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

By Megan Cerullo

March 7, 2022 / 1:55 PM EST / MoneyWatch

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

Italy on Friday said it seized a $70 million yacht moored in Liguria, Italy, belonging to Alexey Alexandrovits Mordaschov, a steel magnate with close ties to the Kremlin. 

"Italy's police has just seized 'Lady M Yacht' - a €65 million yacht belonging to Alexey Alexandrovits Mordaschov located in Imperia (Liguria) - in compliance with the recent EU sanctions," Ferdinando Giugliano, a media adviser to Italy's prime minister, said in a tweet.

Italy’s police has just seized “Lady M Yacht” - a €65m yacht belonging to Alexey Alexandrovits Mordaschov located in Imperia (Liguria) - in compliance with the recent EU sanctions. pic.twitter.com/8NzqkXH7lE — Ferdinando Giugliano (@FerdiGiugliano) March 4, 2022

On Saturday, Italy's tax police also froze "Lena," a $54 million yacht belonging to Gennady Nikolayevich Timchenko, the founder of a Moscow, Russia-based private investment group and close friend of Russian President Vladimir Putin, whom 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 belonging to Oleg Savchenko, who is among the richest Russian business people. Giugliano tweeted an image of a Ministry of Economy and Finance vehicle in front of the estate, named "Villa Lazzareschi." 

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

President Biden has also said the U.S. government is homing in on Russian oligarchs' super-yachts, private planes and other conspicuous symbols of their wealth as Russian President Vladimir Putin escalates his country's attack on Ukraine.  

A new federal task force, dubbed "KleptoCapture," will take aim at what Mr. Biden described in his State of the Union address on Tuesday as "the crimes of Russian oligarchs."  

"We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets," Mr. Biden said. "We are coming for your ill-begotten gains."

More than a dozen Russian billionaires are under sanction by the U.S., European Union and the United Kingdom, and some are trying to dodge restrictions by moving assets that are mobile — including mega-yachts — into territories where sanctions don't apply and where their property cannot be seized or their assets frozen. 

The super-yacht "Graceful," 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, data form MarineTraffic, a maritime tracking website, shows. 

Putin ally Roman Abramovich, who made his fortune in the energy business, is not currently on any government sanction lists, but is making moves to unload valuable assets, including Chelsea Football Club. Among those assets is a super-yacht named "Eclipse" that is the third largest pleasure vessel in the world, measuring more than 540 feet long and 72 feet wide, according to Marine Vessel Traffic, a website that tracks the location of ships and other vessels, including privately owned yachts. It recently set sail from St. Barts to Philipsburg, the capital of Sint Maarten — the Dutch side of the Caribbean island Saint Martin.

"Le Grand Bleu," owned by Russian oil titan Eugene Shvidler, is also anchored off the island of St. Martin, where EU sanctions can be enforced. 

Too big to hide

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

The EU's sanctions on Russian oligarchs on Wednesday led to Germany's freezing of a yacht owned by Alisher Usmanov, one of the wealthiest Russians, according to a Forbes report . According to Marine Traffic, the 512-foot yacht, named "Dilbar," had been stationed in Hamburg, Germany, since October 29 for repairs. 

The French Ministry of Economy and Finance on Thursday said its customs agents seized the "Amore Vero" yacht belonging to a company owned by Igor Setchine, director of Russian oil company Rosneft. The yacht had been stationed for repairs in La Ciotat in Southern France's Cote d'Azur region. 

While the crew's intention was to "sail urgently, without having completed the planned work," it was seized before it could depart, the agency said. 

Fleeing hotspots

In hopes of avoiding the same fate, some yacht owners are "hightailing it on the high seas," financier and anti-corruption activist Bill Browder told CBS News senior investigative correspondent Catherine Herridge. 

They are mooring their mega-yachts, some with 100-member-crews, in places like Dubai and the Maldives — a nation of tiny islands in the Indian Ocean, which does not have an extradition treaty with the U.S. "They're parking their assets where they cannot be seized," Browder told CBS MoneyWatch. 

The problem is that ships of this size can't stay indefinitely in a place like the Maldives, which can generate significant income through docking fees, given their need to refuel and stock provisions. 

"There are a number of these yachts in the Maldives, and unless those countries put sanctions in place they're probably safer there," Alasdair Milroy, a maritime accountant and owner of Breaking the Mould Accounting, told CBS MoneyWatch. "But you can only spend so long in someplace like the Maldives on a yacht of that size without needing provisions, or to refuel, so I don't know how well that will last for a longer period. I don't think they'll be able to do that for that long."

