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Russian billionaires may have found sanctuary for their superyachts

File photo: The $300 million (about R4.4 billion), 120m superyacht 'A', owned by 36-year-old Russian billionnaire Andrey Melnichenko. Picture: Reuters

File photo: The $300 million (about R4.4 billion), 120m superyacht 'A', owned by 36-year-old Russian billionnaire Andrey Melnichenko. Picture: Reuters

Published Apr 7, 2022

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By Alasdair Pal and Mohamed Junayd

Male, Maldives: A day after coal and fertiliser billionaire Andrey Melnichenko was placed on the EU’s sanctions list on March 9, his superyacht Motor Yacht A stopped broadcasting its location while in Maldives’ waters, maritime data shows.

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In Italy, four days later, authorities seized another of Melnichenko's vessels – the world’s largest sailing yacht,estimated by Italian financial police to be worth $578 million (about R8.5 billion).

Switching off devices that allow authorities to track a ship’s whereabouts can help keep yachts out of their sight.

But in Maldives, the chances of action against the property of sanctioned oligarchs are in any case slim, according to interviews with a dozen people familiar with internal discussions about how to respond to US and European financial sanctions, including government ministers, diplomats and experts in the country’s superyacht industry.

The cautious approach by authorities in Maldives to enforcing the sanctions imposed after Russia’s invasion of Ukraine means that the Indian Ocean island nation has emerged as an attractive destination for yacht-owning Russian oligarchs.

Melnichenko’s vessel is one of six Russian-linked yachts that have glided between Maldives’ atolls, south-west of India,since Western nations hit some oligarchs with sanctions in response to the February 24 invasion.

Three of the yachts obscured their live locations, changed reported destinations or moved into international waters, according to data supplied by Marine Traffic, a marine analytics provider.

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The idea of seizing yachts was “far-fetched”, because Maldives legal system was not robust enough, the country’s chief prosecutor, Hussain Shameem, said, adding that authorities could not easily confiscate visiting vessels unless a crime was committed under local law.

Requests for comment about the deactivating of Motor Yacht A’s location devices and its ownership status, sent to Melnichenko’s spokesperson as well as his charitable foundation, fertiliser producer Euro Chem Group and coal company SUEK – two companies he resigned from in March – went unanswered.

Last month, his spokesperson said the businessman would dispute the sanctions, adding that he had no political affiliations.

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The 119m Motor Yacht A features crystal furniture and three swimming pools, photos released by its builder show, and it has been valued in specialist boating publications at $300 million (about R4.4bn). Melnichenko’s wife has said she was involved in the interior design.

In 2017, a spokesperson for Melnichenko to the BBC that the sailing yacht belonged to his boss. Both vessels were styled by Philippe Starck, the renowned French designer.

HAVEN

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The situation in Maldives underscores the difficulty Western powers face in choking off the wealth of oligarchs targeted by sanctions over Russia’s invasion of Ukraine, as several nations around the world offer havens, sources in Maldives said.

The US, Britain and the EU introduced wide-reaching sanctions against Russian President Vladimir Putin, lawmakers and businessmen in the wake of the invasion, which Moscow calls a special military operation aimed the “demilitarisation” and “denazification” of Ukraine.

European countries have seized property including villas and boats, with authorities confiscating at least six vessels they say belong to some of the dozens of oligarchs hit by sanctions.

Peter Stano, a spokesperson for the European Commission, said the sanctions were not binding for non-EU members or non-aligned states such as the Maldives though he called on all countries to adhere to them.

Maldives voted to condemn Russia’s invasion at the UN and publicly maintains it will assist international efforts against sanctioned Russians.

In reality, officials say they are concerned about the economic impact of deterring wealthy Russian visitors.

With its powder-white beaches and some 1 200 islands, the majority uninhabited, Maldives is a favourite destination of the super-rich.

From a backwater with scant natural resources beyond tuna and coconuts, tourism propelled it to a middle-income country over the past three decades. It has a GDP per capita before the pandemic of more than $10 000 – the highest in South Asia.

Tourism accounts for about a third of the $5.6bn economy. Russians have a higher-than-average spend and made up by far the largest number of arrivals in January, the last month before the Ukraine invasion, tourism ministry data shows.

Since then, Russian arrivals have fallen 70%, Tourism Minister Abdulla Mausoom said. He wants that to be reversed.

“Our entrance policy is very open. Maldives is an open country,” he said.

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