Orange Soda in Fiji: Global Asset Tracing

Attempts to chase assets of Russian oligarchs following the Russian invasion of Ukraine have brought newfound attention to the byzantine ways in which malefactors can hide their beneficial ownership of assets, whether they be luxury properties in London, superyachts in Fiji, or even paramilitary groups operating in conflict zones. As demonstrated by leaks such as the Panama and Pandora papers, powerful people have and will continue to use sophisticated — and sometimes legal — schemes involving Matryoshka doll-like networks of shell companies and proxies to shield their wealth and activities from public scrutiny. And with the rise of blockchain, these same people can turn to cryptocurrency wallets instead of brick-and-mortar financial institutions when transferring assets from jurisdiction to jurisdiction.

Finding ways to peer through this haze is essential, not only for those seeking to hunt down ill-gotten gains, but also for banks and other institutions seeking to avoid sanctions and reputational risk. Even global law firms can become enmeshed in controversy when risk controls misfire. As investigators who are routinely called upon to conduct such beneficial ownership investigations and trace misappropriated assets, we know these investigations are more an art than a science. They require creativity and thoughtfulness. They do not follow straight paths. And they require that the tools and techniques used by the asset-searchers keep up with the complexity of the schemes used by the asset-concealers.

Two recent stories serve as master classes in the challenges of piercing opaque ownership structures. In June, FBI agents seized the Amadea, an almost 350-foot-long superyacht valued at over $300 million, which was moored in Fiji after fleeing the Caribbean. And in April, Spanish authorities seized the 250-foot-long superyacht Tango, valued at over $90 million, which was moored for repairs on the Spanish island Palma de Mallorca. Each is allegedly owned by a sanctioned Russian billionaire — Viktor Vekselberg in the case of the Tango and Suleiman Kerimov with the Amadea. On paper, however, the Tango was owned by a British Virgin Islands corporation. The Amadea could be traced to another, unsanctioned Russian billionaire, Eduard Khudainatov, who also allegedly serves as the straw owner of a third superyacht, the Scheherazade, which has been linked to Vladimir Putin.

Piecing together the story of the actual alleged ownership of the Tango and the Amadea required a range of investigative techniques: retrieval of public records from corporate registries in a range of countries, which allowed investigators to sort through a series of nested shell companies and intermediary owners; reviews of email and text messages from individuals involved in the maintenance and operation of the vessels; and interviews of crew members, yacht brokers, and other knowledgeable parties. The facts that emerged were, at times, comical. Those seeking to obscure the ownership of the Tango apparently couldn’t come up with a more creative codename than Fanta, trading one orange soda brand, popular in the UK, for another. Right before the Amadea was set to sail from Fiji, a crew member allegedly sent the text message, “We’re not going to Russia .” Other evidence was more explicit. An employee associated with the Tango reportedly sent emails discussing how to evade sanctions and accidently included a chart showing the holdings of one of the shell companies connecting the vessel to Vekselberg. Multiple crew members of the Amadea reportedly identified Kerimov as the true owner of the superyacht and described his family’s repeated use of the vessel.

In some ways, the quickly evolving world of open source intelligence and digitized information is making it harder to hide big, noticeable assets like superyachts. Careful analysis of geolocation information from social media posts and even public webcams in overseas ports can pin down patterns of movement. Online communities of airplane and yacht enthusiasts blog about the whereabouts of high-interest vessels. Ship movements are tracked on websites that map data from electronic transponders on vessels at sea, at least until ship owners turn them off. And away from the maritime realm, even seemingly anonymous cryptocurrency transactions can sometimes be traced.

When seen through to their conclusion, asset tracing and beneficial ownership investigations can lead to critical insights that can assist in the recovery of hundreds of millions of dollars or reveal associations that would otherwise remain hidden. They can right wrongs and avoid, or inspire, embarrassing front page stories. But those seeking to hide their wealth are ever resourceful and obfuscation techniques continually evolve. Organizations seeking answers, and the investigative firms they rely on, need to be equally tenacious and inventive. Not all assets leave wakes as big as a superyacht, but they all leave some trace if you look in the right spots.