Deputy Attorney General Lisa Monaco, who is in charge of the new U.S. task force targeting Russian oligarchs, issued a stark warning: "We will use every tool to freeze and seize your criminal proceeds," she said in a statement.

Confiscating Russian oligarchs' wealth could be an effective tactic, Browder told CBS MoneyWatch. "It's hugely symbolic, and part of this thing is psychological war. This really has an impact — if not financially, then psychologically."

At least 10 of the 100 largest super-yachts in the world belong to Russian oligarchs, according to Marine Vessel Traffic .

Websites tracking maritime activity show that other oligarchs' yachts are on the move as their owners attempt to shield their assets from seizure. The "Galactica Super Nova," a 230-foot long, $80 million vessel owned by Vagit Alekperov, president of Russian oil company Lukoil, recently left its mooring in Barcelona, Spain, where EU sanctions apply, and set sail for Tivat, Montenegro, in the Balkans, according to VesselFinder.com.  

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

How sanctions work

Placing an individual or their assets under official sanction does not give another government the legal authority to seize their assets — only to freeze or cut off their owner's access. 

"Generally speaking, sanctions are the authority that allow us to freeze assets. They are most easily understood in context of a bank account — it's literally put into a frozen account that still exists and collects interest and you own it, but you can't get any money from it," said Adam M. Smith, a partner at law firm Gibson Dunn. 

Tangible property must also be under the jurisdiction of the U.S. for any sanctions to work, or for the government to cut off their owner's ability to use an asset like a private yacht or jet. 

Daniel P. Ahn, a sanctions and economic warfare expert at the Woodrow Wilson International Center for Scholars and former chief economist for the U.S. State Department, said that targeting an individual's yacht can limit its use even it isn't seized.

"If it arrives in the West, any port that can refuel is not allowed to do that anymore. So maybe the yacht itself doesn't get seized, but it's a lot less useful thing to have," he said. 

For this reason, sanctioned individuals may choose to try to sell assets like yachts at a loss, rather than risk losing use of them indefinitely. 

"If I was an oligarch, the first thing I would do is I would protest and say I shouldn't be blacklisted. Second would be to see if I can liquidate these assets and claw back something, knowing that otherwise it may rot at the pier without proper maintenance and the like," Ahn said.

As far as their impact goes, the sanctions are more than merely symbolic, he added. "The ultimate objective is to make life very difficult for these oligarchs, and it has been achieved," Ahn said. 

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.

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Russian Superyachts Find Safe Haven in Turkey, Raising Concerns in Washington

Turkey’s welcoming ports are symptoms of a much larger problem: evasion of U.S. sanctions against Russia.

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By Elif Ince Michael Forsythe and Carlotta Gall

PORT AZURE, Turkey — On a hot August evening at a marina on Turkey’s southern coast, the crew of the Flying Fox was hard at work, keeping the 446-foot superyacht immaculate for future guests willing to pay $3 million a week. One crew member leaned over the railing at the stern, wiping the highly polished surface next to the ship’s nameplate. Another was busy with a squeegee, cleaning glass.

The Flying Fox, the world’s biggest yacht available for charter, played host last year to Beyoncé and Jay-Z, who skipped the Met Gala in New York to cruise the Mediterranean and enjoy the vessel’s over-the-top amenities: a 4,300-square-foot wellness center with a Turkish bath and a fully equipped beauty spa, among many others.

Then Russia invaded Ukraine. Since then, the Flying Fox has been caught up in the dragnet of international sanctions designed to hobble the lifestyles of the oligarchs who help sustain President Vladimir V. Putin’s rule.

Yet, while some superyachts owned by or linked to Russian oligarchs facing sanctions have been seized in ports around the world, the Flying Fox and others caught up in the broader Russia penalties have found safe haven in Turkey, the only NATO member not to impose sanctions on Russia.

The flotilla of Russian superyachts in Turkish waters is raising tensions with the United States, which sees Turkey’s welcoming of the vessels as a symptom of the much larger problem: Russia’s access to Turkey’s financial system, potentially undermining Western sanctions.

Turkey’s strongman leader, President Recep Tayyip Erdogan, who has criticized Western sanctions against Russia, said in March that Turkey could not impose sanctions because of its energy needs and industry deals. “There is nothing to be done there,” he said.

