Superyacht seizure: Cook Islands scramble to ban any more Russian oligarchs from maritime registry

The Cook Islands says it has no more superyachts owned by Russian oligarchs sailing under its flag and that it helped an international operation to seize a vessel in Spain.

Earlier this week a Cook Islands-flagged mega yacht belonging to an ally of Russian president Vladimir Putin was seized by United States authorities in Spain.

The $140m Tango belongs to Victor Vekselberg, an aluminium baron whose assets are frozen in the US. Vekselberg was added to New Zealand’s list of sanctioned Putin-linked individuals or entities this week.

The 78m Tango spent time in Auckland in the summer of 2017-18 and is one of hundreds of flag of convenience vessels registered in the Cooks.

An affidavit to a US court from an FBI special agent seen by the Heraldstates the management company for Tango registered the vessel with Maritime Cook Islands (MCI) in July, 2011, the year it was built.

“Additionally, business records of MCI show that the Tango has been registered by Arinter in the Cook Islands every year and had various yearly registration fees paid on its behalf.

A Cook Islands government spokeswoman, when asked whether the country had any concerns about the vessel carrying its flag, said: “Yes. To that extent it should be recognised that the Cook Islands as the flag state, and particularly through its ship registry, have fully co-operated and indeed proactively assisted with the investigation of this vessel.”

She told the Herald this action directly contributed to its successful seizure of the vessel by Spanish police and US federal agents in the port of Palma de Mallorca, the capital of Spain’s Balearic Islands in the Mediterranean Sea.

Based on all records and information the Cooks hold, including information recently received related to the assets of targeted individuals and entities, she said this is the only Russian-owned superyacht on the country’s register.

“In addition, our Registry authorities have re-screened all of the existing owners of our superyachts and none have come up with red flags. Furthermore, the Registry has ceased registration of any further yachts which may be owned by any Russian person or entity.”

The spokeswoman said theCook Islands is continuing to work closely with the US and Spanish authorities.

“The Cook Islands will continue to be vigilant and proactive in ensuring that there are no vessels on its register belonging to any sanctioned individuals or entities.”

Vekselberg, who’s chairman of Renova Management AG and is worth an estimated $6 billion, ($8.76b) according to Forbes has been sanctioned by the US Treasury Department’s Office of Foreign Assets Control.

The FBI affidavit in support of the seizure runs through alist of reports and allegations of his involvement in money laundering and racketeering schemes including public reporting from Russia claimed that Vekselberg was involved in a scandal surrounding theft of client funds from First City Bank, the proceeds ofwhich he allegedly used to buy Faberge eggs.

His yacht is the latest asset owned by a Russian oligarch to be seized after the invasion of Ukraine. The US and its allies have tried to squeeze Russia’s elite as part of their effort to punish Moscow for its war.

Flying the flag

Vessel owners use flags of convenience (FOC) rather than their home country’s registry are used for a number of reasons including ease and lower expense of registration and renewal, less strict, or in some cases, no survey or inspection requirements, to minimise or eliminateliability and, especially important for oligarchs, privacy.

The International Transport Workers’ Federation (ITF) has campaigned against them for decades and says seafarers who are employed on FOC ships are often denied their basic human and trade union rights since registers do not enforce minimum social standards.

On its website Maritime Cook Islands promotes itself as offeringresponsible ship owners exceptional service.

“We aim to keep ships in compliance and to keep them moving.”

Through its online register it says it will always know when a vessel is due for a survey or a certificate is about to expire.

“Through our network of Deputy Registrars, ship owners will be able to conduct business in their own time zone in their own language and get things done quickly and efficiently.”

It says the Cook Islands does not impose “additional requirements” on ship owners beyond the requirements of International Maritime Organisation conventions.

The MCI was forced to take action last year after allegations two tankers flying the flag of the Cook Islands were involved in sanctions busting.

The Guardian reported two ships were removed from the islands’ shipping registry after allegations the vessels were transporting Iranian crude oil while concealing their movements in contravention of US sanctions.

Strategic analyst Paul Buchanan said flags of convenience were part of a wider problem for small island countries who were lured into selling “tokens of sovereignty”.

He said when he last investigated flags of convenience in the Pacific the scheme was starting to take off in the Cooks.

“For the exchange of a few dollars you could register super tankers so it’s no surprise that well-heeled individuals with large boats seeking to avoid tax systems of their own countries and other states register these very valuable assets for a pittance.”

While fees appeared low, they could be valuable revenue for a small country.

However, there was reputational risk.

“If criminal organisations or people of ill repute are seeking to register assets in island states because they’re avoiding taxes or liability then it becomes a reputational issue for the states involved,” said Buchanan, the Director of 36th Parallel Assessments, a geopolitical and strategic analysis consultancy.

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