A Russian oligarch’s $500M mega yacht is roiling U.S.-Hong Kong relations

It was the mega yacht that got away. As Western sanctions hit Vladimir Putin’s allies earlier this year following the Russian leader’s invasion of Ukraine, their luxury yachts were seized one after another in jurisdictions around the world.

But not the Nord, a $500 million vessel tied to steel mogul Alexey Mordashov. This spring the ultra-luxurious yacht risked a collision by turning off its transponders and racing full steam ahead back to Vladivostok from the Indian Ocean, evading the grasp of Western authorities.

Now, infuriatingly to U.S. officials, it’s docked for all to see in Hong Kong—and authorities there are doing nothing about it.

A spokesman for Hong Kong’s marine department told the Financial Times:

“Certain countries may impose unilateral sanctions against certain places on the basis of their own considerations,” but the Hong Kong government “does not implement, nor do we have the legal authority to take action on, unilateral sanctions imposed by other jurisdictions.”

U.S. officials were not impressed. State Department officials told the U.K. paper that Hong Kong’s “reputation as a financial centre depends on adherence to international laws and standards…The possible use of Hong Kong as a safe haven by individuals evading sanctions from multiple jurisdictions further calls into question the transparency of the business environment.”

Others agreed.

It would “raise risks considerably if Hong Kong became widely seen as a popular destination for the assets of sanctioned Russian corporations or individuals,” Ryan Mitchell, who teaches international law at Chinese University of Hong Kong, told the paper. He added, “Hong Kong-based corporations or individuals should be aware that they could later face secondary sanctions if they enter into business transactions or relationships with Russian sanction targets.”

Mordashov has close ties with Putin and made his billions as chairman of Severstal, a Russian steel-and-mining giant.

Not all of his yachts got away, however. In April, Italy seized the Lady M superyacht in the port of Imperia after the European Union blacklisted Mordashov. That yacht, however, is valued at a mere $27 million and measures just 215 feet.

The Nord, by contrast, extends 465 feet and is valued at half a billion dollars. A Superyacht Times video about the vessel, made by a German shipyard, has garnered more than 570,000 views on YouTube.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Source link