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JPMorgan forces sale of Russian oligarch’s megayacht

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A $75-million superyacht linked to a sanctioned Russian steel billionaire was auctioned on Tuesday in Gibraltar, court sources said, in what is understood to be the first sale of its kind since Russia invaded Ukraine in February.

The Axioma was impounded by the Gibraltar authorities in March after JPMorgan said its alleged owner Dmitry Pumpyansky had reneged on the terms of a $20 million loan.

The Axioma superyacht belonging to Russian oligarch Dmitrievich Pumpyansky who is on the EU's list of sanctioned Russians is seen docked at a port, amid Russia's invasion of Ukraine, in Gibraltar, March 21, 2022.

The 72.5-meter vessel was auctioned by the Gibraltar Admiralty Court through a system of closed bids to be sent electronically by midday on Tuesday, a court spokesman said. The court added that 63 bids had been submitted for consideration, with the selection process expected to take 10 to 14 days.

There was an “unexpected late surge by prospective buyers” around the world for the vessel, Nigel Hollyer, broker to the Admiralty Marshal of the Supreme Court of Gibraltar who led the auction, told the Guardian newspaper last week.

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The boat sleeps 12 people in six cabins and boasts a swimming pool, a spa, 3D cinema and water sports equipment.

According to court papers reviewed by Reuters, JPMorgan (JPM) lent 20.5 million euros to British Virgin Islands-listed Pyrene Investments Ltd which was owned by Furdberg Holding Ltd. Furdberg’s owner was Pumpyansky, who acted as guarantor for the loan.

The papers said Pyrene Investments defaulted on the loan terms after Pumpyansky on March 4 transferred his shares in Furdberg to a third party and was then sanctioned, blocking the repayment of the loan.

The 58-year-old, who has an estimated fortune of $2 billion according to Forbes magazine, was sanctioned by Britain and the European Union shortly after the invasion of Ukraine.

Pumpyansky was until March the owner and chairman of steel pipe manufacturer, a supplier to Russian energy company Gazprom. The company said he had since withdrawn from the firm.

The Axioma is the first seized luxury yacht known to be auctioned since the West imposed sanctions on powerful Russians following the February invasion of Ukraine.

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Sources close to the process told Reuters JPMorgan would only claim the 20.5 million euros owed and that any further proceeds from the sale would be up to the court to disburse.

Scores of yachts and houses linked to Russian oligarchs have been seized by world governments since the invasion. British and American authorities have said they would seek to send the proceeds of sold assets to Ukraine.

A Gibraltar government source said the money would likely be frozen rather than handed to anyone other than the oligarch.

A spokesman for JPMorgan declined to comment.

James Jaffa, a lawyer for British firm Jaffa & Co which specializes in yachts and who had represented the Axioma before it was seized, said the vessel was likely to sell for “way below” 20 million euros.

After the auction, he said, the ship broker, crew wages, the shipyard and maintenance would need to be paid ahead of the bank.

A successful sale would, nonetheless, be a “benchmark” for other banks looking to recoup losses by auctioning the repossessed property and other assets of sanctioned oligarchs.

“Axioma will be a watershed moment for assets that have bank financing against them because all the other banks will realize that the asset can be sold and that they can get some or all of their money back,” he said.

He stressed, however, that assets without financial claims against them which were seized by governments because of sanctions alone would be harder to sell.

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Russian oligarch's yacht costs U.S. taxpayers close to $1 million a month

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A mega-yacht seized by U.S. authorities from a Russian oligarch is costing the government nearly $1 million a month to maintain, according to new court filings.

The U.S. Department of Justice is seeking permission to sell a 348-foot yacht called Amadea, which it seized in 2022, alleging that it was owned by sanctioned Russian billionaire Suleiman Kerimov. The government said it wants to sell the $230 million yacht due to the “excessive costs” of maintenance and crew, which it said could total $922,000 a month.

“It is excessive for taxpayers to pay nearly a million dollars per month to maintain the Amadea when these expenses could be reduced to zero through [a] sale,” according to a court filing by U.S. prosecutors on Friday.

The monthly charges for Amadea, which is now docked in San Diego, California, include $600,000 per month in running costs: $360,000 for the crew; $75,000 for fuel; and $165,000 for maintenance, waste removal, food and other expenses. They also include $144,000 in monthly pro-rata insurance costs and special charges including dry-docking fees, at $178,000, bringing the total to $922,000, according to the filings.

The battle over Amadea and the costs to the government highlight the financial and legal challenges of seizing and selling assets owned by Russian oligarchs after the country’s invasion of Ukraine. European Commission President Ursula von der Leyen said last week that the European Union should use profits from more than $200 billion of frozen Russian assets to fund Ukraine’s war effort.

Her comments echoed government calls in the spring of 2022 to freeze the yachts, private jets and mansions of Russian billionaires in hopes of putting pressure on Russian President Vladimir Putin and raising money for the war effort.

Yet, nearly two years later, the legal process for proving ownership of the Russian assets and selling them has proven to be far more time-consuming and costly. In London, Russian billionaire Eugene Shvidler has waged a court battle over his private jets that were impounded, and Sergei Naumenko has been appealing the detention of his superyacht Phi.

The battle over Amadea began in April 2022, when it was seized in Fiji at the request of the U.S. government, according to the court filings.

Though the U.S. alleges that the yacht is owned by Kerimov, who made his fortune in mining, attorneys for Eduard Khudainatov, an ex-Rosneft CEO who has not been sanctioned, say he owns the yacht, and have sought to take back possession of the vessel.

In court filings, Khudainatov’s attorneys have objected to the U.S. government’s efforts to sell the yacht, saying a rushed sale could lead to a distressed sale price and that the maintenance costs are minor relative to the potential sale value.

Khudainatov’s attorneys refuse to pay the ongoing maintenance costs as long as the government pursues a sale and forfeiture. However, they say their client will reimburse the U.S. government for the more than $20 million already spent to maintain the yacht if it’s returned to its proper owner.

In court papers, the government says Kerimov disguised his ownership of Amadea through a series of shell companies and other owners. They say emails between crew members show Kerimov “was the beneficial owner of the yacht, irrespective of the titleholder of the vessel.”

The emails show that Kerimov and his family ordered several interior improvements of the yacht, including a new pizza oven and spa, and that between 2021 and 2022, when the boat was seized, “there were no guest trips on the Amadea that did not include either Kerimov or his family members,” according to the court filings.

The government also says Kerimov has been trying to sell Amadea for years, so a sale would be in keeping with his intent.

“This is not a situation in which a court would be ordering sale of a precious heirloom that a claimant desperately wishes to keep for sentimental reasons,” the government said in filings.

Even if Amadea were sold quickly, the proceeds wouldn’t automatically go to the government. Under law, the money would be held while Khudainatov and the government continue their battle in court over the ownership and forfeiture.

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