West hits Russian oligarchs where it hurts — their mega-yachts

The US and the European Union are cracking down on sanctions against Russian billionaires by taking control of their mega yachts and other valuable assets, including private villas and jets, parked in territory over which their governments have jurisdiction.

Italy said on Friday it had confiscated a $ 70 million yacht moored in Liguria, Italy, which belonged to Alexey Alexandrovits Mordaschov, a steel tycoon with close ties to the Kremlin.

“Italian police have just confiscated ‘Lady M Yacht’, a 65 million euro yacht belonging to Alexey Alexandrovits Mordaschov located in Imperia (Liguria), in compliance with recent EU sanctions,” said Ferdinando Giugliano. media adviser to the Prime Minister of Italy. in a tweet.

On Saturday, Italian tax police also froze “Lena”, a $ 54 million yacht owned by Gennady Nikolayevich Timchenko, the founder of a Moscow-Russia-based private investment group and a close friend of Russian President Vladimir Putin. , which the EU has sanctioned.

Assets that cannot be moved are even easier to take possession of or prevent their owners from accessing.

Italy also froze a $ 3.2 million property in Tuscany that belonged to Oleg Savchenko, who is among the richest Russian businessmen. Giugliano tweeted an image of a Ministry of Economy and Finance vehicle in front of the estate, called “Villa Lazzareschi.”

President Biden has also said that the US government is focusing on super yachts, private jets and other conspicuous symbols of its wealth of Russian oligarchs as Russian President Vladimir. Putin intensifies his country’s attack on Ukraine.

A new federal task force, called “KleptoCapture,” will point to what Mr. Biden described his Address of the State of the Union on Tuesday as “the crimes of the Russian oligarchs.”

“We are teaming up with our European allies to find and capture your yachts, your luxury apartments, your private jets,” Biden said. “We come for your ill-conceived profits.”

More than a dozen Russian billionaires are under sanction the United States, the European Union, and the United Kingdom, and some are trying to dodge restrictions by moving movable assets, including mega-yachts, to unpunished territories where their assets cannot be confiscated or frozen.

He “Graceful” super-yacht, It is believed to be owned by Vladimir Putin himself, left Germany two weeks before Russia invaded Ukraine and recently docked in Kaliningrad, near Russia’s nuclear weapons operations, according to MarineTraffic, a site maritime monitoring website.

Putin’s ally Roman Abramovich, who made a fortune in the energy business, is not currently on any government sanctions list, but is making moves to unload valuable assets, including Chelsea Football Club. Among those assets is a super yacht called the Eclipse, the world’s third-largest pleasure boat, more than 540 feet long and 72 feet wide, according to Marine Vessel Traffic, a website that keeps track of the location of ships and others. boats, including privately owned yachts. He recently sailed from St. Barts to Philipsburg, the capital of St. Maarten, the Dutch side of the Caribbean island of Saint Martin.

“Le Grand Bleu”, owned by Russian oil titan Eugene Shvidler, is also anchored on St. Martin’s Island, where EU sanctions can be enforced.

Too big to hide

Some oligarchs on the sanctions lists, who are supposed to have built their wealth in Russia through political corruption, have already been cut off from their valuable assets.

EU sanctions against Russian oligarchs on Wednesday led to the freezing of Germany of a yacht owned by Alisher Usmanov, one of the richest Russians, according to a Forbes report. According to Marine Traffic, the 512-foot yacht, called the “Dilbar”, had been parked in Hamburg, Germany, since October 29 for repairs.

The French Ministry of Economy and Finance said on Thursday that its customs agents confiscated the yacht “Amore Vero” belonging to a company owned by Igor Setchine, director of the Russian oil company Rosneft. The yacht had been parked for repairs in La Ciotat, in the Côte d’Azur region of southern France.

Although the crew’s intent was to “navigate urgently, without having completed the planned work,” it was confiscated before it could leave, the agency said.

Run away from hot spots

Hoping to avoid the same fate, some yacht owners are “bringing it closer to the high seas,” financial and anti-corruption activist. Bill Browder told CBS News senior research correspondent Catherine Herridge.

Their mega-yachts, some with 100 crew, are moored in places like Dubai and the Maldives, a tiny island nation in the Indian Ocean that has no extradition treaty with the United States. assets where they cannot be confiscated, “Browder told CBS MoneyWatch.

The problem is that ships of this size cannot remain indefinitely in a place like the Maldives, which can generate significant revenue through berth rates, given their need to refuel and refuel.

“There are a number of these yachts in the Maldives, and unless those countries impose sanctions, they will probably be safer there,” Alasdair Milroy, a sea accountant and owner of Breaking the Mold Accounting, told CBS MoneyWatch. “But you can only spend as much time somewhere like the Maldives on a yacht of this size without the need for provisions, or to refuel, so I don’t know how good it will last for a longer period. I don’t think” I can to do so for so long “.

Deputy Attorney General Lisa Monaco, who heads the new U.S. task force targeting Russian oligarchs, issued a stern warning: “We will use all tools to freeze and confiscate your criminal profits,” she said in a statement. press release.

Confiscating the wealth of Russian oligarchs could be an effective tactic, Browder told CBS MoneyWatch. “It’s very symbolic, and part of it is psychological warfare. That really has an impact, if not financially, also psychological.”

At least 10 of the world’s top 100 superheroes belong to Russian oligarchs, according to Marine Vessel Traffic.

Websites that track maritime activity show that the yachts of other oligarchs are on the move as their owners try to protect their property from confiscation. The “Galactica Super Nova”, a 230-foot-long, $ 80 million vessel owned by Vagit Alekperov, president of the Russian oil company Lukoil, has recently left its berth in Barcelona, ​​Spain, where they apply. EU sanctions, and set sail for Tivat, Montenegro. in the Balkans, according to VesselFinder.

“Clio”, a super yacht owned by Russian industrialist Oleg Deripaska, is currently anchored in the Maldives, according to MarineTraffic.com. A handful of other oligarch-owned mega-yachts are also moored in the Maldives, such as Alexander Abramov’s “Titan,” Viktor Rashnikov’s “Ocean Victory,” and Vladimir Potanin’s “Nirvana.”

How sanctions work

Putting a person or their property under official sanction does not give another government the legal authority to confiscate their property, only to freeze or cut off access to its owner.

“In general, sanctions are the authority that allows us to freeze assets. They are more easily understood in the context of a bank account: it is literally put in a frozen account that still exists and charges interest and you are the owner. “But you can’t get money from it,” said Adam M. Smith, a partner at Gibson Dunn Law Firm.

Tangible property must also be under U.S. jurisdiction for any sanctions to work or for the government to cut off its owner’s ability to use an asset such as a private yacht or jet.

Daniel P. Ahn, an expert on sanctions and economic warfare at the Woodrow Wilson International Scholarship Center and a former chief economist at the U.S. Department of State, said that going to a person’s yacht can limit a person’s yacht. use even if it is not confiscated.

“If it gets to the West, any port that can refuel can no longer do that. So maybe the yacht itself doesn’t take over, but it’s much less useful to have,” he said.

For this reason, sanctioned people may choose to try to sell assets such as lost yachts, instead of running the risk of losing their use indefinitely.

“If I were an oligarch, the first thing I would do is protest and say I shouldn’t be blacklisted. The second thing would be to see if I could liquidate those assets and get something back, knowing that otherwise I could rot. it gets wet without proper maintenance and the like, ”Ahn said.

As for its impact, the sanctions are more than merely symbolic, he added. “The ultimate goal is to make life very difficult for these oligarchs, and that has been achieved,” Ahn said.