WASHINGTON, March 6 (Reuters) - The U.S. Treasury said on Wednesday it was extending by four months the deadline for investors to divest from Russian automaker GAZ, a company linked to Russian tycoon Oleg Deripaska that Washington sanctioned over Russia's "malign activity."
The Treasury's Office of Foreign Assets Control said in a statement that it would allow investors and businesses until July 6 to cut ties with GAZ. The previous deadline was March 7.
The extension gives Deripaska more time to lower his stake in GAZ, potentially allowing the company to be removed from the U.S. sanctions list.
On Jan. 27, the Treasury lifted sanctions on Deripaska's aluminum and energy businesses Rusal, its parent En+ and EuroSibEnergo after they had agreed to restructure to reduce his stakes.
The Treasury had imposed sanctions in April on 24 Russian allies of President Vladimir Putin, including Deripaska, as well as Rusal, En+, GAZ and other companies in which he owns major stakes. Treasury cited Russia's alleged meddling in the 2016 U.S. election and other "malign activity."
Deripaska had ties with Paul Manafort, President Donald Trump's former campaign manager. Manafort has been a target of Special Counsel Robert Mueller's investigation into Russian meddling in the 2016 election and is due to be sentenced in two separate cases on Thursday and March 13. Russia denies any meddling in the 2016 U.S. election.
When the Treasury announced the sanctions in April 2018, it also said "Deripaska has been investigated for money laundering, and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering."
After lobbying by European governments, Washington postponed enforcement of the sanctions and started talks with Deripaska's team on removing Rusal and En+ from the blacklist if he ceded control of Rusal.
GAZ is Russia's largest producer of light commercial vehicles (LCV) and exports vehicles to more than 25 countries.
It has a contract manufacturing relationship with Germany's Daimler AG on LCV production in Russia, and Volkswagen AG uses GAZ facilities to produce some passenger car models in Russia.
VW was viewed as a possible buyer of Deripaska's stake in GAZ, but a company official was quoted on Wednesday as saying talks on a deal had been suspended because of the U.S. sanctions.
"At the moment this (a deal to buy a stake in GAZ) is not possible for us because of sanctions ... Talks are suspended," RIA news agency quoted Marcus Osegowitsch, Volkswagen's Russia head, as saying. (Reporting by Tim Ahmann; Writing by Mohammad Zargham; Editing by David Gregorio)