May 28, 2018 / 8:09 AM / in 5 months

Sulzer director's exit demonstrates extended reach of U.S. sanctions

ZURICH (Reuters) - Russian oligarch Viktor Vekselberg’s board representation at Swiss pump maker Sulzer (SUN.S) dropped to three with the resignation of one of his allies on Monday in the latest instance of U.S. sanctions making waves in Europe’s boardrooms.

FILE PHOTO: Russian metals tycoon Viktor Vekselberg attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia, May 25, 2018. Alexander Ryumin/TASS/Host Photo Agency/Pool via REUTERS/File Photo

Axel Heitmann, who had been one of four Sulzer directors tied to billionaire Vekselberg’s investment company Renova, submitted his resignation to correspond with the Russian’s new status as a minority shareholder, Sulzer said.

Vekselberg has been forced to cut his stake in the Swiss company to less than 50 percent from more than 60 percent since he was hit by U.S. sanctions this year. Vekselberg now owns 48.8 percent of Sulzer shares, Reuters data shows.

FILE PHOTO: The logo of Swiss engineering group Sulzer AG at an office building in Winterthur north of Zurich, June 24, 2009. REUTERS /Arnd Wiegmann/File Photo

“In line with its reduced shareholding and new status as a minority shareholder of Sulzer, Renova has elected to reduce its board representation effective immediately,” Sulzer said in a statement.

Sulzer’s board will consist of seven members, three of whom represent Renova. They are Chairman Peter Loescher, a former Siemens (SIEGn.DE) boss, Rusal (0486.HK) board member Marco Musetti, who will replace Heitmann on the board’s audit committee, and Mikhail Lifshitz.

Swiss steelmaker Schmolz & Bichenbach (STLN.S) and sports car manufacturer Porsche have also been affected by the sanctions Washington imposed to punish Moscow for alleged meddling in the 2016 U.S. election and other “malign activity”.

In April Schmolz & Bickenbach’s chairman severed contractual ties to Renova after bond underwriters demanded it as a condition of a forthcoming transaction, a Renova spokesman said at the time. Vekselberg owns a large minority stake.

Additionally, Siegfried Wolf this month abstained from taking a seat on the board of Porsche Automobil Holding, the family controlled investment vehicle that controls a majority stake in Volkswagen< VOWG_p.DE>, because of fears the move could cause sanctions trouble.

Wolf serves as chairman of the supervisory board of the Russian car manufacturer GAZ Group, co-owned by tycoon Oleg Deripaska, who also faces U.S. sanctions.

Vekselberg-related sanctions fallout has also hit numerous European banks, including JPMorgan (JPM.N), Credit Suisse (CSGN.S) and UBS (UBSG.S), which had been under pressure because of more than 1 billion Swiss francs ($1 billion) in loans made to the billionaire.

Vekselberg and his Renova Group repaid the loans this month, Renova and a source familiar with the matter told Reuters, helping to avert a potential sale of Sulzer, Schmolz & Bickenbach and OC Oerlikon (OERL.S) shares that the banks were holding as collateral.

Reporting by John Miller in Zurich and Edward Taylor in Frankfurt; Editing by David Goodman

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