A #YachtWatch Update: The Trouble with Russian Floaters
A #YachtWatch Update: The Trouble with Russian Floaters
Turns out auctioning off seized yachts of sanctioned oligarchs is hard, with lots of money getting flushed down the toilet
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ALEX’S WEEKLY RANT
Remember the glory days of yacht watching? The glee that came each time a government seized the yacht of a sanctioned Russian oligarch, the feeling that finally there would be justice against the corrupt network of kleptocrats robbing people blind and stashing their tainted assets in our backyard, using our banking/real estate/yacht management companies to clean their dirty cash and infusing their corruption into our open system?
Yeah, those days are over.
Those same oligarchs are now also using our legal systems to hold on to their corruptly-acquired assets. Auctions of yachts have come to a grinding halt. One yacht has been sold off without auction to an unknown entity. And arguments about who actually owns the assets versus who is the ultimate beneficial owner are tying up courtrooms rooms across the globe.
It’s time for a #YachtWatch update.
ALFA NERO FIDDLED WHILE ANTIGUA BURNED
The Alfa Nero has been sold for $40 million. But the sale means this yacht is leaving more questions than answers in its wake. (Get it? Because boats leave a wake.)
The government of Antigua and Barbados seized the Alfa Nero in 2022 at the behest of the US government, which believed the 267-foot yacht was owned by Andrey Guryev, a Russian fertilizer magnate worth somewhere in the range of $9 billion. That’s a lot of manure.
With the vessel racking up bills of $30,000 a week, the Antiguan government was anxious to get the yacht out of its harbor and off its books and eventually received permission to auction it off. Former Google CEO Eric Schmidt, who apparently was cool with the idea of sailing around in the former yacht of a pissed off Russian oligarch, won the auction with his $67.6 million bid, a fraction of the $120 million the ship is thought to be worth.
But Schmidt never got the Alfa Nero. Guryev’s daughter, Yulia, filed a lawsuit insisting she was the rightful owner of the yacht, although she conveniently left out why she had not claimed the yacht as her own when the Antiguan government seized it in the first place.
Soon enough, Schmidt was like, fuck this, and he pulled out of the deal. He probably googled what pissed off oligarchs can do and decided it was best to let that yacht go. Antigua then turned to the second highest bidder from the auction, but the legal back-and-forth with Yulia continued, so the yacht was never sold. Here is some background on the case and the characters involved.
Then, quite out of nowhere, news came this summer that the Antiguan government had simply sold the yacht. No auction. No bidding. They just sold it for $40 million.
The prime minister of the island nation said, when the sale was announced this summer, that the government would reveal the buyer’s name and how the proceeds were spent in the coming months. It’s been four months, and nothing.
Many questions remain:
Who paid $40 million for the yacht? Did the Antiguan government do any vetting of the buyer? Where did that money go? How did the Antiguan government use the money? Will the vessel’s creditors get their cash? The yacht racked up millions in debts, to the marina and to suppliers. Maintenance alone is thought to have reached nearly $2 million.
The yacht’s on-paper owner, the British Virgin Island company Flying Dutchman, has filed yet another lawsuit to try to keep ownership of the Alfa Nero, but the Antiguan prime minister dismissed the suit as “frivolous.”
In the meantime, Alfa Nero has hit the road, or rather the waves. The yacht left Antigua September 17 and has been hanging out in French Martinique ever since.
A SPOILED ROYAL ROMANCE
The yacht Royal Romance was supposed to be the first of the seized yachts to be auctioned off with the money going directly to Ukraine to help kick Russia’s ass in the conflict Russia started. Alas, this auction, too, has been caught up in legal battles.
Royal Romance belongs to Viktor Medvedchuk, a Ukrainian oligarch who is close to Vladimir Putin and who was traded to Russia in return for Ukrainian prisoners of war.
Croatia seized the $217 million-vessel and had reached an agreement to hand Royal Romance over to Ukraine for auction. But a number of legal and procedural delays slowed the process and then, in June of this year, a district court in Croatia cancelled the seizure order of the yacht altogether, because Ukrainian prosecutors did not file the necessary indictment of Medvedchuk (who had been traded to Russia, so was out of Ukraine’s reach, in any case).
It’s unclear what happens next. Technically, Medvedchuk and his wife (who owns the yacht on paper) are both still under sanctions, so the yacht cannot leave European waters. But the courtroom battle leaves open the chance the yacht will be returned to Medvedchuk, although it seems unlikely in practice that would happen while the war still rages. In any case, chances are slim Ukraine will get the chance to sell the boat and reap the profits to help defend itself from Russia.
WHO OWNS AMADEA?
Guryev’s daughter insisted she is the rightful owner of the Alfa Nero. Medvedchuk’s wife owns Royal Romance on paper. And now we have a niece who was allegedly used to purchase Amadea on behalf of Suleyman Kerimov.
In June, a New York court denied the US government the right to sell Amadea, the 350-foot yacht they seized in Fiji and which they believe is owned by Kerimov, another Putin pal. The US had wanted to sell the vessel, which is costing upwards of $740,000 a month ($600,000 for upkeep, $140,000 for insurance), and let the ownership fight continue over the money, rather than the yacht.
While those bills for upkeep continue to climb—the yacht was sailed up to Washington state earlier this year to undergo maintenance—a different Russian, Eduard Khudainatov, continues to insist he, not Kerimov, is the rightful owner of the ship. Prosecutors believe Khudainatov is a “straw owner” put in place to protect the real owner and they reportedly plan to show Kerimov used his niece to pay for the yacht.
To help make their case, prosecutors have pushed for more financial disclosures from Khudainatov, asking him to prove he can afford the yacht. Khudainatov has also said he owns two other yachts, the Crescent, seized in Spain, and the Scheherazade, seized in Italy and believed to belong to Putin. Prosecutors want to show there is no way he can actually afford all those yachts, which together are worth more than a billion dollars. Khudainatov, in turn, has fought against providing such financial disclosures. For more background on the case and prosecutors’ argument the yacht was laundering money, read this:
Prosecutors have tried to bring in former employees from the yacht as witnesses, including a French yacht designer, to help prove the vessel belongs to Kerimov.
One witness, according to court documents, claims to have been threatened, leading the witness’s counsel to seek to seal documents related to the witness. The witness reported the threatening actions to law enforcement both in the US and in the witness’s home nation. While those threatening actions took place before the individual had been called as a witness in the case, the lawyer said, the threatening actions were taken by people related to the case.
According to the witness’s lawyer’s letter to the court,
“The Witness perceived actions taken by persons relevant to this litigation and who are named in a declaration previously submitted to the Court to be threatening. The Witness promptly reported the actions to law enforcement well before the Witness had any involvement in the present proceedings. The concern is genuine and real.”
It is unclear if Khudainatov—or Kerimov—had anything to do with the threats, according to the lawyer.
[Khudainatov was not] present “during the threatening actions, but the Witness is not in a position to know whether those responsible for the threats coordinated in any way with anyone else. The Witness knows simply that the Witness reported the activity to law enforcement well before the Witness had any involvement in these proceedings and that law enforcement in the United States and the home country of the Witness have taken the threat seriously (and continue to do so).”
FLYING FOX AVAILABLE FOR CHARTER
Lastly, if you’re looking to treat me to a nice vacation, which you should be, the mega yacht Flying Fox has been removed from the sanctions list and will be available for charter globally.
Flying Fox had been sanctioned because it was the largest yacht available for charter (at the time) through Imperial Yachts, a shady yacht management company based in Monaco that is also sanctioned and that has been identified in court documents, along with its CEO Evgeny Kochman, for its role in laundering money using yachts (allegedly). My sources tell me Kochman was also integral to the procurement of private jets for Russian oligarchs. Coincidentally, private jets, like yachts, are also a great vehicle for laundering money. Also coincidentally, Imperial Yachts also managed Amadea, Crescent, and Scheherazade.
Here’s a bunch of background on Imperial Yachts:
And see this article I did for Whale Hunting, as well as this New York Times article.
Flying Fox is 450 feet long, has six decks, and is worth an estimated $400 million. It is owned by Dmitry Kamenshchik, the owner of Moscow’s Domodedovo Airport and who remains free of sanctions (other than Ukrainian ones). The yacht was already available for charter through the Dubai office of Bluewater, another yacht management company based in Monaco, but remained off limits to US citizens, since the vessel remained designated on US Treasury sanctions lists.
Those sanctions have now been lifted. Flying Fox is free to sail anywhere.
THE WEEK’S LINKS
A roundup of things you should be reading
PUTIN AND TRUMP
As Russia Overtly Helps Trump Get Elected, Trump Continues to Check in with Vladimir Putin (Emptywheel)
US ELECTIONS
Two men have re-engineered the US electoral system in favor of Republicans (The Guardian)
VOTE BUYING IN MOLDOVA
Moldova alleges pro-Russian vote-buying scheme ahead of key vote (Reuters)
Alex Finley is a former officer of the CIA’s Directorate of Operations, where she served in West Africa and Europe. She writes and teaches about terrorism, disinformation / covert influence, and oligarch yachts. Her writing has appeared in Slate, Reductress, Funny or Die, POLITICO, The Center for Public Integrity, and other publications. She has spoken to the BBC, MSNBC, CNN, C-SPAN’s Washington Journal, France24, and numerous other media outlets. She was also invited once to speak at Harvard, which she now tells everyone within the first ten seconds of meeting them. She is the author of the Victor Caro series, satirical novels about the CIA. Before joining the CIA, Alex was a journalist, covering Capitol Hill, the Pentagon, and the Department of Energy. She reported on issues related to national security, intelligence, and homeland security. Did she mention she was invited to speak at Harvard?
Should take all the yachts in question, sail them into the Black Sea. Sail them up and down the coast by Odessa and Kherson. Use the as Russian prison vessels. Show the Russian prisoners who and what they are fighting for. Give them a month or two on the yachts, then send them back to Russia. This would please the oligarchs with the potential bonus of sowing the seeds of internal strife.
Line them up, see if the Russians take a shot at them. Maybe anchor one or two in Odessa, use it as a museum. a day spa for Ukrainian veterans.