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Chasing Down the Super-Yachts
You know what to do to signal your entry into the world of big money. You buy yourself a super-yacht. This is especially true of that subspecies known as Russian oligarchs—people who made their money by getting in on the ground floor of the privatization of former Russian state assets during the Gorbachev, Yeltsin and Putin eras.
Says anti-corruption crusader Bill Browder “No self-respecting Russian oligarch would be without a super-yacht…It’s part of the rite of passage to being an oligarch. It’s just a prerequisite.” One tracker is following the movement of some 56 super luxury yachts owned by about 120 Russian billionaires. So let’s say there’s about a 50 per cent ownership rate.
Since the Russian invasion of Ukraine began, European and North American governments have targeted these conspicuous symbols of wealth for seizure as a part of the drive to bring Vladimir Putin, Russia and the ruble to their knees. The accepted view is that oligarchs owe their wealth to the patronage of Mr. Putin, and that many of them are merely placeholding wealth that ‘belongs’ to him.
Governments have been unequivocal in stating their intentions. “We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets,” said US President Joe Biden. “There will be nowhere to hide your ill-gotten gains,” said U.K. Prime Minister Boris Johnson.
And several actions have been taken against the super-yachts already. French authorities have seized the yacht Amore Vero, linked to Igor Sechin, who runs Russian oil giant Rosneft. The yacht Dilbar built for Alisher Usmanov at a cost of over $600 million, sits in dry dock in Germany and is being targeted by authorities, Italy has seized several yachts with an estimated value recovered of $156 million.
It is not surprising that some super-yachts are headed to or staying docked in non-sanction and hard-to reach jurisdictions such as the Maldives, the Seychelles and Montenegro But we must be vigilant to look out for them. For instance, If you happen to be in Wellington Harbour and see a boat that is longer than 79ft stem to stern (the law cutoff point for qualification as a super-yacht), has a swimming pool, a helicopter pad, several decks and a crew of 23, chances are it is not a local fishing vessel and authorities should be contacted right away. And beware of anybody who offers to exchange you a superyacht for a piece of real estate in the County; chances are you’ll get the short end of the stick.
The value of these super-yachts is declining as the value of the ruble goes down the tubes. It costs upwards of $20 million a year in hard currency just to operate one super-yacht; Prices will fall as western governments put seized assets on the market. According to luxury boat builder Northrop and Johnson, there are already over 100 super-yachts up for resale, priced anywhere between $2 million and $245 million. Plus some of the fun goes out of owning one when you have to keep looking over your shoulder to make sure it isn’t going to be seized.
One thing you can say about oligarchs: they know where their bread is buttered. Loyalty to Mr, Putin will not be a high oligarchical trademark if their wealth dries up. If I were an oligarch subject to sanctions, with a fast depreciating super-yacht, I would be at least hedging my bets and offering up my vessel to evacuate Ukrainian refugees off the shores of Odessa or Gdansk, Dunkirk style. It would get me on the right side of history.
And while I am on the subject of super-yachts, I read that there are some 10,000 of them around the world. That leaves us with 9,944 non-oligarch boats. Why should those boats be sanction-free? If a zillionaire like Jeff Bezos can spend half a billion dollars on a boat, why shouldn’t the government at least have the power to commandeer his vessel and use it to rescue refugees? He wouldn’t miss the pocket change it would cost to do it.
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