US, EU Seized Russian Billionaires' Yachts. Then Came the Bill

seventy eight million dollar mega yacht. It's the size of two football fields and the word's largest super yot has been stopped from sailing after Germany officially confiscated the asset of Russian oligarch Alassmanov. The super yot was seized as part of the trenches off sanctions against Russia by the West. The one along has an estimated value of nearly six

hundred million US dollars. Since Russia invaded Ukraine in February, the US and dozens of other Western governments have imposed sanctions on Russians who they accused of supporting Russian President Vladimir Putin or benefiting from ties to the Kremlin. They've frozen their bank accounts, they have gone after their homes and private jets, and most dramatically, they've seized the opulent

prize supriots of these billionaires. We have held the ship, which we now know belongs to Russian oligogue because we're very clear we cannot have any benefits of these oligogus with close connections to put In whilst that terrible war is going on in Ukraine and so many people will suffering. More than fifteen Russian linked yachts have been impounded because

of sanctions, and most remain in legal purgatory. But now comes to the question what do you do with a confiscated yacht that's the size of a small cruise ship. To answer that question, Stephanie Baker joins me from London. She's a senior investigative reporter for Bloomberg. Stephanie, let me start by asking you the US and other Western governments are seizing these huge yachts that are allegedly owned by

Russian oligarchs who are under economic sanctions. So can you tell us what exactly is a Russian oligarch and why are they being sanctioned? Okay, well, the term Russian oligarch originated actually in the nineteen nineties during the era of President Boris Yeltsen, when a group of Russian tycoons backed his bid for re election, financing his campaign. Now they got stakes and state owned companies in exchange for loans to the government which were never repaid, and they became

some of the richest men in Russia. And the term grew from that that they had this undue influence over the government as a result of this political backing of the president. Now that is of course changed over the years. When President Vladimir Putin came into power, he told the oligarchs politics is over. I won't go after your businesses if you stay out of politics. So the term is somewhat troubled. I try to avoid it because it really, you know, implies that these individuals have sway over the

Russian government. And now there are some that certainly do um because they run state owned enterprises. There are other very wealthy Russian businessmen who have been sanctioned who don't have that kind of relationship with the government and don't really have that kind of sway over Putin. I mean, it's arguable if any of these individuals have any sway over Putin, then why are they being sanctioned in exactly

what is a sanction? When the U S sanctions a Russian businessmen, we hear about this all the time these days. What exactly is that, Well, when they're sanctioned, it usually involves asset freezes, travel bands and barring them and their companies from doing business in Western markets, so essentially makes

them financial pariots. Exactly. Now, the reason behind sanctioning them, you know, President Biden said, we're going for your ill gotten gains, and the moves by Western governments are designed a as a signaling tool, a form of punishment in response to Russia's invasion of Ukraine. But in many of the designations by Western governments, they have pointed to the fact that many of these individuals have benefited from their relationship with the Russian state and that can take many forms.

That can be the way they made their money in the early days to continuing relationships now. And the fact of the ma matter is, if you're a Russian businessman today, you are operating at the behest of Vladimir Putin. He can take away your business. You have to stay on the right side of the government or else, and that is taken as an implicit form of support from the government. So even if these executives don't have sway over Putin, they certainly have to be in line with Putin, and

he has sway over them. The only way you can rise to those heights is if you don't run a file of Vladimir Putin and his plans exactly. And that's why you've seen many of these Russian billionaires who I think almost all of them are against the war, but have not come out and said specifically that they are critical of Putin's decision to invade because they know that that could threaten their empires. Does many of express criticism of the war, calling for peace and very general terms,

but if stopped short of directly criticizing Putin. Now you mentioned these alleged ill gotten gains that the US and other Western countries have gone after with sanctions, and among them are these enormous yachts that many of these Russian executives own. What is it about buying giant boats that appeals to them. It's a really great question. I mean, many people ask, why do you need a super yacht? No one needs a super yacht, you might need a house,

and you could have a grand house. But I think it became a status symbol, and it became another venue for wealthy Russians to park their wealth in a zone that is outside the reach of Putin, who was viewed as potentially a threat to their assets if they fell follow of the government, so they could go after their accounts. About a physical thing like a yacht, it could be, you know, at the ends of the earth and harder

