune. After a decade working in corporate finance and then financial PR, but always eyeing a seat in parliament, he was elected in 2001, at 35 years old, as MP for Bexhill and Battle in East Sussex.

At the time, Barker was one of the fresh faces of modernising Conservatism. He replaced a Conservative MP who resigned after a scandal involving a well-paid consultancy for a controversial businessman. Barker won the seat, handily fending off a Ukip candidate, Nigel Farage.

In the summer of 2002, Barker invited Cameron, who was also elected in 2001, for a weekend at his Sussex home, a ten-bedroom Queen Anne house in Peasmarsh, East Sussex. It was a social event with a purpose: Charles Moore, then the Editor of The Daily Telegraph, the biographer of Margaret Thatcher and a man of considerable influence in the Conservative Party, was invited, too. Barker later claimed that they plotted Cameron’s run for the party leadership over dinner.

By the spring of 2004, Cameron had recruited a group of ambitious young MPs into a campaign team. George Osborne and Michael Gove were at the heart of it; Barker was happy to describe himself as Cameron’s bag carrier, a key part of his team when he won the leadership in 2005.

Andrew James's portrait of Barker in full fox hunting regalia

Not that that was the way he saw himself. At the same time, the artist Andrew James was commissioned by Barker’s wife to paint a portrait of the rising politician for their house. James, a famed portrait painter, recalls: “Greg pretty quickly said ‘full fox hunting regalia’ at our first meeting.” The artist said Barker “had an intensity, steely cold gaze…[he was] interesting visually”.

A few weeks later, Barker left his wife for a man. He had promoted himself as a “family man” and “repeatedly [voted] against laws to improve gay rights”, the Daily Record commented. Shortly afterwards, Barker broke up with the man he had been seeing. He later said that life as a public figure was “never quite the same” after the press exposure of his private life.

A few months later, the portrait was vandalised. Barker told James that “local lads” had broken into his house. The painting was beyond repair. Barker asked James, the artist, to destroy it. “Someone had written something in red oxide paint all over it,” James recalled. Barker declined to comment on “the issue”. Most of the red lettering had been peeled off, but three capitalised words remained visible: “GREG, FUCKING, BASTARD.”

Cameron promoted him. In 2008, after a stint as Conservative spokesperson for environment, food, and rural affairs, Barker became shadow minister for energy and climate change.

William Hague, then foreign secretary, and Greg Barker promote UK-Indian business in 2010

“The climate change role was illustrative of Cameron’s moderniser position,” says Lord Cooper, Cameron’s former director of strategy. Barker’s appointment was important because Cameron was repositioning the Conservative party as champions of the climate agenda: “Vote blue, go green” was the slogan. Cooper, himself a moderniser, said: “It’s always a mystery who gets put on the ladder, but it seemed to me that if you were part of that social circle, you got the jobs.”

In April 2006, Barker organised a trip with Cameron to the Arctic to “investigate” climate change. The photograph of Cameron hugging a husky was taken on this trip. After his election as prime minister in 2010, he made Barker minister of state in the Department of Energy and Climate Change.

Cameron hugs a husky during a trip to the Arctic with Barker in 2006

During his time in government, Barker drove the increase in the UK’s renewable electricity from seven to 19 per cent. In September 2014, he was appointed the UK’s climate change envoy to accompany Cameron to the UN General Assembly. There, he tweeted pictures of Leonardo DiCaprio and other celebrities on a climate change march, as well as a photo of himself and Cameron reviewing the speech that set out the UK’s “uncompromising call for real action on #Climate #Leadership”.

As energy and climate change minister in 2013, Barker signs a memorandum to explore project investment opportunities in the UK's clean energy sector with Gulf leaders

Barker had by then told Cameron he wanted to step down from the House of Commons to go back into business. At the end of the parliament, Cameron gave him a seat in the House of Lords.

While the Queen appoints members to the House of Lords, she does so on the prime minister’s advice. In the UK system, the prime minister is not asked to explain how or why a person has been chosen for a peerage. In theory, it is then up to the Lords Commissioner for Standards to ensure that its members uphold the standards and values of the upper house.

