Chalets in Courchevel, villas on the Cap d'Antibes peninsula, yachts and valuable paintings are in the sights of the Ministry of Economy’s task force. But in this game of cat and mouse through a maze of offshore companies, nominees and trusts, oligarchs are often one step ahead.
PARIS — “An exceptional stay in the mountains,” promises the Grand Coeur et Spa chalet, a 4-star Relais & Châteaux located at the bottom of the ski slopes in Méribel, in southeastern France. Its particularity: It is owned by the company Sogeco whose main shareholder is Elena Timchenko, wife of Gennady Timchenko. The billionaire is considered a close friend of Russian President Vladimir Putin and as such, is registered on the European, American and British lists of frozen assets.
“Gennady Timchenko is a long-time acquaintance of the President of the Russian Federation Vladimir Putin and is broadly described as one of his confidants,” the European text says.
On the other hand, his wife’s first name does not appear there and the alpine chalet, just like its twin establishment owned by the same company, have not received any visits from the authorities, the general manager of the two facilities told Les Echos.
850 millions euros in frozen assets
Up until recently, Gennady Timchenko was still presented as the co-president of the economic council of the Franco-Russian Chamber of Commerce and Industry, alongside the CEO of TotalEnergies Patrick Pouyanné, on the organization’s website. The link to the economic council page has since been disabled.
But France has not been idle since the announcement, a month ago, of an arsenal of unprecedented sanctions against Vladimir Putin's Russia, following the invasion of Ukraine.
A total of 850 million euros in assets belonging to Russian oligarchs have been frozen on French territory, Economy Minister Bruno Le Maire recently announced. This includes 150 million euros in bank accounts and nearly 540 million euros in real estate, divided between around thirty properties or apartments.
France has yielded better results than several of its European neighbors, but the outcome is nonetheless modest. The authorities have identified more than 20 villas owned by the oligarchs on the Côte d'Azur alone — one of the favorite destinations of Russian billionaires who also have property in the French Alps, in the heart of Paris or in the southwestern coastal region of Biarritz.
“No oligarch will fall through the cracks,” Le Maire declared on French radio in early March, saying authorities were determined to “strike at the core of Russian power.”
In the wake of the announcement of the first European sanctions at the end of February, the minister set up a task force with the mission of identifying in France everything that belongs to blacklisted billionaires, and if necessary, by extending the search to spouses, children and blind real estate trusts.
This exceptional hunt mobilizes officials from the tax authorities, the Treasury, financial intelligence and customs. Tax authorities can in particular cross-reference their real estate files with the FICOBA listing of bank accounts: it is up to them to detect in this mass of data the assets of personalities sanctioned by the EU.
The financial intelligence unit (Tracfin), which is particularly experienced in tracking down tax evaders and terrorist funders, plays a key role. It is this unit which as soon as February 27 issued a call for vigilance to the banking sector, four days after the invasion of Ukraine started, and just before the sanctions were officially implemented. The swift action prevented nearly 5 billion euros from leaving the territory, according to the Ministry of Economy.
A yacht with seven VIP suites
“Tracfin is the cream of the crop for intelligence,” says lawyer Olivier Dorgans, of the firm Ashurst, recalling that its agents contributed to the arrest of the terrorists of the November 2015 Paris attacks.
The most spectacular catch to date is that of the Amore Vero, the yacht of Igor Sechin. A traveling companion of Vladimir Putin since the 1990s, when the master of the Kremlin worked as mayor of Saint Petersburg, the boss of the oil giant Rosneft is one of Russia’s most influential men.
It's a very big catch.
For French authorities, it's a very big catch. Tracfin has succeeded in identifying Sechin behind the company which owns a superyacht that arrived at the shipyard in southern La Ciotat in January. The operation took place on the night of March 2-3. Customs officers boarded the 86-meter-long white vessel which was preparing to set sail in a hurry while repair work was planned until April 1. With the offense established, the ship could be seized.
But the battle is not yet won. “At this stage the procedure is only administrative,” Ronan Boillot, national director of the customs coastguard service, says. In the meantime, the yacht with seven VIP suites remains at the dock. Two other less flamboyant vessels, La Petite Ourse and La Grande Ourse, have just fallen into the hands of customs, in Cannes and Antibes.
Gennady Timchenko, Zakhar Smushkin and Igor Sechin in Moscow in 2105
Alexei Druzhinin/Russian PPIO/via ZUMA
The members of the task force are not talkative. Maintaining the secrecy of their operations is one of the conditions of their success. They know that they are up against an armies of lawyers scrutinizing the legality of each of their actions and are ready to overturn the procedures at the slightest mistake. “We are dealing with individuals who are not really compassionate,” says one French official involved. Even if they are weakened, oligarchs continue to cause fear.
