Exclusive: Spain and France make owners pay for yachts frozen under Russian sanctions

  • Some owners pay for the maintenance of frozen yachts
  • Law allows France and Spain to allow payments despite sanctions
  • West has made targeting the luxury assets of Putin allies a key objective

BARCELONA/PARIS, Oct 20 (Reuters) – Spain and France have allowed owners of superyachts frozen under sanctions against Russian businessmen to pay for their upkeep, three sources told Reuters.

In Spain, six ships have been frozen following sanctions imposed after Russia invaded Ukraine in February. The “majority” of owners pays for their maintenance, crew, berthing and insurance costs, a source familiar with the matter said.

Individuals are not normally allowed to conduct financial transactions in the jurisdictions where they are sanctioned, but the Spanish and French governments allow payments under EU and national law, according to three sources.

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Spain’s finance ministry told Reuters that a 2014 law – passed after Russia annexed Crimea that year – allows those sanctioned to make essential payments for maintaining assets. The ministry has not confirmed whether the payments were authorized.

The payments come after promises by some Western governments to make targeting the luxury assets of Russian President Vladimir Putin’s allies a central part of their efforts to punish Moscow.

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

So far only one yacht that has been immobilized has been sold: Axioma was auctioned in Gibraltar in August at the request of a debtor bank, JP Morgan, rather than a government. read more read more

Proposals by the United States and the European Union to sell the seized Russian assets and return the proceeds to Ukraine have stalled. read more read more

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 responsibility of the owner, according to the Spanish finance ministry, a French maritime lawyer and two representatives of frozen ships in France.

James Jaffa, a lawyer at British law firm Jaffa & Co who specializes in yachts, including for Russian clients, said the maintenance costs of these yachts were often “pocket change” for their owners, while the no – payment of costs could allow creditors such as shipyards to ask the courts to authorize the seizure and sale of a yacht to liquidate debts.

“The sanctions do not seem to have the intended chilling effect,” Jaffa said.

Port management company Ocibar said the owners of two yachts frozen under sanctions in Spain and moored at its facilities in Tarragona and Mallorca – the Crescent and the Lady Anastasia – were making payments including for mooring fees and utilities and a reduced crew.

Ocibar said he was following procedures set out by authorities and declined to confirm the identity of the owners 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 told Reuters. Khudainatov, contacted through his company Independent Oil and Gas, did not respond to requests for comment.

The Lady Anastasia is registered by the public navigation database Equasis as belonging to a company called Homeland Shipping Limited. Spanish authorities believe the company is controlled by Alexander Mikheev, the sanctioned leader of the Rosoboronexport arms group, a source familiar with the matter said.

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

In France, five yachts were frozen. Alexey Kuzmichev, the sanctioned shareholder of Russian bank Alfa Bank, paid for his two frozen ships in Cannes and Antibes under a 2014 European Union law that allows payments for the upkeep of frozen property, said his lawyer Philippe Blanchetier told Reuters.

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

The French finance ministry confirmed that EU rules allow the payments, but declined to say whether the requests had been authorised.

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Reporting by Joan Faus in Barcelona and Layli Foroudi in Paris, Additional reporting by Aislinn Laing, Jesús Aguado, Belén Carreño, Javier Alvarez, Jonathan Saul and Emilio Parodi, Writing by Joan Faus, Editing by Aislinn Laing and Daniel Flynn

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