Fleeing Sanctions, Oligarchs Seek Safe Ports for Superyachts

WASHINGTON — 

The superyacht Dilbar stretches nearly 140 meters in length. It has two helipads, berths for more than 130 people and a 25-meter swimming pool that itself can accommodate another superyacht.

Dilbar was launched in 2016 at a reported cost of more than $648 million. Five years later, its purported owner, the Kremlin-aligned Russian oligarch Alisher Usmanov, was already dissatisfied. He sent the vessel to a German shipyard last fall for a retrofit reportedly costing several hundred million dollars.

Dilbar was in drydock on Thursday when the United States and European Union announced economic sanctions against Usmanov — a metals magnate and early investor in Facebook — over his ties to Russian President Vladimir Putin and in retaliation for the Kremlin’s invasion of Ukraine.

“We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets,” President Joe Biden said during his State of the Union speech Tuesday night, addressing Russian oligarchs. “We are coming for your ill-begotten gains.”

Seizing the behemoth boats could prove challenging. Russian billionaires have had decades to shield their money and assets in the West from governments that might try to tax or seize them.

Several media outlets reported last week that German authorities had impounded the Dilbar. But a spokesperson for Hamburg state’s economy ministry told The Associated Press no such action had yet been taken because it had been unable to establish ownership of the yacht.

Dilbar is flagged in the Cayman Islands and registered to a holding company in Malta, banking havens where the global ultra-rich often park their wealth.

The Stella Maris yacht belonging to Rashid Sardarov is docked in Nice, France, Tuesday, March 1, 2022.

Working with the U.K.-based yacht valuation firm VesselsValue, the AP compiled a list of 56 superyachts — generally defined as luxury vessels exceeding 24 meters in length — believed to be owned by a few dozen Kremlin-aligned oligarchs. The yachts have a combined market value estimated at more than $5.4 billion.

The AP then used two online services — VesselFinder and MarineTraffic — to plot the last known locations of the yachts as relayed by their onboard tracking beacons.

Many are anchored in the Mediterranean and Caribbean. But more than a dozen were underway or had already arrived in remote ports in small nations such as the Maldives and Montenegro, potentially beyond the reach of Western sanctions. Three had gone dark, their transponders last pinging just outside the Bosporus in Turkey — gateway to the Black Sea and the southern Russian ports of Sochi and Novorossiysk.

Graceful, a German-built Russian-flagged superyacht believed to belong to Putin, left a repair yard in Hamburg, Germany, on Feb. 7, two weeks before Russia invaded Ukraine. It is now moored in the Russian Baltic port of Kaliningrad, beyond the reach of Western sanctions imposed against him this past week.

French authorities seized the superyacht Amore Vero on Thursday in the Mediterranean resort town of La Ciotat. The boat is believed to belong to Igor Sechin, a Putin ally who runs Russian oil giant Rosneft, which has been on the U.S. sanctions list since Russia annexed Crimea in 2014.

The French Finance Ministry said in a statement that customs authorities boarded the 88-meter Amore Vero and discovered its crew was preparing for an urgent departure, even though planned repair work wasn’t finished.

The 65-meter Lady M was seized by Italian authorities Friday while moored in the Riveria port town of Imperia. In a tweet announcing the seizure, a spokesman for Italian Prime Minister Mario Draghi said the yacht was the property of sanctioned steel baron Alexei Mordashov, listed as Russia’s wealthiest man with a fortune of about $30 billion.

But Mordashov’s larger superyacht, the 141-meter Nord, was safely at anchor on Friday in the Seychelles, a tropical island chain in the Indian Ocean not under the jurisdiction of U.S. or EU sanctions. Among the world’s biggest superyachts, Nord has a market value of $500 million.

“No, no self-respecting Russian oligarch would be without a superyacht,” said William Browder, a U.S.-born and now London-based financier who worked in Moscow for years before becoming one of the Putin regime’s most vocal foreign critics.

The yacht Amore Vero is docked in the Mediterranean resort of La Ciotat, France, March 3, 2022.

Russian metals and petroleum magnate Roman Abramovich is believed to have bought or built at least seven of the world’s largest yachts, some of which he has since sold off to other oligarchs.

Dennis Cauiser, a superyacht analyst with VesselsFinder, said the escalating U.S. and EU sanctions on Putin-aligned oligarchs and Russian banks have sent a chill through the industry, with boatbuilders and staff worried they won’t be paid. It can cost upwards of $50 million a year to crew, fuel and maintain a superyacht.

Most of the Russians on the annual Forbes list of billionaires have not yet been sanctioned by the United States and its allies, and their superyachts are still crushing the world’s oceans. The 72-meter-long Stella Maris, which was seen by an AP journalist docked this past week in Nice, France, is believed to be owned by Rashid Sardarov, a Russian billionaire oil and gas magnate.

The crash of the ruble and the tanking of Moscow stock market have depleted the fortunes of Russia’s elite. Cauiser said he expects some oligarch superyachts will soon quietly be listed by brokers at fire-sale prices.

On Thursday, the U.S. Treasury Department issued a new round of sanctions that included news release citing Usmanov’s close ties to Putin and photos of Dilbar and the oligarch’s private jet, a custom-built 64-meter Airbus A340-300 passenger liner.