Barker operated within the rules. Lobbying in the Lords among your fellow peers is prohibited, but there are no constraints on lobbying abroad. If you are a sitting member of the House of Lords, you need to declare your business interests. If you take a leave of absence, you can keep your title but you don’t need to register any paid employment, shareholdings or business activity.

Barker took a leave of absence.

 

Barker’s Russia connections long predated his time in the Lords. When he worked in PR in the 1990s, he won the coveted account for Sibneft, the oil firm run by Roman Abramovich.

An oil rig in Nefteyugansk, Siberia

Bill Browder, Russia’s biggest investor in the 1990s and now an outspoken Putin critic, recalls Barker from his time in Moscow. “Oh, Greg Barker,” he says. “He moved his concierge job from Abramovich to Deripaska. Oligarchs like him because he’s deferential towards them.”

Before the US imposed sanctions on Deripaska and his businesses, Britain’s House of Lords debated the Sanctions and Anti-Money Laundering Bill in January 2018. Barker, who two months earlier had been appointed chairman of En+, voted against the amendments that sought to strengthen the bill, including a public register of the ownership of British property by non-British entities. His spokesman says he voted with the government.

Barker had prepared the ground in December 2017 with a written question to the Foreign Office, asking “which countries were subject to trade sanctions in (1) 2015, (2) 2016, and (3) 2017?”. Russia was sanctioned in those years, Barker was told. His spokesman said Barker wanted to understand what trade opportunities were available “in the context of Brexit”.

Nine months later, the US Treasury stepped in. Barker started organising the campaign to bring En+ in from the cold.

In addition to the lobbying operation he mounted in Washington, Barker sought to make the case for En+ in the UK. He wrote to Ben Wallace, then the security minister in Theresa May’s Conservative government, but Wallace turned down his request for a meeting.

This turned out to be a blessing in disguise for Barker. In response to an MP’s complaint, the Lords Commissioner for Standards launched an investigation into Barker’s lobbying efforts. She cleared him on the ground that since no meeting had taken place, no “paid advocacy” had actually occurred. Barker did, in fact, meet with one MP as well as Alan Duncan MP, the foreign office minister responsible for Russia, but neither featured in the commissioner’s investigation because the meetings were not known about at the time. The Foreign Office said Barker met Duncan to outline his plans to ensure that En+ remained compliant with US sanctions.

An En+ spokesman said Barker met with former colleagues in parliament and government “as a matter of courtesy to update them on the Barker plan”.

In response to the Lords investigation, Barker submitted his letter of appointment to En+. His fees are redacted. A Freedom of Information request for the unredacted letter has revealed that the House only received the redacted version and does not hold the original.

To date, Barker, unlike the chairmen of most other listed companies, has only ever declared his remuneration as part of an aggregate sum paid to the entire board. This is all that the regulations require. An En+ spokesman said Barker’s remuneration will be disclosed by the end of April as part of the 2018 annual report “in line with UKLA listing rules”.

Barker has now taken an indefinite leave of absence from the Lords to dedicate more time to En+. He keeps his title, but his register of interests reads “exempt from registration”.

The market panic and pressure from European allies drove the US Treasury to a deal with En+. In exchange for Deripaska reducing his ownership and control of En+, sanctions on the company were lifted on 27 January 2019.

The deal is described by an En+ spokesman as “the first of its kind in global sanctions policy history”. It has divided Washington.

The official view is that the En+ and Rusal sanctions were a “textbook” case of sanctions policy. They quickly succeeded in divesting an oligarch of his most valuable asset.

The Barker plan brought En+ back online by cutting Deripaska off from the business he had built. Deripaska’s shareholding was reduced from 70 to 45 per cent.

Separate sanctions imposed on Deripaska personally are still in place. He is contesting them. Barker has nothing to say on Deripaska or his lawsuit. Critics of the deal say that while Deripaska cannot receive dividends from his shares in En+, he benefitted when VTB, the Russian state-owned bank, paid off his debt in return for a larger En+ shareholding. VTB denied that the deal relieves Deripaska of his debt to them.