In all, at least 32 yachts tied to oligarchs and sanctioned entities have sheltered in the country’s waters in recent months, able to move about or moor in its picturesque coves and bays without fear of seizure, according to a New York Times analysis. Ownership records of superyachts for the ultrawealthy are notorious for being hidden behind layers of shell companies. The Times analysis was constructed with news accounts linking Russian oligarchs to particular yachts that were then matched with vessel positions available on commercial sites such as MarineTraffic . In many instances, the yachts were spotted in Turkish waters by a Times reporter.

On Aug. 19, the Treasury Department issued a statement saying that the deputy treasury secretary, Wally Adeyemo, had told a Turkish official that the United States was concerned about Russians using Turkey to evade sanctions.

Three days later, Mr. Adeyemo sent a letter to Turkish business groups warning of penalties if they worked with Russian individuals or entities facing sanctions. Turkish banks, he added, risked losing vital correspondent relationships with global banks — and even access to the U.S. dollar — if they did business with sanctioned Russian banks.

In September, several Turkish banks stopped accepting the Mir payment system — the Russian equivalent of Visa or MasterCard. Their actions came after the United States warned that financial institutions expanding the use of Mir or entering into new agreements risked running afoul of American sanctions against Russia.

Nevertheless, Turkish marinas continue to service sanctioned Russians and their superyachts.

The warm turquoise waters, secluded beaches and trendy establishments of Turkey’s Mediterranean coast have long made it a popular and convenient destination for Russian yacht owners and charterers during the summer. Local restaurant menus are printed in three languages: Turkish, English and Russian.

In June, the Flying Fox was singled out by the United States as “ blocked property ” and its management company, Imperial Yachts, was also sanctioned. Nevertheless, the Flying Fox has been moored since at least May at Port Azure, a marina in the posh resort town of Göcek. Other superyachts there owned by or linked to sanctioned Russians have been cruising from one postcard-worthy cove to another in the area.

The town’s polluted waters are unsuitable for swimming, an attractive feature for superyacht owners because it keeps away crowds and unwanted publicity. And the vessels can easily steam to pristine waters nearby. If the pampered guests have any unfulfilled needs, small boats roam around the harbor, selling groceries, ice cream, Turkish crepes and even massages.

Port Azure, touted as the first “mega-yacht-only marina” in Turkey, was opened last year by STFA, one of Turkey’s biggest conglomerates. The marina , which prides itself on its website as being a “haven” that makes “problems big and small go away,” has hosted at least eight yachts linked to Russian oligarchs or sanctioned companies this past summer, the Times analysis found.

On June 1, a Turkish yacht broker posted on Instagram a video taken at Port Azure showing a lineup of five yachts collectively worth almost $1 billion, including the Flying Fox; the Lana, recently listed at $1.8 million a week for charter by Imperial; and the Galactica Super Nova, linked to Vagit Alekperov, a sanctioned Putin ally, according to news media reports.

As of Oct. 20 there were at least 13 yachts in Turkey linked to sanctions, the Times analysis found. Of those, four were owned by or linked to sanctioned individuals and nine have recently been offered for charter by Imperial, the sanctioned Monaco-based company.

A spokeswoman for Imperial Yachts said that after the firm was sanctioned in June, its clients terminated their contracts with the company and that it “no longer manages or charters” any of the yachts in Turkish waters.

But until late August, Imperial advertised yachts for charter and for sale on its website, including yachts in Turkish waters. After an inquiry by The Times, the listings were removed from Imperial’s website, which now displays only a notice announcing that the company had been sanctioned. The company spokeswoman said that it had “kept its other pages alive as a reflection of its former brand.”

“During the time that the other website pages were visible, Imperial did not engage in any business engagements,” Imperial said in response to emailed questions.

Roman Abramovich, the most visible Russian oligarch recently seen in Turkey, does not use Imperial Yachts to manage the construction of his opulent yachts or staff them after they are put to sea. Four yachts owned by or linked to Mr. Abramovich, who has been sanctioned by Britain and the European Union, the Times analysis shows, were in Turkey in August.

Should the United States choose, it has tools at its disposal to enforce its sanctions on the Russian oligarchs, even if their vessels are in Turkish waters and even if the Turkish government is unwilling to cooperate, said Daniel Tannebaum, a former sanctions official who served at the U.S. Treasury and the Federal Reserve Bank of New York.

One way, he said, would be to place sanctions on companies that service the oligarchs’ yachts in Turkey — the marinas, caterers and fueling companies. In that case, not just Russian yacht owners but also the many American yacht owners now in Turkish waters would have to take their business elsewhere, while the banks that do business with these companies might close their accounts so as to avoid becoming a target.

