Geopolitical tensions flare up again as the US warns Hong Kong over a megayacht owned by a Russian oligarch.

Last Thursday, locals in Hong Kong spotted a 142-meter yacht moored west of Victoria Harbor. The owner would subsequently be identified as the Russian oligarch and steel billionaire Alexei Mordashov.

As expected, the ship attracted the attention of western authorities who have been placing worldwide pressure on sanctioned oligarchs linked to Russian President Vladimir Putin. Italy, for example, seized Lady M in March – also a Mordashov-owned yacht – citing EU sanctions imposed following the Ukraine invasion.

Unilateral Sanctions Rejected

Hong Kong did not follow suit with the unilateral sanctions imposed by the west, which follows previous practice. The local marine department indicated that UN sanctions would be implemented but not any imposed by individual nations or blocs.

«Certain countries may impose unilateral sanctions against certain places on the basis of their own considerations,» a spokesperson for the department said. «The Hong Kong government does not implement, nor do we have the legal authority to take action on, unilateral sanctions imposed by other jurisdictions.» 

It is also noteworthy that Beijing retains what it calls a relationship that has «no limits» with Russia and has yet to condemn it over the invasion of Ukraine. Hong Kong’s current leader John Lee has also been subject to US sanctions as a result of the ongoing crackdown on political activity in the city.

US Response

In response, the US warned that Hong Kong could face reputational risk over its inaction as «a financial center depends on adherence to intentional laws and standards». 

«The possible 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,» according to a «Financial Times» report citing a US State Department spokesperson.

The docking also comes shortly before the start of an international financial summit in November, which has been promoted as a symbol of the city's reopening after ending several years of onerous COVID-19-related restrictions that required, among other measures, that travelers from abroad quarantine at designated hotels for extended periods of time.

Alexei Mordashov

Mordashov is the main shareholder of Severstal, Russia’s largest steelmaker. His estimated net worth is $18.2 billion, according to Forbes estimates, down from $29.1 billion at the end of 2021.

The megayacht in Hong Kong is called Nord and is valued at $500 million, ostensibly having more than a dozen luxury cabins alongside a cinema and two helipads. 

According to marine tracking websites, the yacht left Vladivostok a week ago before entering Hong Kong waters last Wednesday. Unless it obtains a proper license from local authorities, it will not be allowed to stay in Hong Kong waters for more than 182 consecutive days.