to track down and take away exactly. And it's the ultimate mobile asset, right And we've seen that since the war started. Right after the invasion began, many Russian owned super yachts began racing across the ocean in search of safe waters in jurisdictions that were not enforcing sanctions. And many of them got away, but some of them did not, and some of them were seized. As long as we're defining our terms here, what exactly is a super yacht? How is it different from a yacht or a really

really big yacht? Right, So this is a really interesting conversation I had with many in the industry. Some people define a super yacht as above forty meters. Others say it's above eighty meters, that's a sort of mega yacht or a giga yacht. A giga yacht, is that an actual term. It's a term, and I asked a lot of people, and most people said, there's no precise definition for that, but I think many in the industry view

anything over eighty ms as well of another class. So eighty ms, by the way, for those of us in the US, that's two hundred sixty two feet, so we're talking just absolutely enormous, enormous, enormous, And in that category eighty and above. Russians are the biggest single owners. They own about There are about a hundred and fifty three super yachts in existence over eighty ms, and Russians own

approximately thirty of them, according to the super Yacht Times. Stephanie, if you could stay with me for just a little bit, we will continue our conversation after the break. When Russia in data Ukraine in February, there were quite a few of these Russian executives, these billionaires who owned these yachts, they were under sanctions, and those boats took to the water and started going all over the place to avoid

being seized. Some of them did some of them, and many of them ended up, for instance, off the coast of Turkey, which has not enforced sanctions, so that you know there are on last account, maybe at least you know half a dozen if not more, sanctioned Russian super yachts in Turkey that are hold up. They're safe, not frozen by Western governments. Others attempted to leave ports in Europe and were stopped because Western governments believed they were

owned by sanctioned Russians. Some wan. You have this very dramatic moment in your story which shows the lengths to which the US is going to try to track down these ships and determine who owns them. That's right. In the case of this one super yacht, Medeia, the US stopped several crew members flying through l A airport, grilled them for several hours, revoked their visa, cloned their cell phone data for evidence, and sent them packing. And what were they asking them? What did they want to know

from these pilots. They were asking them about who was using the super yacht, about Suleiman Karimov, the man they believe is the real owner of Medea. They were asking them why they were using code names for passengers on the super yacht. The code names were G one, G two, G three for different passengers. According to my reporting, the crew members responded that was fairly standard procedure on these super yachts, that you wouldn't identify them by name. I mean,

I guess the standard procedure for super yochts. But you know, for those of us who live in the super yacht world, sounds kind of like you're trying and hide the identities of people being on your boat. Absolutely, but it reflects what a different world the super yacht industry is, and you know how they operate. So the FBI went to great lengths to try to track down evidence proving their case that this was indeed owned by a sanction Russian

super yacht. So in your story you write that Western governments, including the US, started going after these yachts to seize them and take them away from these Russian billionaires. That's right. So the US has been very aggressive. They have sent FBI agents all around the world chasing down super yachts

they believed to be owned by sanctioned Russians. And the most notable case is the super yacht called Amadeia, which was frozen in Fiji when it landed there in April, and the US sought to seize it and engaged in a several weeks of legal wrangling in courts in Fiji in order to get permission to actually seize it and sail it to US waters. A Russian owned super yacht has set sail from Fiji. Its departure from the country marks the end of weeks of ongoing U s efforts

to seize the three hundred million dollar vessel. Fiji Supreme Court cleared the US to take the Amadia, a nearly three hundred fifty foot luxury ship, earlier today tell us

the story of this yacht. Who owns it well? The US believes that the real owner is a sanctioned Russian oligarch named Suleiman Karimov, who was actually sanctioned in eighteen under the Trump administration when he sanctioned half a dozen Russian billionaires for being behind Russia's malign influence operations in the aftermath of Russia's meddling in the election, and they pointed to evidence that he had installed a new spa bed, a pizza oven, super fast jet skis that he had bought.

Now the owner has come forth as a very little known oligarch named Edwardov, who on paper at least is the beneficial owner of a nest of shell companies that technically owns the super yacht. So this takes us back to a really important thing in your story, which is it's really really difficult to figure out who owns these things, um, because I guess you just don't go to the super yacht lot and pick out one and take it home. Today is a really complicated thing to get your hands

on one of these things. Can you just talk a little bit about, like how do you go get a super yacht? Well, generally speak king these yachts tend to be owned by companies rather than individuals as a way of limiting liability in the case of accidents. And that's the case with not just Russians, but many other nationalities who own these super yachts. But in the case of Russians, they are owned by layers of shell companies that it's

often difficult to determine who the beneficial owner is. And that's by design, by design, but you know, there is a tendency, and I'm speaking generally here of Russians to have unofficial agreements about holding assets for others. Now it would appear that after Mr Karimov was sanctioned in ten it would be very difficult for him to buy and

operate and maintain a super yacht. Now, the US maintains that the beneficial owner on paper of Ahmadea is this man Edward who Donatov, who at the time was not sanctioned and therefore was a safer straw owner of that vessel, holding it on behalf of Mr Karimov. And what does Mr Karimov say about this? Mr Karimov does not respond to questions, and he has remained remarkably silent on this matter.

