Written by Kate Kelly, Michael Forsythe and Julian E. Barnes
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 glistening in the sun. Dock workers said they had recently seen people painting, cleaning and generally keeping the ship with its helipad and six guest cabins in pristine condition.
In years past, such a scene would not have been worth mentioning. Many superyachts come and go from Dubai’s Mina Rashid Marina, best known as the home of the Queen Elizabeth 2, the liner-turned-hotel liner that dominates the waterfront here.
But Russia’s war in Ukraine has turned an otherwise routine picture into a diplomatic battleground between the United States and the United Arab Emirates, a key American ally that has established itself as a safe haven for Russian money and assets beyond the reach of US sanctions.
The $156 million Madame Gu sums up the problem. In June, the United States designated the vessel, which is linked to Russian steel magnate and lawmaker Andrei Skoch, as blocked property. This means the yacht cannot use US companies for its maintenance, employ US citizens or even use the dollar. The Justice Department is now taking steps to seize Madame Gu, according to people with knowledge of the plan.
But the United States cannot seize property in a sovereign nation without the permission of its government. The United Arab Emirates, which has taken a friendlier stance toward Moscow, is reluctant to cooperate with the United States in pursuing oligarchs, U.S. officials said. The Kremlin is also using oligarch-controlled companies in the United Arab 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.
UAE officials did not comment specifically on Madame Gu, but said in a statement that they took their role of “protecting the integrity of the global financial system very seriously.”
A closer examination of Russian assets in the UAE shows that even before the war in Ukraine, Dubai had become a playground for Russians with ties to President Vladimir Putin. At least 38 businessmen or officials with ties to the Russian president have homes in Dubai collectively valued at more than $314 million, according to the Center for Advanced Defense Studies. Five of those owners are under US sanctions.
Since the Russian invasion, Dubai has established itself as a safe haven for Russian yachts and aircraft that cannot sail or fly elsewhere. After Russian planes were banned from the European Union in late February, the United Arab Emirates became the destination for 14 percent of all private flights leaving Russia, compared with 3 percent before the invasion.
“It’s frustrating when you see great assets that are out there and the country doesn’t seem to be cooperating,” said Sen. Sheldon Whitehouse, D-R.I., referring to the United Arab Emirates. “It would be nice if there was a more common cause against Putin while he’s busy bombing hospitals and schools.”
Whitehouse is sponsoring legislation that would use proceeds from the sale of seized Russian assets to help rebuild Ukraine. Senior officials from the US Treasury and State Departments have also publicly complained about the situation.
US officials see the presence of superyachts in places like Dubai and Bodrum, Turkey, as a symptom of wider sanctions evasion and continued access to financial markets. The yachts have also come to symbolize the decadence of Russia’s oligarchs, especially at a time when Russian soldiers are scrambling for body armor and sleeping bags on the front lines.
Chasing Madame Gu
Built by Dutch company Feadship and commissioned in 2013, Madame Gu has a large helipad in the forecastle with a hangar below that can double as a squash court when the helicopter is not on board. The ship has berths for 36 crew members, according to a trade magazine.
Skoch, a member of the Russian parliament who is linked to assets worth billions of dollars, according to US court documents, has been sanctioned twice by the United States, first in 2018 and then after the invasion of Russia this year. The Treasury Department has cited his “long-standing ties to Russian organized crime groups.”
Skoch could not be reached and did not respond to messages left at his office in parliament.
In an interview in October about the government’s broader efforts to go after the assets of oligarchs, Andrew Adams, a federal prosecutor who leads the Justice Department’s KleptoCapture task force, declined to discuss Madame Gu. But the United States, he said, cautions companies against doing business with sanctioned individuals and assets. The government, he said, will pursue assets owned by oligarchs whose sale could be used to help Ukraine.
“Where we know there’s an asset that can provide a significant return for Ukraine, that’s obviously an attractive case to pursue,” he said.
Moored in Dubai
From a recent visit to Dubai’s Mina Rashid Marina, where the Madame Gu is moored, it is clear that international companies are playing a critical role in her care.
United Arab Emirates-based company DP World, through its subsidiary P&O Marinas, oversees the dock where the Madame Gu is moored. Employees of another DP World subsidiary, World Security, use the small guard box at the entrance. This makes DP World, owned by Dubai’s royal family, potentially vulnerable to US sanctions.
DP World “fully complies with all applicable local and national laws and intends to continue to do so with respect to the Madame Gu and other vessels using our services,” said Adal Mirza, a company spokesman. He added that DP World had not yet heard from the United States or other countries that had sanctioned Skoch, including the UK and the EU.
If DP World were to face the consequences of US sanctions, it would not be the first time the company has been the focus of attention in Washington. In 2006, DP World sought to manage some terminal operations at six US ports, but abandoned the deal after a bipartisan uproar in Congress.
This article originally appeared in The New York Times.