Oligarch’s’ yachts seizure pays JP Morgan, raising eyebrows
BAGGING A TYCOON
I am writing this on a train and, though I am determined to make some serious points in today’s newsletter, I keep being distracted by a middle-aged woman next to me who is avidly reading an article in the Daily Mail headlined “Yes, you can bag yourself a billionaire tech titan.” Initially, I was amused by the headline’s (probably accidental, but possibly ironic?) echo of one of Barack Obama’s most famous lines.
- “Yes, we can heal this nation. Yes, we can seize our future. Yes, we can bag ourselves a billionaire tech titan”.
But then (as I read over her shoulder) I became intrigued by the idea that Silicon Valley is full of lonely male tycoons just waiting for a call from the female readers of a British midmarket tabloid. Having someone reading over your shoulder on a train is annoying, so I looked up the piece for myself. It’s a profile of Amy Anderson, who runs a dating website for the “loaded-but-lonely” and it’s full of possibilities for a 21st century version of the kind of “She was only a factory girl” shlock that have kept the publishers of romantic novels in business for so long, with plentiful suggestions for what tycoons are looking for in a partner.
- “Another wants a woman who is ‘incredibly beautiful, has been educated abroad and speaks multiple languages, because he speaks five’. In addition, he wants someone who is ‘with him for the right reasons’ — as a billionaire, that’s always tricky — and a woman, says Amy, ‘who he can geek out with and be himself. He has a couple of tattoos and is looking for someone with an edge — basically, a young Angelina Jolie.’”
Hmmm. How many women (a) speak multiple languages, (b) look like a young Angelina Jolie, (c) understand tech jargon well enough to “geek out”, (d) are sufficiently unlucky in love that they’d sign up to a website in the hope of finding a tech titan, (e) wouldn’t be in it for the cash, and (f) read the Daily Mail, a newspaper not known for its forward-looking outlook (“Being bilingual can be bad for your brain”)? That has to be an exclusive club. Still, though, it did remind me of this brilliant piece by Peter Pomerantsev, like me a Coda contributing editor, from a few years back about one of London’s biggest oligarch-vs-oligarch trials.
- “On the opening day a small procession of stunning females in short skirts and high heels made its way to the back of the room: ‘Look,’ the Russian journalist said to me, ‘they’ve come to see if they can bag an oligarch’.”
Public service announcement: if you’ve not read Pomerantsev’s Nothing is True, and Everything is Possible, you should do so forthwith. It hits the perfect combination of funny and serious while revealing a lot about how Russia ended up in the mess it’s in.
BAGGING AN OLIGARCH’S YACHT
I suspect many of you have, like me, been fixated over the last few days on Ukrainian troops’ lightning attack in the Kharkiv region. By the time you read this, the situation will no doubt have changed further, but influential folks are already wondering if this could be the beginning of the end for the Kremlin’s assault.
- “These factors could be the ingredients of a historic defeat,” writes Leonid Bershidsky.
- “Are we in the West really prepared for a Ukrainian victory?” asks Anne Applebaum.
I am pathologically superstitious and, like my great-grandmother, have a habit of adding the words “if we’re spared” to any comment that appears to presuppose things might conceivably work out well, so I’m not going to speculate about the outcome in the Donbas. However, it is clear that the Ukrainian armed forces have comprehensively out-thought and out-fought their opponents for the last week or so, and it’s worth asking if the rest of us have been doing the same?
Clearly, Western weaponry and intelligence have been crucial in helping Ukraine first resist and then repel Russian forces, so major Western countries (though where’s France?) deserve congratulations for that. But what about the second front of the assistance we promised?
- “We will limit Russia’s ability to do business in Dollars, Euros, Pounds, and Yen,” said President Joe Biden back in February. “We’re also adding names to the list of Russian elites and their family members that we’re sanctioning as well… these are people who personally gain from the Kremlin’s policies and they should share in the pain.”
Announcements of which oligarchs’ assets being frozen followed at bewildering speed and, in June, the Russian Elites, Proxies and Oligarchs (REPO) Task Force — which unites all major Western countries – said it had blocked $30 billion worth of billionaires’ wealth, on top of $300 billion belonging to the Russian Central Bank, as well as lots of yachts, real estate and other valuables. That was clearly all for the good but this was supposed about more than just freezing assets, it was about confiscating them too. So, how’s that going?
In June, Canada changed its laws to make confiscating oligarchs’ assets easier, and the European Union is inching towards making a breach of EU sanctions an EU crime, which would be helpful. Leading British officials, including Liz Truss before she was prime minister, have also said they need to alter legislation to make seizing stuff more straightforward. (Traditional disclaimer: any new laws will be of no benefit to anyone without significant additional resourcing for the agencies that enforce them.)
It wasn’t in one of the major Western countries where the first seizure took place, however, but in one of the tiniest of British offshore territories. Last month, a first superyacht – the Axioma, belonging to Dmitry Pumpyansky — was put up for auction after being frozen in March, by Gibraltar’s admiralty court.