Several ships have managed to slip through the cracks by heading for more welcoming areas such as the Seychelles or the Maldives.
Tracking the wanderings of these powerful people in the seas of the globe has become a hobby for some Internet users who have become fixated on websites like MarineTraffic, which can track ships in real time thanks to their registration number. But tracing back to the real owner in order to allow the grounding of the ship is a real ordeal.
Several operations have been conducted on vessels considered “worthy of interest,” without them ending up in confiscations. “We tried to intercept a ship in Saint-Barthélemy, but we couldn't prove who the owner was,” says Ronan Boillot, who also points out that the yacht season has not yet started in France. “In May and June, these measures to freeze assets would have had more impact!”
In the race to track the oligarchs’ assets, public authorities have a trump card: sharing information and documents with neighboring countries. An international task force was set up in record time and everyone was asked to play the game.
Even the Principality of Monaco, where more than 800 Russians live year-round, complied immediately. Slightly fewer than ten accounts have been frozen by Monegasque banks, according to our information, and in the port, where several giants of the seas are currently moored at the start of spring, the oligarchs’ yachts have disappeared.
“There has been an exemplary application of the measures in Monaco,” Michel Hunault, director of Siccfin, the equivalent of Tracfin in Monaco, says, while refusing to comment on the identity of the people concerned and on the number of seized properties.
According to several people involved in this international mobilization, some of the first catches in Europe were made possible by the effect of surprise on oligarchs who did not expect to find themselves on the blacklist. But many others had felt the tide turn, especially since the sanctions implemented in 2014 after the Russian invasion of Crimea, and had protected their estate.
“I doubt that they still had assets, in individual bonds, in French banks,” says Olivier Attias of the August and Debouzy firm.
Webs of intermediary companies with some registered in tax havens, trusts, foundations, use of false names: these methods are known, especially as they can also be used to hide from the tax authorities.
Cayman islands don't cooperate
“Structures are interposed, a trust in Jersey, an empty shell in Cyprus, a company in the British Virgin Islands. Or it’s simpler: Astraw man owns the property. It's as old as the earth and as the mafia,” a former high official of the Ministry of Economy explains.
It is much easier to impose a sanction than to enforce it.
Lawyer Alexandre Malan, who is familiar with issues related to Russia, agrees: “Behind the speeches of certain states, the reality is that there is little cooperation with the British Virgin Islands or the Cayman Islands for example.”
Danny Glaser of the American firm K2 Integrity, which specializes in investigations on corporations, compliance and cybersecurity, notes that it is much easier to impose a sanction than to enforce it. “More often than not — and this applies more to Europe than to the United States — sanctions are seen as a means of expressing political outrage rather than something that needs to be implemented," Glaser said.
In the same vein, the French government's desire to transform the measures to freeze assets into real expropriation quickly collided with the obstacle of the law. Paris, which wants to be at the forefront of this offensive, suggested that 70 names be added to the blacklist in order to potentially include the billionaires’ entourage.
Among the 50 or so oligarchs under sanctions, there are still a few major absentees. Oleg Deripaska, a shareholder of the aluminum production giant RUSAL via the En+ company, is not on the European list although he appears on those of the UK and the U.S. The RUSAL factories supply 80% of French aluminum needs, which could explain this “oversight.”
Some oligarchs are preparing their response, by challenging their placement under sanction and targeting the motives which are sometimes formulated in a nebulous way in official documents, according to lawyers.
The southern French towns of Antibes and Saint-Jean-Cap-Ferrat are starting to feel the effect of the ban of certain Russian billionaires. “Here, on the seaside promenade, you only hear the Russian language being spoken, and in the summer, in the Baie des Fourmis, there are only yachts chartered by them,” says Olivier, a local who’s about to go surfing.
Many locals, who have seasonal contracts of four or six months, are afraid of losing them. “It is what happened to my daughter,” Olivier adds. “She was supposed to start working as a stewardess on March 1 at Roman Abramovich's in Cap d'Antibes but then someone called her to tell her that it was not worth coming.”
- How Sanctions Can Hit Even Harder: Guidance From A Russian In ... ›
- Oligarchs Au Revoir: Russia's War Drifts On To The French Riviera ... ›
- Russian Oligarchs Turn To Crypto To Skirt Sanctions - Worldcrunch ›
- Ukraine Braces For Fresh Attacks In East, Rush To Evacuate In Mariupol - Worldcrunch ›
- Europe's "Freeze And Seize" Hits Russian Oligarchs For 12.5 Billion - Worldcrunch ›