“I believe that such a decision is unfair and the reasons employed to justify the sanctions are a set of false and defamatory allegations damaging my honor, dignity and business reputation,” Usmanov said in a statement issued through the website of the International Fencing Federation, of which he has served as president since 2008.

Abramovich has not yet been sanctioned. Members of the British Parliament have criticized Prime Minister Boris Johnson for not going after Abramovich’s U.K.-based assets, which include the professional soccer club Chelsea. Under mounting pressure, the oligarch announced this past week he would sell the $2.5 billion team and give the net proceeds “for the benefit of all victims of the war in Ukraine.”

Meanwhile, location transponders showed the 162-meter Solaris — launched by Abramovich in 2010 with an undersea bay that reportedly holds a mini-sub – was moored in Barcelona, Spain, on Saturday. Abramovich’s $600 million Eclipse, eight stories tall and on the water since last year, set sail from St. Maarten late Thursday and is under way in the Caribbean Sea, destination undisclosed.

US Sanctions Against Russian Oligarchs Take Shape

WASHINGTON — 

The United States on Wednesday announced a comprehensive effort to identify and seize the assets of wealthy Russians who have supported the regime of Russian President Vladmir Putin, as part of its response to the Russian invasion of Ukraine.

The new initiative, led by the Justice Department, is called Operation KleptoCapture and was hinted at by President Joe Biden on Tuesday in his State of the Union address.

“Tonight, I say to the Russian oligarchs and the corrupt leaders who bilked billions of dollars off this violent regime: No more,” Biden said. “The United States Department of Justice is assembling a dedicated task force to go after the crimes of the Russian oligarchs. We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets. We are coming for your ill-begotten gains.”

On Wednesday morning, Attorney General Merrick B. Garland announced the formation of the new task force, noting that its aim would be to enforce the punishing array of economic sanctions that have been levied against Russia since its invasion of Ukraine last week.

“The Justice Department will use all of its authorities to seize the assets of individuals and entities who violate these sanctions,” Garland said. “We will leave no stone unturned in our efforts to investigate, arrest and prosecute those whose criminal acts enable the Russian government to continue this unjust war. Let me be clear: If you violate our laws, we will hold you accountable.”

Familiar tools

Experts say the work of tracking and seizing the assets will rely on a combination of intelligence-gathering, data analysis and cooperation with international partners, which is common in criminal investigations.

“We’ve seen asset seizures in the past. We have seen yachts and apartments and stuff taken,” said Daniel P. Ahn, a global fellow at the Woodrow Wilson International Center for Scholars and a former chief economist for the Department of State. “This is a difference of scale, rather than a difference of instrument.”

Ahn said that identifying the real owners of some assets will be a “sticky intelligence problem.” Assets owned by extremely wealthy individuals are often controlled by a complex web of shell companies and other entities that disguise what law enforcement officials refer to as the “beneficial owner.”

Yachts on the move

Since the countries of the European Union, the United Kingdom, the U.S. and other allies began leveling sanctions on Russian banks and wealthy supporters of Putin, mega yachts owned, or believed to be owned, by Russian oligarchs have been tracked leaving ports in countries that have joined in the sanctions.

Several have sailed to the Republic of Maldives, an island chain in the Indian Ocean that does not have an extradition treaty with the United States.

On Wednesday, the oligarch Roman Abramovich, who owns the highly successful London-based football club Chelsea, announced that he had put the club up for sale, in the process writing off some $2 billion in loans he has made to it. On Tuesday, a member of the British Parliament said in a speech to the House of Commons that Abramovich was also trying to sell off a number of luxury properties in London.

Unloading obvious assets

Experts say they believe the oligarchs may try to dispose of assets that can be most easily linked to them in the hope that their seizure will satisfy Western governments.

“If I’m a kleptocrat, and I don’t want them to get the bulk of my stuff, I’m going to throw away the stuff that everybody knows about, and then they’ll hopefully leave me alone,” Jim Richards, founder and principal of RegTech Consulting, told VOA.

Richards, who was the director of financial crimes risk management for Wells Fargo & Company for a dozen years, said Abramovich and other oligarchs will have been careful to have large amounts of wealth hidden in complex holdings that will be difficult or impossible for law enforcement agencies to detect.

“I mean, the last thing these guys want is for their girlfriends, their kids and themselves to all end up in some apartment in Moscow,” he said.

Aim of sanctions

As Western nations continue to pile sanctions on the Russian economy, their ultimate objective could be questioned.

Ahn said there are three aims when it comes to sanctions, which may or may not overlap. The first is to inflict economic damage on the target. The second is to deter or reverse specific behaviors. The third is to express disapproval of specific actions by the party being sanctioned and/or solidarity with a victim of those actions.

Ahn said that to the degree the sanctions imposed on Russia are aimed at doing economic damage, they have been a “qualified success” so far. Time will likely worsen the effects on the Russian economy. But when it comes to preventing or reversing Russia’s aggression against Ukraine, the sanctions have plainly failed, at least so far.

The symbolic success of sanctions regimes is typically greater the more multilateral they are, Ahn said. On that score, the actions taken against Russia have been quite successful, doing significant reputational damage to Putin’s government.