Superyachts are a significant source of income for the marinas, as well as other businesses in the area. In one example, Turkish news media outlets reported in April that Mr. Abramovich’s biggest yacht, the 533-foot-long Eclipse, ran up a fuel bill of $1.66 million in the port town of Marmaris. Its tanks took 22 hours to fill.

One of the four superyachts linked to Mr. Abramovich, the 460-foot Solaris, is moored in the Yalıkavak Marina in Bodrum, a trendy resort town in Turkey’s south. While lying idle, it still has 20 crew members who make trips every day to provision it, supply it with water and electricity and dispose of its waste, according to a port employee with direct knowledge of the matter, who spoke anonymously because he wasn’t authorized to speak publicly.

Solaris also receives a truckload of food every week through a catering company, he said, adding: “Twenty cases of asparagus — what would you do with so much asparagus?”

Yalıkavak is Turkey’s most luxurious marina, with stores like Prada, Louis Vuitton and Valentino on a promenade lined with palm trees overlooking the harbor. At least three yachts recently offered for charter by Imperial, the sanctioned management company, and three other yachts owned by or linked to oligarchs moored at Yalıkavak Marina this summer, the Times analysis shows.

In an emailed statement, the marina said that even though Turkey has not adopted sanctions, because it recognizes “international concerns,” the Solaris has been kept outside the marina’s boundaries. As for the vessels associated with Imperial Yachts, the marina said that it did not know, as the summer is “quite a busy time” and that it didn’t have a system in place to check whether an individual yacht might fall under international sanctions.

In August, the Eclipse, one of the yachts linked to Mr. Abramovich, was anchored in the middle of the bay off Göcek, a three-and-a-half-hour drive down the coast from Yalıkavak.

On an early morning in August, Ömer Kırpat, 56, was fishing on the shore in Göcek, sitting under a willow tree overlooking the yachts.

“The bells aren’t jingling,” he said, pointing to the bells attached to his rods to alert him when the fish bite. He showed his bucket with one lone fish inside, explaining that the fish avoid the shore because of pollution and noise from the boats.

Port Azure, the Göcek marina hosting the Flying Fox, was built over the port of a state-owned paper factory where Mr. Kırpat worked for 13 years as a security guard until it was privatized in 2001. He used to go there to swim, fish and have picnics every weekend with other factory workers and their families. “It was sparkly clean,” he said. “We caught the biggest fish there.”

He tried to go into Port Azure last year but was chased away. “We’re banned,” he said. “Soon they won’t even allow us to look inside. It’s heartbreaking.”

Michael Forsythe is a reporter on the investigations team. He was previously a correspondent in Hong Kong, covering the intersection of money and politics in China. He has also worked at Bloomberg News and is a United States Navy veteran. More about Michael Forsythe

Carlotta Gall is a senior correspondent currently covering the war in Ukraine. She previously was Istanbul bureau chief, covered the aftershocks of the Arab Spring from Tunisia, and reported from the Balkans during the war in Kosovo and Serbia, and from Afghanistan and Pakistan after 2001. She was on a team that won a 2009 Pulitzer Prize for reporting from Afghanistan and Pakistan. More about Carlotta Gall

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Roman Abramovich’s $1bn five-yacht fleet revealed

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Russian oligarch Roman Abramovich owns or is linked to a collection of five yachts estimated to be worth almost $1bn, including several vessels whose ownership remained secret until this week.

A Financial Times investigation into the billionaire’s assets has lifted the veil of secrecy he maintains over his wealth, even after the UK and EU imposed sanctions on him following Russia’s invasion of Ukraine for his allegedly close relationship with President Vladimir Putin.

Authorities in the UK and EU are attempting to identify all of the assets owned by sanctioned oligarchs. Abramovich was already widely reported to be the owner of Solaris and Eclipse — worth $474mn and $437mn, respectively, according to yacht data service VesselsValue. But the FT revealed this week that he also owns Halo and Garçon, which are both moored in Antigua.

The Antiguan government was unaware of the ownership of the boats docked on the island before inquiries from the FT, highlighting the scale of the challenge UK and EU authorities face in enforcing sanctions.

Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute think-tank said governments, banks and other institutions trying to enforce sanctions had to navigate a world where “ownership trails run cold and morph into a haze of front companies, nominees and cut-outs”.

Halo and Garçon are valued at $38mn and $20mn, respectively, and are now at risk of being seized.

In a letter to the British high commissioner to Barbados regarding the yachts, Antiguan minister of foreign affairs Paul Chet Greene said the island would “provide full assistance to the government of the United Kingdom” if it receives a request under the two nations’ Mutual Legal Assistance Treaty.

