Hong Kong nixes US sanctions on Russian-owned superyacht

In this image taken from video footage run by TVB, the megayacht Nord, left, worth over $500 million, is seen off Hong Kong Island outside Victoria Harbour on Oct. 7

Hong Kong’s leader John Lee said yesterday he will only implement United Nations sanctions, after the U.S. warned the territory’s status as a financial center could be affected if it acts as a safe haven for sanctioned individuals.

Lee’s statement came days after a luxury yacht connected to Russian tycoon Alexey Mordashov docked in the city.

Mordashov, who is believed to have close ties to Russian President Vladimir Putin, was sanctioned by the U.S., U.K. and the European Union in February after Russia’s invasion of Ukraine. Hong Kong authorities have said that they do not implement unilateral sanctions imposed by other governments.

“We cannot do anything that has no legal basis,” Lee told reporters. “We will comply with United Nations sanctions, that is our system, that is our rule of law,” he said.

A U.S. State Department spokesperson said in a statement yesterday [Macau time] that “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.”

The State Department spokesperson also said the city’s reputation as a financial center “depends on its adherence to international laws and standards” and that U.S. companies “increasingly view Hong Kong’s business environment with wariness” due to an erosion of Hong Kong’s once high degree of autonomy and its freedoms.

The $500-million superyacht Nord, allegedly owned by Mordashov, moored in Hong Kong’s harbor on Wednesday following a weeklong journey from the Russian city of Vladivostok.

Mordashov is one of Russia’s richest men, with an estimated wealth of about $18 billion. He also is the main shareholder and chairman of Severstal, Russia’s largest steel and mining company. Mordashov has tried to challenge the sanctions against him in European courts.

U.S. and European authorities have seized over a dozen yachts belonging to sanctioned Russian tycoons to prevent them from sailing to other ports that are not affected by the sanctions. So Russian oligarchs have begun docking their yachts at ports in places like Turkey, which has maintained diplomatic ties with Russia since the war began.

The Nord measures 141.6 meters (464.6 feet), has two helipads, a swimming pool and 20 cabins. It is operating under a Russian flag.

Beijing sets foreign policy for Hong Kong and has demurred from participating in sanctions against Russia for its attack on Ukraine.

The semi-autonomous city’s status as an international business hub and financial center has suffered in recent years after Beijing imposed a national security law on the city, “aimed primarily at stamping out dissent following months of anti-government protests in 2019,” Western observers say.

Critics say the security law, which in certain cases allows for suspects to be transferred to mainland China for trial in “its opaque legal system, could threaten Hong Kong’s rule of law.”

Following passage of the law in 2020, the United States sanctioned Lee, then Hong Kong Chief Executive Carrie Lam and other Hong Kong and mainland Chinese government officials, for “undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly.”

Lee blasted the ban on personal and official travel to the U.S. and access to the American financial system.

He was responding to a question of whether he is paid in cash, as was the case for Lam, who was also placed under U.S. sanctions that limit the ability of those designated for such penalties to transfer funds across national boundaries or convert them into different currencies.

“The second thing about the so-called sanction imposed on people in Hong Kong without justification, it is a very barbaric act, and I’m not going to comment on the effect of such barbaric act, because officials in Hong Kong do what is right to protect the interests of the country, and the interests of Hong Kong, so we will just laugh off the so-called sanctions,” Lee said. MDT/AP