When the war in Ukraine erupted, the United States and European nations swiftly targeted Russian oligarchs by seizing their global assets. Among the confiscated properties were bank accounts, upscale mansions, and notably, superyachts docked in prestigious ports worldwide.
What initially appeared to be a lucrative gain to fund Ukraine’s military support quickly turned into a significant financial burden for the countries wielding the confiscation power. The costs involved in maintaining these luxury vessels—including the staggering expense of keeping them in good condition—have raised considerable concerns.
A pertinent example involves the luxurious Sailing Yacht A, owned by Russian billionaire Andrey Melnichenko. Since being captured in March 2022, it has remained docked in Trieste, Italy. Now, with maintenance expenses soaring to nearly $47 million over four years, Melnichenko is suing Italy, contending that he deserves free access to his yacht and that the state has been unfairly burdened with the maintenance costs.
The Magnitude of Sailing Yacht A
The Sailing Yacht A is celebrated as the world’s largest private sailing yacht, measuring 143 meters in length. Its avant-garde design resembles a futuristic submarine equipped with sails, making it a highly desired spectacle for tourists in Trieste. Melnichenko reportedly invested around $600 million for this extraordinary vessel. However, complications arise as the yacht is technically not registered in Melnichenko’s name.
The vessel is owned by a Bermuda-based firm called Valla Yachts, which operates under a trust managed by a Swiss company. This layer of corporate ownership has resulted in a complex legal situation regarding asset recovery and ownership rights.
Legal Battles and Maintenance Costs
In 2024, Italy’s Lazio Regional Administrative Court requested clarification from the EU Court of Justice regarding whether assets can be frozen when held in a trust, as opposed to being owned directly by someone sanctioned. The European Court confirmed that it is permissible, provided it is demonstrated that the sanctioned person maintains real control or access to the assets.
The beneficiary of the trust is Aleksandra Melnichenko, Andrey’s wife. Lawyers representing the Melnichenko family argue that the yacht is part of a legitimate corporate structure, thus invalidating Italy’s seizure claim and advocating for the lifting of the blockade.
Financial Implications of Seizures
Following Ukraine’s invasion by Russia, the EU and its allies swiftly introduced sanctions targeting wealthy individuals close to Putin. The seizure of yachts was a prominent strategy intended to hit these oligarchs financially. However, no significant consideration was given to the financial repercussions of maintaining these confiscated vessels.
Luxury superyachts come with hefty maintenance costs, typically averaging around 10% of their purchase price annually. Therefore, a $500 million yacht could incur annual upkeep expenses of about $50 million. These costs accumulate even when the yacht is secured in port, as demonstrated by the expenses incurred on the recently seized Alpha Black, linked to Russian oligarch Andrey Guryev.
Sailing Yacht A anchored off Trieste
During its time in port, Sailing Yacht A consumed approximately $2,000 daily in fuel to sustain air conditioning, which prevents sea salt from degrading the yacht’s interior materials. Without such measures, selling the yacht becomes increasingly complex due to the lack of clarity surrounding its true ownership. Returning it isn’t a viable option as it would be perceived as a political defeat in relation to Russia.
The Italian government has assigned the management of the yacht to the Agenzia del Demanio, with the maintenance costs falling under state responsibility. However, these expenditures can later be claimed from the owner or recouped through a potential sale—if viable buyers exist, which is currently rare.
The mayor of Trieste has questioned for years who will cover the €30,000 daily expense necessary to maintain Sailing Yacht A. As reiterated by the specialized portal Megayacht News, the upkeep costs continue to be financed by the Italian Treasury.
The legal dispute surrounding Melnichenko’s yacht may linger for months or even years. If the Italian courts ultimately determine that the sanctions against Sailing Yacht A are unwarranted, Melnichenko might regain control of his vessel, leaving Italy to shoulder approximately four years of maintenance expenses entirely free of charge.
In Xataka | Superyachts are aptly described as floating mansions: Roman Abramovich’s is fortified with an anti-missile shield.
Image | Flickr (Paul Fenton, adrianovero), Wikimedia Commons (Maximo Marmur)