What is happening to mega-yachts of Russian oligarchs?
When someone comes at your doorstep to take away your assets, you obviously find ways to hide it. Now it is one thing to stuff unaccounted cash under your bed or hide it in a pot of rice. You can even transfer money to your innumerable Swiss bank accounts easily.
But how does one hide an asset like this super mega-yacht from governments, local folks and satellites when you want them to magically disappear in a crisis?
In an attempt to make the Russian sanctions hit 'home', strain Russian finances and make life of Russians harder (as if the 31 and more companies leaving Russia was not enough), the US announced a KleptoCapture team, which will aggresively target Russians. In a four-point statement to clarify what it means, the US mentioned that they would be 'using civil and criminal asset forfeiture authorities to seize assets belonging to sanctioned individuals or assets identified as the proceeds of unlawful conduct'.
So, indirectly, the US just said: "Russia, we are coming for your lovely large mega-yachts and jets. And real estate, of course."
This move came after France decided to seize Russian ships, which was followed by the US and some other countries. This forced the Russian oligarchs to play a game of hide and seek - which they will unwittingly lose. Because how on earth do you hide this big piece of luxury asset, which is probably also linked to Putin, and which you purposefully created to be this large, to flaunt your wealth?
WHY DO THE RICH LOVE THEIR YACHTS IN THE FIRST PLACE?
Among the billionaires and mega billionaires, the length and the number of superyachts decides the pecking order of ranking among these millionaires in their club. Though yachts aren't the most useful mode of transport (like private jets) and don't appreciate in value each year (like art and property), yachts always allow the super-rich to show off their wealth and status.
The rich owners usually use their mega-yachts as alternative floating homes / floating hotels around the world. Also, both their homes and mega-yachts are so huge that they have to be fully managed by their professional staff. This enables the oligarchs to have a lifestyle where they can comfortably stay at different places depending on their mood and business - their mega-yachts which can float across the globe.
Because life is comfortable and luxurious, no matter where you stay.
Remember this scene from The Wolf of the Wall Street where John Belford flaunts his influence and status and tries to bribe FBI officers? Yea, that's the vibe.
In The Wolf of Wall Street (2013) the second FBI agent who questions Belfort on his yacht is played by Ted Griffin, a co-producer on the film who also wrote the screenplay for Ocean's Eleven (2001) pic.twitter.com/cQp0V1QEpX
— Movie Details (@moviedetail) August 9, 2021
The super-rich also use their yachts to control the level of access they grant to those outside their wealthy circle and allow the yachts to influence their relationships with the 'not-so-rich' rest of the world. Yachts on the sea give the oligarchs a feeling of privacy which contrasts with the city life, where there is a desire to see and be seen.
Also, since tourists remind the super-rich of their wealth and their social status, the oligarchs usually sit on the aft deck and when they finally descend from the ship, people look at them in awe, which though is a reminder of their power, is also quite a feeling to experience again and again.
IS SEIZING SHIPS ILLEGAL?
Assets can only be seized during sanctions if the country imposing such sanctions is in armed conflict with the owner of the asset. Also, finding the actual owner of the ships could be difficult since ships are owned by 'offshore companies'. But if there is enough speculation pointing to a specific person as the owner, such evidence is 'sufficient' to seize ships.
But can there be legal battles and operational issues because of such seizures? We think so.
NOW, LET'S TALK ABOUT THE RUSSIAN YACHTS
Russian nationals own about 10% of all yachts longer than 79 feet, and at least 15 mega-yachts have been linked till date to the sanctioned Russian oligarchs. These include:
1. Galactica Super Nova
2. The Amore Vero
3. Dilbar
4. Quantum Blue
5. Nirvana
6. The Eclipse
7. Solaris
8. Tango
9. Graceful
10. Scheherazade
11. Stella Maris
12. Sailing Yacht A
13. ICE
14. Lena (Seized)
15. Lady M (Seized)
SO, WHAT ARE THE RICH DOING?
As the sanctions began, the oligarchs started moving their ships to small, tiny countries like the Maldives and Seychelles, which are also tax havens, as they are free from seizure repercussions. Some even travelled through the Indian Ocean and are still finding nations to hide.
