Earlier this year I asked Gretta Fenner, head of a Swiss Foundation that investigates oligarchs and financial crime, about confiscating the assets of wealthy sanctioned Russians and using the proceeds to support the Ukrainian military and rebuild the country. I was surprised by her response. ‘Confiscating assets without proof they are the proceeds of crime is akin to expropriation,’ she told me. ‘This is done by dictators not by democracies that adhere to the rule of law and international human rights. Financial support for Ukraine is vital and urgent. But if western governments undermine their own commitment to the rule of law to obtain that money, then they are violating the very principles that Ukraine is fighting to preserve.’
For sanctioned Russians – supporters and enemies of Putin – the threat of their assets being confiscated and sold off without being able to challenge the case in a court is akin to the Stalin show trials of the 1930s. ‘It is theft. Plain and simple’, the international lawyer, Bob Amsterdam, told me.
The first battles over Russian assets being sold off arbitrarily is being played out on the sun-drenched Caribbean Island of Antigua. The asset in question is a 259-foot-long luxury super yacht called Alfa Nero, valued at $120 million.
In March of last year, the Alfa Nero arrived and moored at Falmouth harbour in Antigua. Legally it is owned by Flying Dutchman Overseas Ltd, a BVI company owned by the Tyne Trust whose beneficiary is Yulia Guryeva-Motlokhov, the daughter of the Russian oligarch Andrey Guryev. Guryev is best known for once owning Witanhurst Estate, the second biggest house in London. And he is being sanctioned by the US for being ‘a known close associate of Putin’ and part of a ‘Kremlin-connected elite’ who ‘generate substantial revenue for the Russian regime.’
Five months after Guryev was sanctioned the US Treasury imposed restrictions on the Alfa Nero after classifying it as his ‘blocked property’. This banned the owner from selling or leasing out the vessel. The problem is that Guryev does not own the yacht. He is not a beneficiary of the Tyne Trust. And the US was unable to provide any evidence the Oligarch owned the yacht or even controlled the Trust.
Legally there was no case to seize the yacht. But then the fate of the Alfa Nero took a remarkable twist. On 15 March 2023, the Antiguan Prime Minister suddenly proposed a special amendment to a law which enabled the ‘government to sell by auction a vessel that appears sanctioned or falls under the Proceeds of Crime Act’. The text of the law was written to suit the yacht’s sale. Two days later the bill was passed in a single day with no notice. The opposition was furious and walked out of the parliament in protest.
Within a week the port manager in Antigua announced the Alfa Nero was ‘an abandoned vessel’ and posed ‘an imminent threat to the safety and security of the harbour’. He added that unless an individual came forward to prove he or she was the beneficial owner, then the yacht would be regarded as abandoned, seized by the government, and sold at auction.
The Antiguan government ignored the fact the yacht was not owned by a sanctioned individual and on 11 April 2023, the port manager took possession of the Alfa Nero. The Antiguan flag was raised, and maintenance costs were covered by the government.
Their justification was that the owner had not contacted the authorities. This was not true. On 4 April, Shane Giles, CEO of the company that managed Flying Dutchman Overseas Ltd emailed Darwin Telemaque, the port manager, and explained the owner was seeking a licence from the US Treasury to remove the vessel. He asked for a postponement of the sale. The port manager did not respond directly. Officials and lawyers for the owner contacted the authorities on multiple occasions, according to court documents. They were ignored.
The condition of the yacht was central to the argument for the Antiguan government seizing the yacht. In one interview the port manager said the vessel ‘was in pristine condition’ but four days later stated it was in poor condition, unattended and fees were not paid. In fact, fees were reportedly paid up until December 2022. But reportedly the banks were unwilling to make payments to the crew on a vessel sanctioned by the US for fear of being sanctioned themselves. This was later resolved.
The Antiguan government was keen to sell the yacht as quickly as possible and on 18 May 2023, the US Treasury issued a special licence to authorise the auction. The impatience to receive the cash was revealed by the asking price – a mere $60 million for a vessel worth $120 million. Unsurprisingly, it was snapped up quickly. Eric Schmidt, former CEO of Google, successfully bid $67 million, but then changed his mind and withdrew because of the legal challenges.
Today the yacht remains unsold and its status unresolved. This month, a part of Guryeva-Motlokhov’s claim that the yacht should be returned to ‘the rightful owner’ was heard in the East Caribbean Court of Appeal. The next hearing will be in December.
This unique case raises serious issues about the rule of law. The Ukrainian government is open about confiscation. ‘We’ve been quite intensively confiscating assets belonging to Russian individuals’, said Vlad Vlasiuk, a sanctions advisor to the Ukraine President. For many UK lawyers, the move from freezing Russian assets to seizing them and transferring the proceeds to Ukraine without due process is a step too far.
Ukraine argues the war is a special case. Their very existence is under threat. Horrific war crimes are committed daily. The country is being destroyed. The western rule of law should be set aside. The Ukrainian people desperately need the cash from the sale of Russian Oligarch assets.
But in Antigua this argument for confiscation collapses spectacularly. In fact, the $60 million-plus proceeds from the sale of this super yacht will not be used to help the Ukrainian people or pay for weapons or post war reconstruction. The money will instead be transferred to the bank account of the Antiguan government. Piracy has returned to the Caribbean.
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