So he hasn't disputed probably that he owns or doesn't own this yet he has not disputed the management company that had managed it disputes that he owned it and says actually the real owner is Mr Kutuonatov. And just because Mr Karimov used the yacht is should not be

used as evidence that he actually owns it. Now, I spoke to some forfeiture experts who you know compared the process of establishing ownership of sanctioned Russian assets to that of assets of drug lords that you know, jugglers don't always hold assets in their name. They often hold their house and their girlfriend's name, and that it's a similar situation here that often assets are held in the names of other individuals in order to protect a sanctioned individual from,

you know, having his assets freezed. So when the US is going after these super yachts like this one, which they found all the way in Fiji, do they have a really difficult time figuring out who owns them in each case? Well, they have done an exhaustive investigation and they are still investigating to be able to prove to a court that indeed the owner is sule Man Karimov, a sanctioned Russian oligarch, and not this other individual, Edward

Kuda Natov, who is not sanctioned by the US. They need to be able to prove that in a court of law, and they need to be able to produce sufficient evidence to convince a judge that their case is sound. Now they haven't proceeded yet with civil forfeiture complaint, so this process is likely to take years to litigate because the amount of evidence they need to compile and the

process of forfeiture can take so many years. And how many other yachts has the US gone after they have issued a seizure warrant for another super yacht in Spain called Tango, owned by a Russian billionaire named Victor of Exelberg, who was also sanctioned in and they have boarded but not issued to seizure. Weren't yet another vessel in Antigua

owned Bias sanctioned we believe Russian. Now the issue here is that they do need to be able to prove who the actual beneficial owner is and that means they're going to be interviewing and they have interviewed crew members, the captains aboard these vessels to determine who is actually using the asset, and they've already sent out subpoenas to several crew members. And what are the countries are going

after these yachts? Europe has many of these super yachts, and Italy has frozen for mega yachts, probably more than any other European country, including one super yacht that has been linked to Vladimir Putin, jailed. Russian opposition leader Alexei Navalny's Anti corruption foundation has published a video. Now, according to the video, Vladimir Putting owns one of the world's largest yachts. Now this, yeah, because it comes up in stories quite a bit saying it's Putin's yacht. He disputes it.

There have been all kinds of investigations trying to figure out does he own it or not? When you say it's linked to Vladimir Putin, what does that actually need? Well, I think in a lot of these cases there is

evidence that he used it. So the Russian opposition leader Alexey Navalny his team did an investigation which found evidence that many of the crew members of the super yacht called Scheherazade actually worked for the same agency that is responsible for Putin's personal security, and Navalny, of course was

the leader who was poisoned and then imprisoned. That's right, But according to US affidavits, the us IS also believes that those yachts are linked to Putin, and I think it raises the broader issue of you have super yachts and their ownership structures, which is owned by offshore companies with which in turn have their beneficial owners, but then

there's who actually uses them. So I think in many cases, establishing ownership is really all about figuring out, well, there may be an owner on paper, but who is really actually using it and controlling it and making decisions about the vessel and its maintenance, and you know it's redesigned. Seventy of these super yachts aren't just big, they're unbelievably expensive. That's right. I mean many are incredibly expensive. There is one super yacht called Crescent, which is estimated to be

worth million. There's another culture Harrizade, the one that is linked to Putent, that is worth at least six d and fifty million, if not more. These things are incredibly expensive to build. It takes at minimum four years before you put in a design plan, you hire an architect. They are unbelievably expensive to build and maintain, and just

give an idea. You mentioned this one yacht came in at six hundred million dollars, just to give you a little basis of comparison for any of our listeners who are thinking about maybe buying a super yet the medium us in come right now. It's about dollars, which means that if you're making that much money a year, and you you know, maybe bring your lunch to work instead of going out and don't stop by the cafe, would

