Highly Priced Yachts of Russian Oligarchs
Pursuant to the Russian invasion of Ukraine last year the US and its European allies imposed sanctions against Russian owners of yachts and villas on the presumption that the owners were associated with the Russian government. Initial seizures were impounding of a 213-foot yacht owned by Alexei Mordashov in Imperia, Igor Sechin’s 280-foot yacht in the French port of La Ciotat and Alisher Usmanov’s $18 million resort compound in Sardinia. The value of super yachts of Russian oligarchs may even reach $ 750 million. Despite sanctions and subsequent seizures of yachts some are limping back to Russian Ports.
Sanctions and Uncharted Waters
The law varies across territorial jurisdictions and the enforcers are in uncharted waters .Under U.S. law and most laws in Europe assets that are frozen remain under the ownership of the oligarch, but can’t be transferred or sold by the seizing authorities .They continue to own their yachts but they remain secured to the docks by the authorities and prevented from sailing . To actually seize and take ownership of an oligarch’s yacht or villa US state prosecutors have to prove under U.S. civil forfeiture law that the asset was used to commit a crime or that the asset is connected to a crime and represents the proceeds of illegal activity .The Asset Forfeiture and Money Laundering Section in the U.S. Attorney’s office standard is that there has to be clear evidence of criminality involving protracted legal proceedings. The matter descends into legal purgatory. Once the U.S. helped retrieve more than $300 million stolen from Nigeria by former military dictator Sani Abacha after more than five years of proceedings. In another instance of lengthy court proceedings former Ukrainian Prime Minister Pavlo Lazarenko was convicted in the U.S. of money laundering in a trial lasting 15 years.
Complications after Seizures
Ostensibly the purpose of diverting taxpayer’s finances or proceeds from auction of yachts was to aid citizens of Ukraine impacted by the war. Once assets of oligarchs , in this case being yachts, were seized legally they were not in a position to maintain the yachts as their bank accounts were frozen. After sanctions were imposed many Russian oligarchs became inaccessible which hindered investigations to establish a nexus between seized yachts and illicit profits arising from crimes in the backdrop of Russia’s invasion of Ukraine. The Russian oligarchs are adept at the art of subterfuge and concealing ownership through an intricate web of families, associates and shell companies . Yachts may be registered in countries like the Cayman Islands, British Virgin Islands or Panama being conducive for ensuring trust privacy .At times yachts sail under non Russian flags making it exceedingly difficult to track the actual owners.
Extravagant Maintenance
The owners of these yachts have an extravagant lifestyle boasting dance floors, Jacuzzis, Olympic size swimming pools , multiple helipads as well as lavish interiors with multiple decks.Minimal staff has to be deployed to prevent environmental hazards occurring as the boats need constant scrubbing and molds develop without adequate ventilation and contaminants may leak into the marine environment. The onus to maintain the yacht devolves on the seizing authorities at their taxpayers expense which may work out to around 10 % of the value of the yacht itself . Cost of mooring runs high not to mention insurance premiums . To compound matters the seizing government cannot auction forfeited assets without establishing that the assets were purchased out of proceeds of illicit funds linked to crimes committed internationally.The owners retain the right to legally contest seizure and forfeitures and in the ensuing litigation the vessels deteriorate in value.
UN & SDGs
The UN eventually will have to come up with a decision to put an end to this war as contaminants leaking into the marine environment would clearly be in breach of SDG number 14 laid down by UN in regards to protection and conservation of marine ecosystems. Even if the UN turns a blind eye to violation of SDG number 14, the Ukrainians would be seeking diversion of proceeds of auction .
Authored by Razeen Ahmed
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