Mandelson Scolded Over Deripaska

APDeripaska, shown at a news conference in 2006, hosted Mandelson on his yacht three times, British media reported.
Former European Union Trade Commissioner Peter Mandelson has been criticized for maintaining "unwise" private contacts with Russian billionaires after it emerged that he vacationed in August on the yacht of metals magnate Oleg Deripaska.

Mandelson, who quit his job in Brussels this month to become Britain's business secretary, oversaw two significant cuts in European aluminum duties during his four-year tenure as commissioner but denies any conflict of interest.

Deripaska was a major beneficiary of those cuts, since his United Company RusAl is the world's biggest aluminum producer.

British newspapers reported this week that Mandelson visited Deripaska's mega-yacht Queen K while it was anchored off the coast of the Greek island of Corfu this August.

Mandelson's former Brussels spokesman Peter Power said Mandelson had been in Corfu to attend a birthday party for Elisabeth Murdoch, the daughter of media magnate Rupert Murdoch.

"He does not see why more importance should be attached to Mr. Deripaska than any other guest," Power said in a statement.

The newspapers said Mandelson had visited the yacht on two other occasions, including for a weeklong vacation. His partner Reinaldo Avila da Silva was also reported to have been a guest.

A spokesman for Deripaska said he would not comment on the businessman's private life.

Edward McMillan-Scott, a conservative member of the European Parliament and a long-standing member of its Foreign Policy Committee, said it was unwise to maintain close ties with the Russian elite.

"In any dealings with members of Russia's current political or financial hierarchies, any politician should be extremely cautious and dubious," he said by telephone from London on Thursday.

McMillan-Scott said exceptions were "genuine reformists" such as opposition leader Garry Kasparov, "who may have money, but they also have values."

A senior official in the EU's Directorate-General for Trade, which was led by Mandelson from November 2004 until his resignation this month, said there was nothing improper about the contacts with Deripaska.

"The trade commissioner naturally is in constant contact with the business community, in this case with oligarchs," he said on condition of anonymity, because he was not authorized to speak to the media.

EU officials also said the tariff cuts of January 2006 and May 2008 were unrelated to Mandelson's relationship with Deripaska.

The 2006 decision, which scrapped a minimum price requirement for a RusAl unit, was taken by lower-level commission officials without any involvement by the commissioner, said Denis Daniilidis, spokesman for the EU delegation to Moscow.

"Any allegation of conflict of interest simply does not arise," Daniilidis said. "Mr. Mandelson has made it clear that he has met Mr. Deripaska socially through mutual friends. Mr. Deripaska has not raised any commercial interest on a single occasion in any of these contacts."

The decision last May, when the EU halved import duty on nonalloyed raw aluminum from 6 percent to 3 percent, was the result of lobbying by some member states, not foreign business people, a source in the delegation said.

"As trade commissioner, Mandelson responded to constant requests by member states to eliminate or reduce aluminum tariffs," the source said, speaking upon condition of anonymity because of the sensitivity of the matter. "The tariffs created divisions between member states, with a minority opposing their elimination. As a compromise, Mandelson cut tariffs by half."

RusAl's press office said in an e-mailed statement that it always operates according to local regulations, including in the EU.

"The reduction of tariffs has been the effort of the absolute majority of the European countries that were not benefiting from such conditions," the statement said.