The MY Tango inquiry: Lessons to be learnt
The industry was rocked recently by the news that Richard Masters and Vladislav Osipov were charged with allegedly aiding sanctioned Russian billionaire, Viktor Vekselberg. The US Department of Justice claims the pair ran a money laundering scheme and tried to hide the ultimate beneficial owner (UBO) of the superyacht MY Tango through a string of shell companies.
“What this case really shows us is that we, as an industry, need to be incredibly careful whom we work with,” James Jaffa, partner and founder, Jaffa & Co tells Superyacht Investor (SYI). “People need to be 100% sure where the true source of wealth lies.”
It is worth stressing that an indictment is merely an allegation and Masters, the founder of yacht manager Masters Yachts, should be presumed innocent. He is a highly regarded and popular member of the yachting community.
The 255ft (78m) yacht was seized in Mallorca, Spain at the request of the US on April 4th 2022. Its owner, Vekselberg was sanctioned by the US in April 2018, as part of a package of sanctions against Russia after its alleged interference in the 2016 US presidential election and other “malign activity”. The sanctions freeze the billionaire’s assets held under US jurisdiction and prevent American companies from doing business with him.
The FBI claims that Masters operated Tango using US companies and financial systems, in an attempt to hide the UBO. Masters was arrested by Spanish authorities on Friday, January 20th. A warrant for the arrest of Osipov has also been issued. The case has been led by the FBI and the US Justice Department’s KleptoCapture Task Force, aimed at enforcing US sanctions abroad.
Paul Abbate, deputy director, FBI said on January 20th: “Today’s indictments and the arrest executed by Spanish law enforcement demonstrate the FBI’s continued focus on tracking down and holding accountable those who assist sanctioned Russian oligarchs.”
The US government says that Masters took over the management of the vessel and conspired with Osipov and others to evade the US sanctions.
“I’m not surprised at all when I hear of allegations like this,” one industry source tells SYI. “You hear stories all the time about people continuing to work with Russians that have been sanctioned.”
Other industry leaders felt differently. “I was pretty shocked when I heard the news if I am honest,” says a British lawyer. “The situation could be down to anything, but it seems there may have simply made an error of judgement.”
US authorities also allege that Masters changed the vessel’s name to Fanta to hide payments in US dollars linked to Tango. US institutions are said to have processed hundreds of thousands of dollars for the Russian oligarch as a result, giving US authorities grounds to arrest the British national.
Another industry source tells us: “You can’t just disregard sanctions. You could perhaps argue that an individual might ignore them, risking everything, because the owner is an important client and brings in a lot of business. But you simply can’t just ignore them because of that or because you disagree with them.”
There could be an argument for disregarding the sanctions if an individual operated solely within countries like Turkey or the United Arab Emirates, adds our source. “But not if you are a British gent working in Spain. That is just crazy. And there are extradition treaties that [the US] will use if they have to.”
Masters potentially faces extradition to the US. One industry source tells SYI these are familiar waters. “Remember the trade for Brittney Griner and the Russian arms dealer? When you break US laws, they will find you. And they will extradite you.” The arms dealer, Viktor Bour, was arrested by US authorities in Thailand on terrorism charges in 2008.
David Hernandez, partner, Vedder Price, is happy to speak on the record.
“These sanctions are real and need to be taken very seriously. People who don’t, get caught. Period. That’s a fact,” he tells us. “You can’t just hide millions of dollars worth of assets and expect to get away with it.”
So, what lessons can the industry learn from the case? “Simply put, it is not worth the risk. Why risk everything for a $100,000 commission?” says Hernandez. “Is it worth losing your liberty? Your reputation? No, of course not.”
With the charges for Masters and Osipov potentially leading to a lengthy prison sentence if found guilty, it is a stark reminder that the industry has to take great care in choosing with whom it does business.
“What we have to take away from this, no matter what the outcome, is that we, as an industry, must take incredible care with understanding who our clients really are,” says Jaffa.