The quest to seize Western assets from Russian oligarchs – Economy – War in Ukraine

The European Union, the United Kingdom and the United States have all trumpeted unprecedented sanctions against key figures in Moscow’s elite.

Even countries long known for harboring assets with few questions asked, such as Switzerland and Monaco, have joined the measures.

On the ever-growing sanctions lists, hundreds of people, including lawmakers, high-ranking military officers, prominent journalists, tycoons and finance chiefs, have been targeted.

In addition to freezing assets, the measures can sometimes include bans on sanctioning the territory of nations.

Among the personalities concerned are Nikolay Tokarev, the president of the oil and gas giant Transneft, the head of the defense company Rostec Sergei Chemezov or the head of the development bank VEB Igor Shuvalov.

Washington would “find and seize their yachts, their luxury apartments, their private jets,” US President Joe Biden warned in his State of the Union address last week.

“We come for your ill-begotten gains.”

French Finance Minister Bruno Le Maire said “partners of the oligarchs, their children, their holding companies” would be affected, “so they won’t be able to hide behind financial constructs.”

Many wealthy individuals use complex ownership structures to minimize tax bills or hide the true owner of an asset.

Besides the wealthiest oligarchs close to Putin, “there is a kind of hinterland of maybe two to three thousand people…they are also very, very wealthy financially…and they are all connected and backed by the Putin regime,” said Robert Barrington, professor of anti-corruption practice at Britain’s University of Sussex.

Hidden billions

The UK has been one of the most favored Western nations by Russians who hide their wealth in financial or real estate assets, earning the capital the derogatory nickname of “Londongrad”.

In addition to high-end residential real estate, London also offers facilities such as the city‘s extensive legal and wealth management resources and world-class boarding schools and universities for descendants of the wealthy.

Barrington said around 1.5 billion pounds ($1.9 billion, €1.8 billion) of land in London in prized areas like Kensington, Chelsea and Hampstead had been awarded to oligarchs, probably only a fraction of the total.

“Luxury real estate is a preferred means of laundering money from corruption or embezzlement of public funds,” said Sara Brimbeuf of Transparency International France.

A stone’s throw from Great Britain, France also “welcomes these ill-gotten gains”, which pile up on the south coast bathed in sunshine and in the upscale neighborhoods of western Paris or the Alpine resorts.

Properties in Mediterranean places like Nice and St Tropez have been awarded to oligarchs close to Putin and already targeted by sanctions.

But none of the experts interviewed by AFP were able to estimate the extent of the Russian elite’s Western assets.

wealth industry

When it comes to managing their money, the oligarchs “don’t do things themselves”, said Jodi Vittori, a professor specializing in corruption at Georgetown University in the United States.

“They have a team of facilitators who do this for them. They are the lawyers, the accountants and the art dealers.”

Transparency’s Brimbeuf said ‘not everyone is doing what they are supposed to’ when it comes to reporting suspicious assets or transactions to authorities – ‘even if they are subject to anti-money laundering requirements’ in the laws of many Western nations.

Last month, a consortium of investigative journalists alleged that the Swiss bank Credit Suisse had held billions of euros for decades in the accounts of criminals, dictators and rights abusers and failed to meet its reporting obligations.

The bank itself rejected the claims.

Identifying the real origin and ownership of assets can be hard and painstaking work going through shell companies and complex structures.

“It would take a significant mobilization of the intelligence services” to identify much of the hidden wealth, said Julien Martinet, a lawyer at the French firm Swiftlitigation.

In France, only one major seizure has made headlines since the imposition of sanctions: the super-yacht Amore Vero linked to Rosneft boss Igor Sechin, estimated at 120 million euros.

Meanwhile, Italy said on Saturday it had seized yachts belonging to steel tycoon Alexei Mordashov and Putin confidant Gennady Timchenko, worth 95 million and 50 million euros respectively.

But experts warn that it has only been days since the sanctions were imposed, with wealth investigations sometimes taking years.

Task Force

US Attorney General Merrick Garland has already announced the creation of a task force to pursue the assets of the oligarchs dubbed “KleptoCapture”, comprising 10 prosecutors as well as federal investigators and tax experts.

Similar operations have been mounted in other Western countries, including France, while online amateurs are also getting started.

American teenager Jack Sweeney created the Russian Oliarch Jets Twitter account to follow the elite’s private jets.

Beyond the identification and freezing of assets, their pure and simple seizure presents even greater legal obstacles.

For example, in France, “an infringement of property rights requires a law, not just a regulation or a decree” from the government, lawyer Martinet said.

A senior member of the French oligarchs task force said they were only able to seize the superyacht Amore Vero because her crew tried to leave for Turkey, “outlawing themselves”.

Hustle for safety

Many Russian billionaires have already moved their floating palaces to safer waters, with rumors circulating of upcoming moves away from the French Riviera, according to a source close to the industry.

The source mentioned Dubai as a possible destination, while the Maldives – which does not have an extradition treaty with the United States – is also home to several yachts, including those of aluminum tycoon Oleg Deripaska and Alexander Abramov steel.

On land, there have been few signs of a sudden flight from property in the south of France.

But in London, billionaire Roman Abramovich has put his stake in Chelsea football club up for sale, promising to use the proceeds to help victims of war in Ukraine.

Abramovich, the co-founder of aluminum giant Rusal, grew rich in the 1990s when Russia privatized former Soviet state industries and his wealth is now estimated at more than $12 billion by Forbes.

He is close to Putin but has yet to face sanctions.

Also in Britain, financier Mikhail Fridman has withdrawn from the LetterOne investment firm he co-founded and from all European companies in which he has a stake.

He and his partner Petr Aven have been targeted by sanctions, but deny any “financial or political relationship” with Putin.

In a letter to his LetterOne employees, Fridman told staff last week that “war can never be the answer” and called for an end to “bloodshed.”

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