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Friday, March 31, 2023

Russian Oligarchs Seek Safe Ports to Hide Their Superyachts, As Sanctions Loom

The gigantic superyacht Dilbar is nearly as long as a World War I dreadnought and is one-and-a-half football fields in length. It has two helipads, berths for more than 130 guests, and a 25-meter swimming pool that could fit another superyacht.

Dilbar was launched in 2016 at a cost of more than $648 million, according to reports. After five years, the vessel’s claimed owner, Kremlin-aligned Russian businessman Alisher Usmanov, was unsatisfied and sent it to a German shipyard last October for a repair that would reportedly cost another several hundred million dollars.

That’s where she was in drydock on Thursday, when the US and EU imposed economic penalties on Usmanov, a metals billionaire and early Facebook investor, for his links to Russian President Vladimir Putin and in retribution for Russia’s invasion of Ukraine.

President Joe Biden addressed the oligarchs at his State of the Union address Tuesday night, saying, “We are partnering with our European friends to discover and seize your yachts, your luxury residences, and your private aircraft.” “We’re on our way to take your ill-gotten wealth.”

However, taking the massive vessels may be difficult. For decades, Russian millionaires have been able to keep their money and assets in the West safe from governments that could try to tax or seize them.

Dilbar has been impounded by German officials, according to many media reports. However, a spokesperson for Hamburg’s state economics ministry told The Associated Press that no such action had been taken since ownership of the boat, which is named after Usmanov’s mother, could not be established.

Dilbar is registered to a holding company in Malta and is flagged in the Cayman Islands, two clandestine financial havens where the world’s ultra-rich frequently shelter their cash.

Despite this, it is frequently an open secret who owns what in the sector that caters to the elite club of billionaires and centimillionaires who can afford to buy, crew, and maintain superyachts.

The Associated Press created a list of 56 superyachts — luxury vessels surpassing 24 meters (79 feet) in length — thought to be owned by a few dozen Kremlin-aligned billionaires, with a combined market worth of more than $5.4 billion, working with the U.K.-based yacht valuation business VesselsValue.

The AP then plotted the boats’ last known whereabouts as provided by their onboard tracking beacons using two web services: VesselFinder and MarineTraffic.

While several are still anchored near sun-drenched beaches in the Mediterranean and Caribbean, more than a dozen were on their way to or had already landed in distant ports in minor countries like the Maldives and Montenegro, perhaps beyond the reach of Western sanctions. Three of them are anchored in Dubai, a popular holiday spot for many rich Russians.

Another three had gone silent, their transponders last pinging just beyond the Bosporus in Turkey, the Black Sea’s entrance to the Russian ports of Sochi and Novorossiysk in the south.

Graceful, a German-built Russian-flagged superyacht said to belong to Putin, sailed out of a Hamburg repair yard on Feb. 7, just two weeks before Russia attacked Ukraine. It is presently docked in the Russian Baltic port of Kaliningrad, out from the reach of the Western sanctions placed on him this week.

Despite weeks of public warnings about Putin’s impending invasion, several Russian oligarchs appear to have missed the word to shift their superyachts.

The superyacht Amore Vero was seized by French officials in the Mediterranean resort town of La Ciotat on Thursday. The yacht is said to be owned by Igor Sechin, a Putin loyalist who is the CEO of Russian oil firm Rosneft, which has been sanctioned by the US since Russia took Crimea in 2014.

Customs authorities boarded the 289-foot Amore Vero and discovered her crew preparing for an urgent departure, despite the fact that planned repair work had not been completed, according to the French Finance Ministry. The yacht, valued at $120 million, is registered to a business with Sechin as the major stakeholder.

The 132-foot superyacht Lena, which is registered in the British Virgin Islands, was detained by Italian financial police in the port of San Remo on Saturday. The yacht, according to authorities, belongs to Gennady Timchenko, an oligarch close to Putin who has been sanctioned by the European Union. Timchenko is the creator of the Volga Group, which specializes in investments in energy, transportation, and infrastructure assets, and has a net worth of $16.2 billion.

The Italians also captured the 213-foot Lady M, which was docked in the Riviera port of Imperia. The comparably modest $27 million yacht was the property of sanctioned steel billionaire Alexei Mordashov, ranked as Russia’s wealthiest man with a value of almost $30 billion, according to a spokeswoman for Italian Prime Minister Mario Draghi in a tweet announcing the seizure on Friday.

However, Mordashov’s larger yacht, the 464-foot Nord, was securely anchored in the Seychelles on Friday, a tropical island chain in the Indian Ocean that is not subject to US or EU sanctions. Nord is one of the world’s most valuable superyachts, with a market value of $500 million.

Italy has confiscated 143 million euros ($156 million) in luxury ships and residences in some of the country’s most beautiful locations, including Sardinia, the Ligurian coast, and Lake Como, since Friday.

