Spain and France allow Russian owners to pay for upkeep of superyachts

Barcelona/Paris — Spain and France have authorised the owners of superyachts frozen under sanctions against Russian businesspeople to pay for their upkeep, three sources said.

In Spain, six vessels were frozen after sanctions imposed after Russia’s invasion of Ukraine in February. The “majority” of the owners are paying their maintenance, crew, docking and insurance fees, a source with knowledge of the matter said.

Individuals are normally restricted from making financial transactions in jurisdictions where they are sanctioned, but the Spanish and French governments are authorising the payments under EU and national legislation, according to three sources.

Spain’s finance ministry said a 2014 law — adopted after Russia’s annexation of Crimea that year — allows sanctioned individuals to make essential payments for the upkeep of assets. The ministry did not confirm whether payments have been authorised.

The payments come after pledges from some Western governments to make targeting the luxury assets of allies of Russia’s President Vladimir Putin central to their efforts to punish Moscow.

In March, Spain’s Prime Minister Pedro Sanchez vowed, when announcing the freezing of one yacht in Spain, to hit Putin’s allies “decisively” and “hard”.

So far, only one immobilised yacht has been sold: the Axioma was auctioned in Gibraltar in August at the behest of a bank owed money, JPMorgan, rather than a government.

Proposals by the US and EU to sell seized Russian assets and give the proceeds to Ukraine have stalled.

In France and Spain, the decision to freeze rather than seize luxury assets thought to be owned by sanctioned Russians means that their running costs remain the owner’s responsibility, according to Spain’s finance ministry, a French maritime lawyer and two representatives of frozen vessels in France.

James Jaffa, a lawyer for British firm Jaffa & Co specialised in yachts, including for Russian clients, said that the maintenance costs of such yachts was often “pocket change” for their owners, while the nonpayment of fees could allow creditors such as shipyards to request that courts authorise the seizure and sale of a yacht to liquidate debts.

“Sanctions do not seem to have the crippling effect that was intended,” Jaffa said.

Port management company Ocibar said that the owners of two yachts frozen under the sanctions in Spain and moored at its facilities in Tarragona and Mallorca — the Crescent and the Lady Anastasia — were making payments, including for docking and utilities’ fees and a skeleton crew.

Ocibar said it was after procedures established by authorities and declined to confirm the owners’ identity or the costs involved.

Spanish authorities believe the Crescent is controlled by Eduard Khudainatov, a sanctioned former chief of Russian energy giant Rosneft, a government source said. Khudainatov, contacted via his company, Independent Oil & Gas, did not respond to requests for comment.

The Lady Anastasia is registered by the public shipping database Equasis as owned by a company named Homeland Shipping Limited. Spanish authorities believe that firm is controlled by Alexander Mikheev, the sanctioned head of weaponry group Rosoboronexport, said a source with knowledge of the matter.

Mikheev, contacted through Rosoboronexport, did not respond to requests for comment. Homeland, contacted via a lawyer representing it, as well as the vessel’s registered manager also did not respond to Reuters’ questions.

In France, five yachts have been frozen. Alexey Kuzmichev, the sanctioned shareholder of Russia’s Alfa Bank, has been paying for his two frozen vessels in Cannes and Antibes under a 2014 EU law that allows payments for the maintenance of frozen property, according to his lawyer, Philippe Blanchetier.

Kuzmichev declined to comment, he added. A court in early October ordered the release of the yacht in Antibes due to procedural errors during its seizure. A decision on the second yacht is pending.

France’s finance ministry confirmed that EU rules allow payments but declined to say whether requests had been authorised.

Reuters