Deripaska remains the single biggest shareholder, but can derive no economic benefit from his stake. His voting rights are capped at 35 per cent. The remaining 10 per cent is exercised by a third-party trustee, managed by the Jersey law firm Ogier Global Nominee, which has worked with Deripaska for years, and three US citizens:

David Crane is from Pegasus Capital Advisors, where Barker worked as an adviser while an MP and as chairman of one of its companies when in the Lords. DJ Baker came from Latham & Watkins, the law firm Barker hired to advise on the US Treasury negotiations. The third, Arthur Dodge, chairs an American commercial flooring company.

The divestiture deal reorganises En+’s board. Deripaska is still allowed to nominate up to four directors to a board of 12, eight of whom must be independent of him.

Joan MacNaughton is one of Barker’s new independent directors. She joined the board of The Climate Group in 2013 and became chair in 2016. Barker was a board member of that group from February 2015 to November 2018. En+ was a “business member” of The Climate Group, a company spokesperson said, from 2011 to 2013. The group has now cut sponsorship ties with En+, but MacNaughton remains an independent director and chair.

Barker is now executive chairman of En+.

Washington is left debating when, how – and even if –sanctions can work. Michael Dobson, a former US Treasury official, says it was a successful outcome given the context and that “Congress is politicising the process”. Dobson now works as a sanctions lawyer in private practice – a growing industry in Washington – and he wondered, in hindsight, whether En+ may have been too big to sanction. Peter Harrell, who previously worked at the US State Department, said that sanctions are used widely but “typically target small and medium-sized businesses”, not multinationals like En+. Harrell, who worked on the 2014 Rosneft sanctions, still thinks sanctioning large companies is possible, for example by restricting their borrowing ability, without forcing them to cease operations.

As of late 2017, En+ operates seven power-hungry alumina refineries and ten aluminium smelters, seven bauxite mines, eight heat power stations that mainly run on coal, and ten open-pit coal mines.

A coal mining and processing plant in South Yakutia. En+ produces 13.5m tonnes of coal a year from its ten mines

Barker casts En+ as a green energy company, basing his claim on the company’s hydro-electric power stations. He is committed, an En+ spokesman said, to “entrenching En+ Group as the global leader in low-carbon aluminium production and hydro power generation”.

Three quarters of En+’s energy comes from hydroelectric dams mostly on the rivers that feed into Lake Baikal, the world’s greatest lake and a UN world heritage site. The company’s Irkutsk dam generates more than half of all its energy.

The remaining quarter of En+’s energy production comes from its eight fossil-fuel powered stations, which run mainly on coal (the “dirtiest fuel”, as Barker once described it) from its ten open-pit mines. The mines yield about 13.8m tonnes of coal a year, which is more than France’s annual consumption.

Eugene Simonov, a conservation scientist at Rivers without Boundaries, says En+ “has destroyed key ecological features [around Lake Baikal] by introducing unnatural fluctuations to its water level”.

When he was first appointed chairman of En+ in October 2017, before the flotation on the London Stock Exchange, Barker said his appointment “places En+ Group at the vanguard of green industrial innovation”.

Simonov disagrees. En+, he says, “is one of the greatest polluters in Russia”. Russian authorities and government-friendly media are now harassing Simonov and his colleagues, accusing them of using foreign money to destroy Russian industry.

In a letter to Barker, Simonov urged him to address the environmental damage that En+ is doing to the world’s greatest lake. Barker, he says, “de-facto controls” it. For Lord Barker of Battle, he’s been on what you’d call a journey, from Shoreham-by-Sea to Lake Baikal.

Further reading

  • Barker appeared before the House of Commons Foreign Affairs Committee in February this year to explain his role at EN+ and answer questions about sanctions
  • Bill Browder’s Red Notice (2015) is an unputdownable first person account of Russian capitalism at the dawn of the age of the oligarchs
  • Chrystia Freeland’s Sale of the Century is still the best account of how the oligarchs made their money

Update

The article above was updated on May 28, 2019. We have amended the article (1) to confirm that the US Treasury imposed sanctions on En+ because of evidence about Russia (not En+) interfering with elections, supplying weapons to Assad in Syria, and annexing Crimea, and (2) to clarify that Lord Barker did not register as a foreign principal of Russia, but that Mercury Public Affairs registered Barker as its “foreign principal”.