The majority of Russian billionaires on Forbes’ annual list have not yet been sanctioned by the US and its allies, and their superyachts are still roaming the world’s waters.

The emergence of oligarch yachts can be traced back to the turbulent decade following the Soviet Union’s demise in 1991, when state oil and metals industries were sold off at rock-bottom prices, often to politically connected Russian businessmen and bankers who had provided loans to the new Russian state in exchange for the shares.

Russia’s nouveau riche began purchasing luxury boats akin to those held by Silicon Valley billionaires, heads of state, and monarchy in terms of size and cost. In Moscow and St. Petersburg, it’s a crucial indicator of prestige, and size does matter.

“No self-respecting Russian tycoon would be without a superyacht,” said William Browder, a U.S.-born, London-based banker who spent years in Moscow before becoming one of Putin’s most outspoken international opponents. “It’s all part of the oligarchic rite of passage.” It’s basically a must.”

As their fortunes grew, the oligarchs engaged in a kind of arms race, with the wealthiest among them amassing personal fleets of ever-expanding yachts.

For example, Roman Abramovich, a Russian metals and petroleum mogul, is thought to have purchased or built at least seven of the world’s biggest ships, some of which he has since sold to other oligarchs.

Abramovich launched the Bermuda-flagged Eclipse in 2010, which at 533 feet was the world’s largest superyacht at the time. A wood-burning fireplace and a swimming pool that turns into a dance floor are among the amenities. Eclipse also has its own helicopter hangar and an underwater bay with a mini-sub, according to reports.

According to Dennis Causier, a superyacht analyst at VesselsValue, oligarch yachts frequently have hidden security features fit for a Bond villain, such as underwater escape hatches, bulletproof glass, and armored panic rooms.

“Eclipse has a variety of unique features on board, including missile launchers and self-defense systems,” Causier stated. “There’s an undersea evacuation place and something like that.”

When it was unveiled in 2013, Eclipse was quickly overshadowed by Azzam, ostensibly owned by the emir of Abu Dhabi, which claimed the title of world’s longest yacht. Usmanov launched Dilbar three years later, to replace a somewhat smaller boat of the same name. By volume, the new Dilbar is the world’s biggest yacht.

Last year, Abramovich, who is worth $12.4 billion, retaliated by establishing Solaris. The $600 million Bermuda-flagged boat may be even more opulent than Eclipse or Dilbar, despite being shorter and smaller. Solaris is an eight-story building with a sleek palisade of vast teak-covered decks that can accommodate a slew of well-heeled revelers.

No boat, however, can stay in first place for long. At least 20 superyachts are reportedly being built in Northern European shipyards, including a $500 million superyacht for Amazon CEO Jeff Bezos.

Causier added, “It’s about ego.”

However, he noted, the rising US and EU sanctions on Putin-aligned billionaires and Russian banks have sent shivers through the sector, with boatbuilders and employees fearful of not being paid. Crewing, fueling, and maintaining a superyacht may cost upwards of $50 million per year.

The collapse of the ruble and the collapse of the Moscow stock market have decimated the wealth of Russia’s elite, with numerous billionaires tumbling off Forbes’ list last week. Causier believes that certain oligarch superyachts may be surreptitiously offered by brokers at fire-sale rates in the near future.

The 237-foot Stella Maris, which was spotted parked in Nice, France, by an AP writer this week, is said to be owned by Rashid Sardarov, a Russian billionaire oil and gas mogul. Following the publication of an earlier version of this article, yacht broker Joan Plana Palao contacted AP on Sunday, claiming that his firm represented a Californian who acquired the Stella Maris last month. He refused to provide the buyer’s identity or the person from whom the yacht was acquired.

The US Treasury Department announced further penalties on Thursday, including a press statement praising Usmanov’s links to Putin and images of Dilbar and the oligarch’s own plane, a custom-built 209-foot Airbus A340-300 passenger liner. The aircraft, which is called Bourkhan after Usmanov’s father, is estimated to have cost up to $500 million, according to the Treasury.

Usmanov, whose fortune has just plummeted to around $17 billion, has spoken out against the penalties.

“I believe such a decision is unjust, and the reasons used to justify the sanctions are a series of false and defamatory allegations that have harmed my honor, dignity, and business reputation,” he said in a statement posted on the website of the International Fencing Federation, which he has led since 2008.

Abramovich has yet to receive a punishment. Members of the British Parliament have chastised Prime Minister Boris Johnson for failing to pursue Abramovich’s properties in the United Kingdom, which include the professional soccer team Chelsea. Under increasing criticism, the tycoon said last week that he will sell the $2.5 billion squad and donate the earnings to “all victims of the war in Ukraine.”

Solaris was docked in Barcelona, Spain, on Saturday, according to GPS transponders. Eclipse departed St. Maarten late Thursday and is currently sailing in the Caribbean Sea to an unidentified location.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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