U.S. Eyes $156 Million Yacht in Dubai Linked to a Russian Oligarch
DUBAI — On a clear morning in late October, the jewel-blue hull of the Madame Gu, one of the world’s most luxurious superyachts, gleamed, its aluminum rails shimmering in the sun. Workers on the pier said they had recently seen people painting, cleaning and generally keeping the ship with its helipad and six guest staterooms in pristine condition.
In past years, such a scene would not have been noteworthy. Many superyachts come and go from Dubai’s Mina Rashid Marina, best known as the home of the Queen Elizabeth 2, the trans-Atlantic ocean liner-turned-hotel that dominates the waterfront here.
But Russia’s war in Ukraine has turned an otherwise routine tableau into a diplomatic battleground between the United States and the United Arab Emirates, an important American ally that has established itself as a safe haven for Russian money and assets out of the reach of U.S. sanctions.
The $156 million Madame Gu epitomizes the problem. In June, the United States designated the vessel, which is linked to the sanctioned Russian steel magnate and lawmaker Andrei Skoch, as blocked property. That means the yacht cannot use American companies for its upkeep, employ U.S. citizens or even use the dollar. The Justice Department is now taking steps to seize the Madame Gu, according to people with knowledge of the plan.
But the United States can’t seize property in a sovereign nation without permission from its government. The Emirates, which has taken a friendlier position toward Moscow, is balking at cooperating with the United States to pursue oligarchs, American officials said. The Kremlin is also using oligarch-controlled companies in the Emirates to acquire war supplies that the West is trying to keep out of Russia’s reach, according to a Western official involved in the sanctions effort against Russia.
Emirati officials did not comment specifically on the Madame Gu but said in a statement that they took their role “protecting the integrity of the global financial system extremely seriously.”
A closer examination of Russian assets in the Emirates shows that even before the war in Ukraine, Dubai had become a playground for Russians with links to President Vladimir V. Putin. At least 38 businessmen or officials with ties to the Russian president own homes in Dubai that are collectively valued at more than $314 million, according to the Center for Advanced Defense Studies. Five of those owners are under U.S. sanctions.
Since the Russian invasion, Dubai has established itself as a safe haven for Russian yachts and aircraft unable to sail or fly elsewhere. After Russian jets were barred from the European Union in late February, the Emirates became the destination for 14 percent of all private flights leaving Russia, up from 3 percent before the invasion.
“It’s frustrating when you see huge assets that are sitting out there and it appears that the country is not cooperating,” said Senator Sheldon Whitehouse, Democrat of Rhode Island, referring to the Emirates. “It would be nice if there were more common cause against Putin while he’s busy shelling hospitals and schools.”
Mr. Whitehouse is sponsoring legislation that would use proceeds of the sales of seized Russian assets to help rebuild Ukraine. Senior officials at the Treasury and State Departments have also complained publicly about the situation.
U.S. officials view the presence of superyachts in places like Dubai and Bodrum, Turkey, as a symptom of wider Russian circumvention of sanctions and continued access to financial markets. Yachts have also come to symbolize the decadence of Russia’s oligarchs, especially at a time when Russian soldiers are scrounging for body armor and sleeping bags on the front lines.
Pursuing the Madame Gu
Built by the Dutch firm Feadship and put into service in 2013, the Madame Gu has a large helicopter pad on its forecastle with a hangar underneath that can double as a squash court when the chopper isn’t on board. The vessel has berthing for 36 crew members, according to one trade magazine.
The State of the War
- A Pivotal Point: Ukraine is on the offensive, but with about one-fifth of its territory still occupied by Russian forces, there is still a long way to go, and the onset of winter will bring new difficulties.
- Ukraine’s Electric Grid: As many Ukrainians head into winter without power or water, Western officials say that rebuilding Ukraine’s battered energy infrastructure needs to be considered a second front in the war.
- A Bloody Vortex : Even as they have celebrated successes elsewhere, Ukrainian forces in the small eastern city of Bakhmut have endured relentless Russian attacks. And the struggle to hold it is only intensifying.
- Dnipro River: A volunteer Ukrainian special forces team has been conducting secret raids under the cover of darkness, traveling across the strategic waterway that has become the dividing line of the southern front.
Mr. Skoch, a member of Russia’s Parliament who is linked to assets worth billions of dollars, according to U.S. court filings, has been sanctioned twice by the United States, first in 2018 and then after Russia’s invasion this year. The Treasury Department has cited his “longstanding ties to Russian organized criminal groups.”
Mr. Skoch could not be reached and did not respond to messages left at his office at Parliament.
In an interview in October about the government’s broader efforts to go after the assets of oligarchs, Andrew Adams, a federal prosecutor leading the Department of Justice’s KleptoCapture task force, declined to discuss the Madame Gu. But the United States, he said, is warning companies they must not do business with sanctioned individuals and assets. The government, he said, will pursue oligarch-owned assets whose sale could be used to aid Ukraine.
“Where we know there is an asset that can potentially provide significant remuneration for Ukraine, that obviously is an attractive case to pursue,” he said.
U.S. officials are likely to use the case they made for impounding a $90 million Airbus business jet linked to Mr. Skoch in August as a blueprint for seizing the Madame Gu, said people familiar with the plan.
That means investigators will aim to show that the owner of the vessel, or the companies that have been providing services to it, have intersected with the U.S. financial system.
“If there are U.S. dollars or a U.S. nexus associated with supporting this vessel, massive enforcement actions could take place,” said Adam M. Smith, a former official overseeing sanctions at the Treasury Department. Companies that provide support to sanctioned entities could potentially face their own sanctions, said Mr. Smith, who is now a lawyer at Gibson Dunn in Washington.
This year the United States has carried out two high-profile seizures of yachts tied to sanctioned Russians, working with cooperative governments. The $300 million Amadea was taken in Fiji in May and sailed to San Diego under an American flag. In April, the United States worked with Spanish police to
