- Seized yachts owned by sanctioned Russian oligarchs hang in limbo as US and European authorities decide next steps.
- Annual maintenance for some of the yachts costs as much as $115.6 million.
- Without proper care, some of the megayachts could deteriorate in a matter of weeks, experts say.
Dozens of superyachts seized from Russian oligarchs and collectively worth billions of dollars are likely racking up millions of dollars in maintenance costs or wasting away from improper care after hanging in limbo for almost a year.
The yachts and their billionaire owners, many of which are among Russian President Vladimir Putin’s closest allies, were included in a series of sweeping global sanctions imposed against Russia for its invasion of Ukraine. Last year, Italy seized a $578 million megayacht belonging to Andrey Melnichenko, France seized a $120 million vessel owned by Igor Sechin, and Spain seized a $153 million superyacht linked to Sergei Chemezov, to name a few.
Earlier this week, CNBC reported that billions of dollars in oligarch’s assets — from yachts and villas to private jets — are still frozen. Government authorities are working through a lengthy legal process that prevents them from officially taking ownership of the property. Experts previously told Insider that its a process that can take several months to years.
Most recently, US authorities filed legal paperwork in February seeking the official forfeiture of $75 million in luxury real estate tied to sanctioned Russian oligarch Viktor Vekselberg. The paperwork was filed nearly six months after the properties were first raided by the US Department of Justice and Homeland Security Investigations.
Meanwhile, other assets, including yachts, are still floating in the docks in which they were first seized. For example, the $300 million Amadea yacht that was tied to sanctioned Russian oligarch Suleiman Kerimov is still floating off Fiji after it was seized in May 2022, according to CNBC.
Insider spoke with four experts who described how the sanctions against Russia — which they say are more extensive than any other coordinated global round of sanctions in history — have lead to lengthy court battles and the deprecation of the world’s most expensive superyachts.
“Yachts will start to deteriorate as soon as the maintenance program is relaxed,” Benjamin Maltby, partner at Keystone Law in the UK and an expert in yacht and luxury asset law, told Insider. “Cleaning surfaces, and checking equipment operation is continual.”
Sanctions leave yacht maintenance in the balance
Todd Roberts, president of Marine Boat Works in California, told Insider that yachts are typically seized for sales purposes, meaning the impounder has a vested interest in maintaining the yacht and its value. However, the sanctions have made the process more murky.
The sanctions do not allow countries to take ownership of the yachts and the Russian billionaires remain the beneficiaries, though the assets are effectively frozen and blocked from use.
And while the Russian oligarchs are still technically responsible for paying for yacht maintenance, they’re unlikely to fork over the maintenance cost or authorities will encounter difficulty collecting the funds due to sanctions on financial transactions with the billionaires.
In the meantime, it’s unclear who will foot the bill. In some cases, such as in the maintenance of the Amadea, government authorities have been left to pay for the expenses, which includes paying for crew and docking fees, CNBC said. But Reuters reported in October that some countries, including France and Spain, have authorized the Russian owners to pay for the upkeep.
According to Maltby, the maintenance cost of a yacht usually totals about 15% to 20% of its overall value. For Melnichenko’s yacht, for example, that would translate to up to $115.6 million in annual expenses.
‘This is completely uncharted territory’
Even foregoing the costs to staff, repair, fuel, and insure the ship, the costs to dock the yacht can quickly add up. Roberts said docking fees alone typically cost tens of thousands of dollars per month.
Without proper care, vessels can lose about 30% of their value, according to Roberts. What’s more, if a superyacht were to go without its crew — which typically includes a staff of 25 or more — the vessel could quickly fail official inspections and ultimately lose its insurance due to concerns related to functionality and environmental risk.
Without insurance, the yacht would be unable to dock in most ports, harbors, or marinas around the world.
What’s more, some of the crews in charge of maintaining the vessel have long since left the ships as their pay was compromised early on by sanctions on Russia, accelerating the deterioration of the yachts and leaving authorities in the lurch when it comes to deciding what to do with the assets.
“This is almost completely uncharted territory,” Roberts said. “I don’t think any of us fully understand what it will mean for the industry.”