The letter noted that Antigua had requested information on the company that owns the two boats — British Virgin Islands-registered Wenham Overseas Limited — after “persistent allegations by the Financial Times that the vessels could be owned by Mr Roman Abramovich”.

In response, the British high commission provided Antiguan authorities with a letter, seen by the FT, “from the Financial Investigation Agency of the British Virgin Islands which states the beneficial owner of Wenham Overseas Ltd is Roman Abramovich”.

The letter also shows the billionaire’s address in Switzerland is listed simply as “Immeuble, Gatzby Le Magnifique”, which translates as “The Great Gatsby Building”.

Keatinge described the UK’s ability to demand full ownership information of companies registered in any of its overseas territories or crown dependencies as its “most powerful global weapon” in combating financial secrecy.

However, he asked: “How much is that weapon being used?”

A person with knowledge of Abramovich’s boat collection and documents seen by the FT indicate that the oligarch may also still be the owner of Sussurro, the first yacht he bought in 1998, despite reports he had given it to an ex-wife in a divorce.

The person who correctly identified the two yachts in Antigua as belonging to Abramovich told the FT the oligarch still owned Sussurro.

The vessel’s owner is listed in maritime registers as Vesuvius International Limited in the British Virgin Islands. BVI documents show this company was deregistered there in 2017. Another Vesuvius International was registered in Jersey the same year.

The owner of Jersey-based Vesuvius International is listed as Wotton Overseas Holdings Limited. This entity — which shifted from the BVI to Jersey in 2017 — is also the owner through a subsidiary of a helicopter that has been photographed landing on Abramovich’s Solaris several times.

Maritime tracking services show Sussurro, which means “whisper” in Italian and is valued at $11mn, is moored in La Ciotat in the south of France — the same port where the French government last month seized a $116mn superyacht belonging to a company tied to Igor Sechin, head of Russian oil group Rosneft.

Sussurro’s management company is Blue Ocean Management, a Cyprus-based company that also manages Le Grand Bleu, a 113-metre superyacht that Abramovich reportedly gave to his business associate Eugene Shvidler.

The UK placed Shvidler under sanctions last week.

The letter from the BVI’s financial investigation agency to its British counterparts also reveals that the owner of Le Grand Blue — Ashchurch Holdings Limited — is owned by “Zarui Shvidler”. Shvidler’s wife is commonly known as Zara Shvidler.

VesselsValue pegged Le Grand Bleu’s market value in a range of $110mn-$130mn, noting that the boat had last been tracked this week in the Caribbean Sea off the coast of Puerto Rico.

Representatives for Abramovich and Shvidler did not respond to requests for comment.

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2 superyachts owned by the Russian oligarch Roman Abramovich and worth more than $1 billion combined head east after he's sanctioned

• Abramovich's two superyachts are moving eastward after he was sanctioned.
• It's unclear where Solaris and Eclipse, worth a total of more than $1 billion, are sailing.
• Abramovich's assets were frozen on Thursday as a part of UK sanctions.

Two superyachts belonging to Roman Abramovich are heading east after the UK hit the billionaire Russian oligarch with sanctions on Thursday.

Among the sanctions imposed on Abramovich, the UK government said, was the freezing of his assets, meaning his yachts and private jets are at risk of seizure.

Abramovich's 460-foot vessel, Solaris, was just off the east coast of Italy on Friday, according to the ship-tracking site MarineTraffic . It had left a shipyard in Barcelona , Spain, on Tuesday, where it had been docked since late 2021 for repairs, Reuters reported.

It's unclear where Solaris is sailing. MarineTraffic says the destination of its port isn't recognized. Solaris has a price tag of $600 million, according to SuperYacht Fan .

Meanwhile, Abramovich's 533-foot yacht, Eclipse, has been cruising eastward from St. Martin in the Caribbean since February 21, MarineTraffic data shows. The boat, which costs $700 million according to SuperYacht Fan , was near the west coast of Africa on Friday, MarineTraffic said.

There is also no destination port for Eclipse listed on MarineTraffic's website, so it's unclear where the superyacht is going to dock next.

After the invasion of Ukraine, sanctioned Russian oligarchs such as Abramovich have sought to move their yachts  and  private jets across the world in an attempt to protect their assets.

Abramovich, who Bloomberg estimates has a net worth of $13.7 billion , is the owner of Chelsea FC. He had announced last week that he was selling the club, but the UK's sanctions mean he can't go ahead with the sale.

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