Maldives protects sanctioned yachts owned by Russian billionaires

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  • Maldives will not actively pursue yacht seizures – sources
  • Fears impact of Russia sanctions on tourism industry – sources
  • “Far-fetched” to believe that yachts are impounded

MALE, April 7 (Reuters) – A day after coal and fertilizer billionaire Andrey Melnichenko was placed on the European Union sanctions list on March 9, his superyacht Motor Yacht A stopped transmitting its location while moored in the waters of the Maldives, as maritime data shows.

In Italy, four days later, authorities seized another of Melnichenko’s ships — the world’s largest sailing yacht, valued at $578 million by Italy’s financial police.

Turning off devices that allow authorities to track a vessel’s whereabouts can help keep yachts out of sight.

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

The Maldives authorities’ cautious approach to enforcing sanctions imposed in the wake of Russia’s invasion of Ukraine means the Indian Ocean island nation has become an attractive target for Russian yacht-owning oligarchs.

Melnichenko’s ship is one of six Russia-linked yachts that have been plying back and forth between the Maldives atolls southwest of India since Western nations imposed sanctions on some oligarchs in response to the February 24 invasion.

Three of the yachts were obscuring their live locations, changing reported destinations or moving into international waters, according to data from MarineTraffic, a marine analytics provider. Continue reading

The idea of ​​impounding yachts is “far-fetched” because the Maldives’ legal system is not robust enough, the country’s chief prosecutor Hussain Shameem said in an interview, adding that authorities could not simply impound visiting vessels, it unless a crime was committed law.

Requests for comment on Motoryacht A’s tracking devices being disabled and her current ownership status, addressed to Melnichenko’s spokesperson, as well as his charitable foundation, fertilizer maker EuroChem Group and coal company SUEK – two companies he resigned from in March – went unanswered .

Last month his spokesman told Reuters that the businessman would challenge the sanctions, adding that he had no political connections.

The 119-meter (390-foot) Motor Yacht A features crystal furnishings and three swimming pools, photos released by her builder show, and has been valued at $300 million in boating trade publications. Melnichenko’s wife has said that she was involved in the interior design.

A spokesman for Melnichenko admitted in a statement to the BBC in 2017 that the sailing yacht belonged to his boss. Both vessels were designed by Philippe Starck, the renowned French designer.

SAFE HAVEN

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

The United States, Britain and the European Union imposed sweeping sanctions on Russian President Vladimir Putin, lawmakers and businesspeople in the wake of the invasion, which Moscow describes as a special military operation aimed at “demilitarizing” and “denazifying” Ukraine.

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

Peter Stano, a spokesman for the European Commission, said the sanctions are not binding on non-EU members or non-aligned countries like the Maldives, but urged all countries to comply.

The Maldives voted at the United Nations to condemn the Russian invasion and publicly claim they will support 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 around 1,200 islands, most of which are uninhabited, the Maldives is a popular destination for the super-rich.

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

Tourism accounts for about a third of the $5.6 billion economy. Russians are above-average spenders and accounted for by far the largest number of arrivals in January, the last month before the invasion of Ukraine, data from the Tourism Ministry shows.

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

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

“NOBODY CAN TOUCH YOU”

Abdul Hannan operates Seal Superyachts Maldives, providing fuel and food supplies to shipowners, including Russian customers.

Hannan said the yachts typically cost hundreds of thousands of dollars a week and about half his clients are Russian. Like other superyacht owners, they often winter in the Indian Ocean and spend the summer season in Europe, he said.

Hannan said he has met some Russian owners on board their superyachts since the sanctions were announced and described them as “humble, normal people” going through a difficult moment. He did not say whether the people were under sanctions.

“Right now they’re trying to keep the yachts in international waters” where they can potentially sit idle for months, he said.

“Then nobody can touch them.”

He declined to give the names of the customers, citing confidentiality.

A spokesman for Maldives Customs, which monitors maritime traffic in its waters, did not respond to a request for comment on the number of Russian-owned yachts currently present.

DELICATE DIPLOMACY

While it would be difficult for Maldives institutions to ignore a US Treasury Department warning that failure to seize Russian assets would affect their access to US financial markets, no such message was sent, said an official familiar with the international financial accords familiar to the Maldives.

Asked about places like the Maldives, Andrew Adams, head of a US task force aimed at freezing oligarchs’ assets, told Reuters that Washington sees cooperation “at an all-time high,” even as oligarchs try yachts, planes or other mobile property to hide in lands they deem mysterious.

However, if the politically unstable and financially strapped Maldives are forced to make a tough decision on sanctions, they could draw closer to China, two Western diplomats said. A previous government had strengthened ties with Beijing, although relations with the West and traditional ally India are now improving.

“We are aware of the economic risks involved,” one of the diplomats said, if the Maldives takes a hard line.

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Reporting by Alasdair Pal and Mohamed Junayd in Male Additional reporting by Sarah Lynch in Washington, Jan Strupczewski in Brussels and Dasha Afanasieva in London Editing by Frank Jack Daniel

Our standards: The Thomson Reuters Trust Principles.

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