1. Roman Abramovich, the owner of Chelsea FC, is one of 7 Russian oligarchs who have been sanctioned with asset freezes and travel bans. He owns two super-yachts- a $600 million Solaris and a $1 billion worth The Eclipse.
Roman's vessel Solaris was tracked off the coast of Sicily when it left the Barcelona port. It had been undergoing repairs since late 2021 and on March 10, it was rounding the southern coast of Sicily.
Abramovich’s second (and even more luxurious yacht), The Eclipse set sail from the Caribbean island of St Maarten, crossed much of the Atlantic, and was located to the west of the Canary Islands.
Roman Abromovich Eclipse Yatch #luxury #yatch pic.twitter.com/JdaqxNtL
— Expensivedrive (@Expensivedrive) February 11, 2013
2. Vagit Alekperov's yacht The Galactica Super Nova, is a 230-foot super-yacht that has room for 28 guests and crew. It had sailed off from Barcelona to Montenegro on March 1. But on March 2, it turned off its GPS tracking system and vanished from the port, in violation of the International Maritime laws. The laws require ships of this size to have their tracking systems on "at all times", and though the owner is not sanctioned yet, the sanctions on other officials seem to have caused this development.
3. Russian President Vladimir Putin's own yacht Graceful left Germany just before his invasion of Ukraine. But seems like someone ungracefully messed up.
Putin reportedly has a $97 million luxury yacht called "Graceful". A group of Anonymous hackers on Saturday figured out a way to mess with maritime traffic data & made it look like the yacht had crashed into Ukraine's Snake Island, then changed its destination to "hell": pic.twitter.com/Ch53lcG7D6
— Ryan Gallagher (@rj_gallagher) February 27, 2022
4. Alisher Usmanov owns Dilbar, which is the largest motor yacht in the world by gross tonnage. Though he has been sanctioned by the EU, the US, the UK, and Switzerland, his boat remains in Germany (unseized). With a weight of 15,917 tons, the ship (which values between $600- 750 Mn) which has been docked in Germany for months undergoing a 'refitting', has been unable to leave the dock. Some reports also say that the crew and the captain of the ship were not paid their wages (thanks to the sanctions) and hence decided to leave the ship alone.
Alisher Usmanov Dilbar yacht will be seized because of sanctions ?♂️ pic.twitter.com/cwdv69f9x5
— Lethabo (@Cheetahplains) March 2, 2022
The Germany Federal Customs has to issue an export waiver for the yacht to leave Germany, and since the same is held back, seems like the port will stay there for some time.
THE SEIZED YACHTS
1. France was the first country to seize Russian mega-yachts and detained Amore Vero (which means “true love"), a 280ft, $120 million super-yacht which is owned by Igor Sechin. The yacht, which can accommodate 14 guests and 28 crew, was found at the Mediterranean port of La Ciotat. Sechin is a sanctioned oligarch as he is the Chief Executive of the Russian oil producer Rosneft and a close ally of Putin. The French police found that though the ship was in port for repairs, its crew were “making arrangements to leave in a hurry, without having completed the planned work”.
2. Gennady Timchenko, a close friend of Putin, is a sanctioned Russian owner of a 41-metre, $55 million yacht called Lena, which was impounded by Italy. Gennady has an estimated $21 billion fortune held in several large Russian raw materials companies.
Italy’s tax police also froze “Lena” - a €50m yacht belonging to Gennady Nikolayevich Timchenko located in Sanremo (Liguria) - and “Villa Lazzareschi” - a €3m property belonging to Oleg Savchenko located in the province of Lucca (Tuscany). pic.twitter.com/yc1Q2y4d0G
— Ferdinando Giugliano (@FerdiGiugliano) March 5, 2022
3. Alexei Mordashov, another sanctioned Russian, whose luxury yacht Lady M, a 64-metre, $66 million yacht was also seized in the nearby Ligurian port of Imperia by Italy.
Looks like the EU and US are just getting started with the yachts. Next up will be the millions of euros worth of property held by Russians in the real estate sector.