How Europe and the U.S. Seize Oligarchs’ Yachts



After the Soviet Union crumbled, dozens of Russian businessmen enriched themselves by buying up stakes in Russia’s commodity industries at rock-bottom prices. In later years, these men protected their wealth by cozying up to Russian President Vladimir Putin.

Then, these oligarchs did what any self-respecting billionaire would do: They bought large, beautiful boats. Russian oligarchs, who now own about 10 percent of all superyachts, have boats with helicopter pads, swimming pools, “infinite wine cellars,” and hot tubs stabilized against the motion of the waves. And now all their boats are belong to us.

Or at least, that’s the idea. Ukraine’s allies are scrambling to seize the oligarchs’ yachts in order to punish Putin for invading Ukraine, by putting the squeeze on his buddies. Sadly, though the yacht-seizing is undoubtedly the most badass element of Putin’s global castigation, it has also proved to be more complicated, and less gratifying, than it sounds.

I was hoping for exciting nighttime combat on the high seas, but the process of detaining a yacht is rather boring. Most of the 16 yacht “seizures” that have occurred so far have been more like freezes, according to Alex Finley, a writer and former CIA officer who has been tracking the seizures. First, a country will notice that a large, majestic vessel is parked in one of its shipyards and attempt to ascertain its true owner—a process that requires cracking open shell company after shell company, a nesting doll of paperwork, if you will. If the yacht is indeed connected to an oligarch, the country’s port authority simply forbids the yacht to move. The yacht remains at the dock, and the oligarch can’t use it for a while. The owners aren’t usually on their yachts when the boats are seized, Finley told me, so there are unfortunately no images of carabinieri dragging away tuxedoed men as they curse in Russian. Nor are the boats chained to the docks with comically large padlocks, as I had hoped. “They just are not given permission to leave,” Finley said.

Some countries are deregistering the yachts, negating their insurance, which discourages the boat from sailing off. An Italian official who was not authorized to give reporters his name told me that the boats are simply floating in the harbor, with no one allowed to get on. This person then sent me some videos of Italian officials walking around a dock in a calm and unhurried manner.

The real drama seems to happen either before or after the yachts are seized. For instance, one Russian-owned superyacht, the Ragnar, got stuck in Norway because port workers refused to refuel it. A group of young Ukrainian sailors motored out to protest the billionaire Chelsea F.C. owner Roman Abramovich’s superyacht as it docked in Turkey, shouting, “Go away, Russian ship!” and “No war in Ukraine!” The Ukrainian chief engineer of the Lady Anastasia, which news reports say belongs to the Russian oligarch Alexander Mikheev, tried to sink the ship while it was docked in Mallorca by opening up the valves in her engine room. (All boats are female, even the ones violating international law.) Spanish authorities soon arrived to pump out the water and arrest the engineer.

European countries have seized the most yachts so far, but the U.S. Justice Department has also launched a task force that aims, in part, to seize Russian yachts. When I asked about this operation—called KleptoCapture—the agency responded with an email saying, “DOJ is interested in identifying all properties of sanctioned oligarchs and ensuring, to the extent possible, that those assets are ‘blocked’ from use or enjoyment.” If a yacht can be traced to criminal conduct, the agency said, “DOJ is interested in going further, where possible, and actually forfeiting the property.” On Monday, U.S. federal agents seized their first such yacht, the 255-foot-long Tango, owned by the billionaire Putin ally Viktor Vekselberg, at a port on a Spanish island. (That seizure footage, too, showed Spanish and American cops quietly standing around the yacht’s wheelhouse with their arms folded.) “Today marks our taskforce’s first seizure of an asset belonging to a sanctioned individual with close ties to the Russian regime,” Attorney General Merrick Garland said in a press release. “It will not be the last.”

Dealing with these seized yachts, though, can be kind of a headache. If left in brackish water for months, the boats’ hulls will corrode and, eventually, the yachts could sink. “If the ultraviolet light from the sun causes seals around the windows to perish, then you’ll get freshwater ingress from rain,” says Benjamin Maltby, a partner at Keystone Law who specializes in yachts. This could become an issue for the countries doing the seizing. “If in a year or two’s time the owner turns up and finds that these yachts are not in good condition, then there will almost certainly be a claim arising,” Maltby told me. In France, La Ciotat Shipyards told Reuters that it doesn’t know whom to bill for the mooring fees of the Amore Vero, a seized superyacht said to be owned by the oligarch Igor Sechin.

When the U.S. government seizes, say, a Lexus or a helicopter from a drug dealer, it takes on the cost of storing and maintaining it. “The government doesn’t own it yet,” says Stef Cassella, an expert on asset-forfeiture law. “It still belongs to the other guy, and he might get it back. And if he gets it back, then he has a right to get it back in the same condition that it was in before it was seized from him. Otherwise he gets to sue the government for damages.” Occasionally, the feds will pay a contractor to, say, mow the lawn of an alleged drug kingpin’s mansion or half-heartedly run the small business that was previously a front for money laundering.

Sometimes, U.S. marshals, who are the custodians of seized property, place yachts in dry storage facilities, where they are less likely to deteriorate. The oligarchs’ boats are too big for that, though; they have to be kept in the water. Still, “U.S. marshals don’t want to crew a yacht,” Cassella told me. Apathetic bureaucrats tend not to be as conscientious about yacht maintenance as the boats’ Russian oil-magnate owners. The government might opt to just reach an agreement with the oligarch to maintain the yacht while it’s under seizure.

Because of these upkeep challenges, the government typically tries to avoid seizing things that are too high-maintenance. After a few cases in which prosecutors seized thoroughbred horses, then were stuck having to feed and groom several criminally implicated equines, the government handed down a new rule of thumb: “If it eats, don’t seize it,” says Steven Welk, the former asset-forfeiture chief in the U.S. attorney’s office in Los Angeles.

To permanently take a yacht, as opposed to just keeping its owner from using it, American authorities must show that the boat is connected to criminal activity. A billionaire oligarch would surely challenge such a claim, and he may get his yacht back eventually. If he loses and forfeits his yacht, the government would put it up for auction, at which point anyone could buy it, other than government employees and the oligarch himself.

But that’s if the Justice Department is able to yank the yachts out of foreign waters in the first place. Because European countries have been cooperating with the Americans, several oligarchs’ yachts have sped away from the Mediterranean and over to Turkey or Dubai, which are seen as friendlier to Russia. Some of the yachts stopped “pinging”—sending marine-traffic data—then resurfaced near Russia itself. “One yacht, for example, Nord, had pinged down around the Maldives, and then she disappeared for several days and finally reappeared, clearly making her way through the straits of Malaysia and up toward Vladivostok,” Finley said.

Foreign governments are not always as helpful as U.S. authorities wish they would be. During his time as a prosecutor, Welk once tried to seize a $2 million yacht, the Rive de Mer, that belonged to an American fraudster who had fled to Mexico aboard the boat. Welk asked Mexican officials to arrest the man and surrender the yacht to U.S. officials. “They did grab him and bring him to Tijuana and give him to us,” Welk said. “But they kept his yacht.”

A few years later, Welk got a call from a yacht broker in Panama who had bought the fraudster’s boat from the Mexican government.

“What would happen if somebody bought that yacht and brought it to the United States?” the broker asked.

“If I know where it is, and it’s in U.S. waters, I’m going to take it,” Welk said.

But he never heard anything more about it, so he never did.



Source link

Leave a Reply

%d bloggers like this: