A #YachtWatch Update: It Takes More than Two to Tango
Hi again! Before I launch into my weekly rant, I’m excited to announce my Foreign Influence Operations course is up and running. I’ll be posting a new class every other Monday, but the course is designed to do at your own pace, so don’t feel like it’s too late to sign up. The first class is posted and free to all readers. All subsequent classes will be for paid subscribers, who will also get access to a course chat room and Vespers, live chats with me.
For those of you who have already signed up: Thank you! You should have received the link for the chat. If not, click here.
Alex’s Weekly Rant
On April 4, 2022, Spanish authorities, at the behest of the US government (USG), detained the superyacht Tango, in Palma de Mallorca. The yacht, 78 meters (254 feet) long and worth an estimated $120 million, is owned, according to the USG, by Viktor Vekselberg.
A quick background on this particular Russian oligarch, because we are bound to hear more about him in the coming months and years. Vekselberg is worth an estimated $5.5 billion (down from $17.2 billion in 2014, when Russia invaded Crimea. Oops.) He was sanctioned in April 2018 (along with our buddy Oleg Deripaska, about whom I ranted last week). But before that, in January 2017, just before the inauguration of Donald Trump, Vekselberg met with Trump’s personal lawyer, Michael Cohen, at Trump Tower. His cousin, Andrew Intrater, owns an American company linked to Vekselberg’s Russian company. Intrater paid $250,000 to attend Trump’s inauguration. Probably just a series of coincidences (that we will look at more closely in the Foreign Influence Operations course).
Vekselberg also is known for his interest in the high-tech industry. In 2010, he formed a partnership with MIT, in hopes of building a Russian Silicon Valley in Moscow. National security experts raised all kinds of red flags (namely, we don’t want Russia to have access to our best technology, especially if it is technology with both civilian and military applications), and in 2018, MIT tossed Vekselberg from its board of trustees. But the initiative continued (albeit quietly), since it was so lucrative (I call this kind of relationship Faustian Capitalism, trading your soul—or in this case, democracy’s soul—for short-term profit). MIT ended the program (finally!) last year, when Russia (again) invaded Ukraine. You can read more about the whole sordid affair here.
Given his designation as a sanctioned individual, Vekselberg is not allowed to do any business dealings in dollars or with any US company. This has caused the oligarch a few headaches, including, apparently, how to pay for his yacht.
A recently unsealed indictment in Washington, DC, revealed at least some of the trickery involved. Turns out, it takes more than two to Tango. It takes four co-conspirators, including the Spanish yacht management company Master Yachts and its CEO, Richard Masters (allegedly).
According to the indictment, Masters, along with his co-conspirators and at least two employees of Tango, went out of their way to hide the fact that Vekselberg was the true owner of the yacht, while working diligently to keep the yacht up and running for their boss. The group changed the name of the vessel on invoices, comingled funds for Tango with other vessels they managed, and often paid for expenses with their own personal credit cards (begging the question: how was Vekselberg repaying them?).
The group worked really hard to conceal the true owner of Tango. What the indictment outlines serves as a good example of how money launderers hide and confuse how money is moving. According to the indictment:
A British Virgin Islands corporation was listed as the owning company of Tango. That British Virgin Islands company was owned, in part, by a Panamanian corporation, which in turn was owned by a Panamanian foundation. A different British Virgin Islands corporation was the beneficiary of the Panamanian foundation. That British Virgin Islands corporation was owned by Vekselberg. A different Panamanian corporation was another partial owner of the British Virgin Islands company that is listed as owner of Tango. This different Panamanian corporation was in turn owned by a Russian corporation owned by an employee of Vekselberg’s. That Russian corporation was owned by another Russian corporation with a name similar to a Russian corporation owned by Vekselberg.
Confused? That’s exactly the point. The harder it is to uncover the true beneficial owner, the better for (alleged) money launderers.
In essence, what Masters and his co-conspirators were doing was trying to make it look like Tango belonged to one of Vekselberg’s employees, and that this magnanimous employee allowed Vekselberg, his boss who is an oligarch worth $5 billion, occasionally to use the yacht. Because we all do super nice things like that for our billionaire bosses, right? I mean, it’s a common trend these days for CEOs to make less and less and to allow their employees to earn enough to buy a $120 million super yacht. The least the employee can do is offer the boss a nice cruise or two.
But put aside the stupidity of that logic for a moment to enjoy this gem.
To obscure the fact that purchases were being made for Tango, the group used invoices with a false yacht name: Fanta. In fact, crew on the boat were told to “avoid any mention of Tango.” Emails involving payments for the yacht literally said, “Please make absolutely certain there is no mention of ‘Tango’. Reference should read ‘Fanta’.”
Except, then they did this: They spent $2630 on 29 “luxury robes” for the yacht. The invoice said Fanta. But guess what logo was embroidered on all those luxury robes? Yep, the logo for Tango.
Masters and his helpers also seem to have upgraded the yacht’s computer system, spending tens of thousands of dollars on both navigation and videoconferencing software. The indictment also reveals the yacht received a shipment of computers on March 22, 2022, one month after Russia’s invasion of Ukraine and one week after Spanish authorities first boarded the yacht for a look around.
Not all expenses were for the maintenance of the yacht. One $40,000 payment was for over-water villas in the Maldives for Vekselberg and his guests, plus more than $11,000 in mooring fees. Exorbitant prices, but an excellent opportunity to wear an embroidered luxury robe.
We are starting to see some patterns emerging. Evgeniy Kochman and his company Imperial Yachts, which manages several Russian oligarch yachts (including sister ships Crescent and Scheherezade, both of which were possibly purchased for Putin’s use), were sanctioned in June last year for their role helping Russian oligarchs move and hide assets, as well. He (allegedly) helped Suleyman Kerimov make payments for his super yacht, Amadea, including to purchase new water toys and to build a pizza oven on board. Amadea was seized in Fiji and is now floating in San Diego on display for her new owners, the American people.
But there are other patterns, too. The Russian yacht Valerie, detained by Spanish authorities in Barcelona in March 2022, changed names in September 2022 to Meridian A. Spanish media reported the yacht asked for permission to leave. The harbor master, unaware Meridian A was actually Valerie, at first granted that permission and the crew began preparing to leave. Someone finally got wise and the permission was rescinded, but Valerie almost made her escape.
The Masters indictment is yet another example of how the yachts—and the management and service industry around them—are used to launder money.
The Week’s Links
A roundup of stories you should be reading
(Note: I reserve the right to rant in depth about any of these at a future date)
RUSSIA SANCTIONS
Top US Treasury Official to Warn UAE, Turkey over Sanctions Evasion (Reuters)
How an Oligarch May Have Recruited the FBI Agent Who Investigated Him (NY Times) (this pairs well with my Rant from last week, which you can read here)
Credit Suisse Banked Abramovich Fortune Held in Secret Off-Shore Companies (OCCRP)
On the Hunt for Vladimir Putin’s Ex-Wife and her Ironman Husband (Politico)
RUSSIA IN AFRICA
How Russia’s Wagner Group is Fueling Terrorism in Africa (Foreign Policy)
RUSSIAN SPIES
Slovenia Arrests 2 Suspected Spies for Russia (The Moscow Times)
Austria Kicks Out Four Russian Diplomats (Austrian Ministry of Foreign Affairs)
QATARGATE
Inside the ‘Qatargate’ Graft Scandal Rocking the EU (FT)
CONFLICT OF INTEREST
DEA Mexico Chief quietly ousted over ties to drug lawyers (Associated Press)
WHEN CORRUPTION ERODES FAITH IN GOVERNMENT
Donald Trump Isn’t the Only One to Blame for the Capitol Riot. I’d Know. (NY Times)
TRANSNATIONAL CRIME AND AUTHORITARIAN REGIMES
INFORMATION LITERACY
How Finland is Teaching a Generation to Spot Misinformation (NY Times)
YOUR FEEL-GOOD STORY OF THE WEEK
North Korea’s Kim Jong Un is Having a Mid-Life Crisis (The Mirror)
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?
“We need publicly accessible corporate registries in every jurisdiction, from the British Virgin Islands to Anguilla to the Seychelles to Labuan to Delaware. Now. And if you hear resistance, that sound you hear is the sound of a politician who must be sacked.”
Stamping out offshore activity is key to limiting the Kremlin’s influence. Unfortunately, reluctance to do so demonstrates the depth of corruption as well as the potential health hazards associated with disclosing governmental links to offshore havens. Daphne Caruana Galizia exposed Malta’s links. Her car exploded one morning shortly after leaving her home. Probably a coincidence.
Yes, more transparency is needed! But also yes, too many people are benefiting from the current system.