The US has warned Hong Kong is at risk of becoming a haven for Russian oligarchs after the Chinese territory said it would not enforce Western sanctions on a superyacht owned by billionaire Alexei Mordashov and docked in the city’s waters .
The US State Department also said that Hong Kong’s business prospects could be further clouded by its government’s inaction, as the former British colony’s “reputation as a financial center depends on compliance with international laws and standards”.
The saga unfolded when the 142-metre Nord, one of the world’s most luxurious superyachts built by German firm Lürssen, entered Hong Kong waters on Wednesday. The $500 million ship is anchored west of Victoria Harbour.
The yacht, which sails under the Russian flag, left Vladivostok last week, according to Marine Traffic, a tracking website. Nord has been described as “a warship in a tuxedo” by the studio that designed it, as it has two helipads, a pool and a fleet of tenders.
Mordashov, one of the richest men in Russia, made his fortune through the Severstal steel company. Following Russia’s invasion of Ukraine, the US, EU and UK imposed sanctions on Mordashov and other oligarchs.
“Certain countries may impose unilateral sanctions on specific locations based on their own considerations,” a spokesman for the city’s Navy Department said on Friday.
“The Hong Kong [government] does not implement unilateral sanctions imposed by other jurisdictions, nor do we have the legal authority to take action against them.”
The US said the Hong Kong ministry’s statement could encourage sanctioned oligarchs to live in the city. “The potential use of Hong Kong as a safe haven by individuals evading sanctions from multiple jurisdictions further calls into question the transparency of the business environment,” a US State Department spokesman told the Financial Times.
Lodestone, a Hong Kong based yacht broker providing superyacht support services, is listed as agent for North in Hong Kong. An employee confirmed the listing.
Ryan Mitchell, an assistant professor specializing in international law at the Chinese University of Hong Kong, said it would “significantly increase risks if Hong Kong were widely viewed as a popular destination for the assets of sanctioned Russian companies or individuals.”
“Hong Kong-based companies or individuals should be aware that if they enter into business transactions or relationships with Russian sanctions targets, they may face secondary sanctions later,” he added.
Maintenance, insurance and other financial services provided for the yacht may involve institutions operating in more than one state. This could “allow sanctioning states to intervene along the payment chain rather than directly in Hong Kong on these transactions,” said Michael Tsimplis, law professor at the City University of Hong Kong.
A visiting pleasure yacht may not stay in Hong Kong waters for more than 182 consecutive days unless duly authorized by local authorities, the Navy Authority said.
https://www.ft.com/content/2e872ca1-54dc-48b0-8477-a8976cb9d7aa The US warns Hong Kong about the oligarch’s superyacht docked in its waters