bring coffee from home, and you save your pennies. It would take about thirteen thousand, six hundred thirty six years to earn enough to buy a super yacht worth six million dollars. It's just an incredible amount of money. And they kept getting bigger and bigger and more expensive as

the years went on, particularly during the tens. When we come back from the break, continue my conversation with Stephanie Baker, and Stephanie, I'm gonna ask you where are all these confiscated yachts and who is paying to keep them afloat? You had written that it takes an enormous amount of just to keep these things running every year, right under normal conditions, The industry shorthand is that it will cost between ten and of a yacht's value to maintain it

every year. Now, some people think that's an exaggeration. You know, certainly when they're in stuck in a port like they are when they're frozen, it's going to cost less. So I did quite a bit of reporting to talk to people in a position to know about how much it really costs to keep these things in port, frozen and immobilized imports. I calculated on an uber conservative estimate of

three of the yachts value. That includes you know, a skeletal crew to maintain it, management companies to oversee the running of it, and then you know, as time goes on, there's going to be bigger expenses that come up. So we're talking about millions of dollars a year to maintain these ships while they're just sitting in port under you know exactly, And who actually is footing in the bill for that. Well, in the case of the US and Italy,

it is the taxpayer. So do you have an estimate of how much you say, US taxpayers are on the hook for maintaining that's while they're sitting in port. Well, according to my reporting, Amadeia costs about ten million a year to maintain. And that's just one ten million dollars to sit in port. Yeah, that does not include any sort of unusual expenses that might crop up. So we're you know, we're talking unless this gets resolved fairly quickly, you know, tens of millions of dollars every year. So

the question, I guess, is is it worth it? Um? What is the benefit other than taking punitive measures against people who the US believes active illegally or as you put it, you know their their their wealth is from ill gotten gains. What is the benefit of seizing beyond that kind of satisfaction taking a big boat away from

a rich gap. Well. I spoke to a former Biden official who was running a big part of the U S sanctions campaign, and he said it was really about showing to the Russian people that they have been ripped off for years and disrupting the Russian elite. And I think it's fair to say that taking away these super yachts that they have spent so much money and so much time designing and building does hit a sore spot

with many of these billionaires. So it's sending a message and a signaling mechanism that there will be consequences for Russia's war in Ukraine. Uh, Stephen, you even talked about how these governments have either detained or seized these big yachts, and you said that the US's intention is to sell them eventually to recoup all of these costs, once they're able to prove the actual ownership of these vessels. But were they going to sell them to? Who would buy

Russian oligarchs yet? Is there a market for that? It's a really good question. I asked a lot of people that who said, well, I certainly wouldn't want to buy uh sanctioned Russian super yacht. Um, you know what would happen if I happened to sail into Asian waters and the Russian billionaire came up saying he wanted his yacht back. I wouldn't be able to sleep. Now, having said that, there is precedent for this. It's not like a super

yacht has never been seized or stolen before. If you remember a few years ago, there was a super yacht allegedly bought with stolen money from Malaysia's state Investment fund one m dB that was seized on the orders of the U S which was conducting an investigation, and it was sold several months later as the proceeds of crime. Now, in that case, it's sold for about half of what

it was thought to be worth. So that gives you some indication of perhaps a discount that might be in play if any of these seized Russian super yachts do come up for sale. What do you think the future of all this is? Where is this heading? When it comes to these SATs that have been sees do you think that they will identify the owners that they will auction them off or is there some other end to

this story. I think in the case of the US, they will probably be able to establish ownership and proceed through forfeiture, but it could take years to complete. I think in the case of the European countries that have frozen these yachts, I don't think they have the legal basis to go ahead with actually seizing and selling them.

So I think they're going to be kept in these ports, and in some cases, like in Italy, taxpayers will be on the hook for paying for the maintenance, and other countries like Europe and France, port officials say the owners are responsible for the maintenance and upkeep, but it's all pretty murky ast who exactly is paying. I think it will be very difficult in legal cases to prove that they are owned by sanctioned Russian olive arcs. Stephanie Baker,

thanks so much for coming on the show. Thanks for having me. You can find Stephanie's story on Russian super yots at Bloomberg dot com. Thanks for listening to us here at the Big Take, the Daily podcast from Bloomberg and I Heart Radio for more shows from my Heart Radio, visit the I Heart Radio app, couple podcasts, or wherever you listen. Read Today's story and subscribe to our daily newsletter at Bloomberg dot com. Slash Big Take, and we'd love to hear from you. Email us with questions or

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