- “Motor yacht Axioma is a beautifully designed and stylishly appointed 72 metre vessel boasting luxurious furnishings and well laid out decks. There is something here for everyone from the most sophisticated and discerning to those just wishing to relax and get away from it all. Axioma has it all,” says the auction notice.
If you’re looking to snap up a bargain, I’m afraid you’re too late, however. The auction is closed and the yacht has a new owner. Bidding was “spirited” but, as yet, the winning bidder does not appear to have been announced, though the price will no doubt have been well into nine figures. That at first glance looks like great news for Ukraine, which could badly do with the money, until you realize that this has nothing to do with Ukraine at all.
- “At the time of writing, the value of the bids remain confidential but it is pleasing to note that the Bank will ultimately recover all amounts owing to it, much to our and our client’s satisfaction,” noted lawyers acting for JP Morgan.
The bank was involved because the proceeds of this auction will repay a mortgage of around $20 million that Pumpyansky took out via a shell company to buy the ship but failed to keep up on the payments because he had been sanctioned.
Now JP Morgan has been having a tough year and could no doubt do with some extra cash if it’s to maintain bonus levels for its senior employees, but I’m struggling/failing to be enthusiastic about this. The idea that the first wealth confiscated from a sanctioned Russian oligarch is going to a major financial institution which lent him money so he could buy bling does stretch the boundaries of what sanctions were supposed to be for. Biden would have gotten a less glowing reception back in February if he’d announced that sanctions existed to backstop any losses suffered by oligarchs’ Western business partners.
Is there good news on superyachts elsewhere? The Tango, currently in Mallorca, has been moved to a new berth but there is no news on its fate since its oligarch owner appealed against its seizure. A judge in Fiji (possibly with an eye on the crippling maintenance costs of keeping a superyacht in port) handed the Amadea over to US custody, and she’s now in San Diego, but there’s no news on whether/when she’ll be auctioned. The Phi is stuck in London, with some doubts over whether her owner is even sanctioned at all.
- “They’ve got the wrong guy,” says Guy Booth, the Phi’s captain, of the U.K. government’s decision to block the boat from going elsewhere. “But we were the only boat here. We’re big, we’re blue, we’re shiny, we’re brand new. We were low-hanging fruit.”
Similarly, the $7 billion of Roman Abramovich’s wealth frozen in Jersey is, well, still frozen. Officials there have no updates, but promise them in due course. Around the world, officials and politicians are wondering if law enforcement agencies need more powers to overcome the objections of oligarchs’ lawyers. This is a message that was expressed in evidence to a Senate hearing in July.
- “It’s clear that we need more tools to fight sophisticated oligarchs, cartels, and other transnational criminal organizations. This is why I support some needed modifications to our existing system, including raising the dollar threshold for some types of administrative forfeiture and making it easier to use classified information in these proceedings,” said Senator Chuck Grassley, a Republican who has represented Iowa since 1980.
The challenge is: how do you craft those tools in such a way that they don’t confiscate Russian oligarchs’ wealth basically because they’re Russian, and thus create an alarming and frankly draconian precedent?
- “Retroactive application of civil forfeiture would solve one immediate problem, namely making additional funds available to support Ukrainian resistance to Russia’s invasion. I agree that this support meets a vital national security interest of the United States. I question, however, whether raising money this way, rather than through the normal appropriation process, is so necessary as to justify the precedent that this act would create,” asked Professor Paul Stephan in evidence to the hearing.
Personally, my answer to that question is that we should treat all oligarchs the same, robustly investigate their wealth, and confiscate it if it’s shown to be dodgy, wherever they’re from. However, I worry that Western governments will answer the conundrum differently and end up pursuing their traditional policy of leaving the oligarchs in peace, since — as a lawyer told me just yesterday when I was being enthusiastic about anti-oligarch activity — singling out any one group is unfair if we don’t single out all the others. To some legal brains, doing something is a surprisingly powerful argument against doing anything. If we are serious about helping the Ukrainians, who every day are showing how much they deserve our help, then we need to do better.
I have in the past raised concerns that the inactivity of investigative agencies could provide an opening for oligarchs to challenge their sanctions in the European Union’s court. We can take a little heart from the fact that the court upheld the French government’s ban on the Russian propaganda channel RT (in which France was supported by Lithuania, Latvia, Poland, Belgium and the European Commission). Hopefully, that’s a sign other challenges will fail too.
WHAT I’M LISTENING TO
For much of the last week I have been addicted to the podcast Dead Eyes, which I heartily recommend, although it is utterly daft. Actor Connor Ratliff sets out to investigate why he lost a small part in Band of Brothers two decades ago, and somehow avoids being annoying or needy over the subsequent 30 episodes. It’s a profoundly odd concept, but one which works superbly, and ends up being rather moving.
If you’re looking for a podcast but prefer things less whimsical, then Empire is up to episode six and proves a really good exploration of what Britain did to India. It’s a very useful corrective to the myths of all sides.