Gibraltar auctioned a $75-million superyacht linked to a Russian steel billionaire under sanctions on Tuesday.
US bank JP Morgan said The Axiom's alleged owner Dmitry Pumpyansky had reneged on the terms of a €20.5m ($20.4m) loan, leading authorities in Gibraltar to impound the luxury yacht in March.
The Gibraltar Admiralty Court auctioned the 72.5-metre vessel through a system of closed bids that were supposed to be sent electronically by noon on Tuesday, a court spokesman said.
The court added that 63 bids had been submitted for consideration, with the selection process expected to take 10 to 14 days.
There was an “unexpected late surge by prospective buyers” around the world for the vessel, Nigel Hollyer, broker to the Admiralty Marshal of the Supreme Court of Gibraltar, who led the auction, told The Guardian newspaper last week.
The boat can accommodate 12 people in six cabins and has a swimming pool, a spa, 3D cinema and water sports equipment.
According to court papers reviewed by Reuters, JP Morgan lent €20.5m to British Virgin Islands-listed Pyrene Investments, which was owned by Furdberg Holding Ltd.
Furdberg's owner was Mr Pumpyansky, 58, who acted as guarantor for the loan.
The papers said Pyrene Investments defaulted on the loan terms after Mr Pumpyansky transferred his shares in Furdberg to a third party on March 4 and was then hit with sanctions, blocking the repayment of the loan.
Superyachts owned by Russian oligarchs — in pictures
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Two superyachts linked to Russian billionaire Roman Abramovich were spotted on the Turkish coast on Tuesday, 'Eclipse' and 'My Solaris'. Mr Abramovich is among several wealthy Russians added to an EU blacklist as governments act to seize their yachts and other luxury assets. AP -
'My Solaris', a superyacht linked to sanctioned Russian oligarch Roman Abramovich, is pictured in Bodrum, south-west Turkey. Reuters -
A 68-metre luxury yacht called 'Ragnar', owned by a former KGB officer Vladimir Strzhalkovsky, is pictured at the quay in Narvik, north Norway. AFP -
The 'Axioma' superyacht belonging to Russian oligarch Dmitrievich Pumpyansky at a port in Gibraltar. Reuters -
'Crescent', which is believed to belong to Russian oligarch Igor Sechin, is seen docked at Marina Port Tarraco in Tarragona, Spain. Reuters -
The yacht 'Tango', owned by Russian billionaire Viktor Vekselberg, at Palma de Mallorca Yacht Club on the Spanish island of Mallorca. Reuters -
The 48m long, St Vincent and the Grenadines-flagged yacht 'Lady Anastasia', owned by Alexander Mijeev, moored at a dock in Mallorca. AFP -
Superyacht 'Valerie', linked to chief of Russian state aerospace and defence conglomerate Rostec Sergei Chemezov, at Barcelona Port in Spain. Reuters -
The 142.81m sail-assisted motor yacht 'Sailing Yacht A', owned by Russian tycoon Andrey Melnichenko, in front of Monaco harbour. Reuters -
'Dilbar', a luxury yacht owned by Russian billionaire Alisher Usmanov, sails in the Bosphorus in Istanbul, Turkey. Reuters -
'La Datcha', owned by Russian businessman Oleg Tinkov, docked at the port in Ensenada, Mexico. Reuters -
'Lady M', owned by Russian oligarch Alexei Mordashov, docked at Imperia's harbour. AFP -
Superyatch 'Amore Vero,' which French authorities have said is linked to Rosneft's CEO Igor Sechin, is seen at La Ciotat Port near Marseille in France. Reuters -
'Quantum Blue', Russian billionaire Sergei Galitsky's yacht, docked in the port of Monaco. AFP -
The world's largest expedition yacht, 'Luna', owned by Roman Abramovich, at the port of Sibenik in Croatia. Shutterstock -
The luxury 68m superyacht 'Triple Seven,' owned by Alexander Abramov, on the River Thames in London. EPA
The Russian magnate, who has an estimated fortune of $2 billion according to Forbes magazine, was placed under sanctions by Britain and the EU shortly after the invasion of Ukraine.
Mr Pumpyansky was until March the owner and chairman of steel pipe manufacturer OAO TMK, a supplier to Russian energy company Gazprom. The company said he had since withdrawn from the business.
The Axioma is the first seized luxury yacht known to be auctioned since the West imposed sanctions on powerful Russians after the February invasion of Ukraine.
Oligarchs and UK sanctions — in pictures
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The UK has sanctioned more than 1,400 individuals and businesses, including 100 oligarchs and their relatives, since Russia invaded Ukraine in February. The list of oligarchs includes: Roman Abramovich, 55. PA -
Katerina Tikhonova, left, and Maria Vorontsova, unseen, also known as Maria Putina, daughters of Russia President Vladimir Putin. Reuters -
Oleg Deripaska, 54. The industrialist is worth £2 billion and has had close links with the British political establishment. He has a multimillion pound property portfolio in the UK. Reuters -
Igor Sechin, 61. Officials described Mr Sechin as Mr Putin's right-hand man and the second most important person in the country. Reuters -
Andrey Kostin, 65. The chairman of VTB, a Russian state-owned bank. Mr Kostin is also a member of the supreme council of the United Russia political party and deemed a close associate of Mr Putin. AP Photo -
Alexei Miller, 60. The chief executive of energy company Gazprom, Russia's largest company and the world's biggest public energy supplier. AFP -
Nikolai Tokarev, 71, president of the Russia state-owned pipeline company Transneft. Mr Tokarev is a former KGB officer who served with Mr Putin in East Germany towards the end of the Cold War. AP Photo -
Kirill Shamalov, 39. He is Russia's youngest billionaire and the ex-husband of Mr Putin's daughter Katerina Tikhonova. Reuters -
Pyotr Fradkov, 43. He is head of the sanctioned Promsvyazbank, which finances Russian defence industries, and the son of Mikhail Fradkov, a former prime minister of Russia and chief of its foreign intelligence service. Reuters -
Denis Bortnikov, 47. The deputy president of government-affiliated VTB bank. His father, Alexander Bortnikov, is head of the Federal Security Service. Getty Images -
Yury Slyusar, 47. The director of United Aircraft Corporation, one of the major defence organisations that has also been sanctioned. Getty Images
Sources close to the process told Reuters that JP Morgan would only claim the €20.5m owed and that any further proceeds from the sale would be up to the court to disburse.
Scores of yachts and houses linked to Russian oligarchs have been seized by governments around the world since the invasion.
British and American authorities have said they would seek to send the proceeds of sold assets to Ukraine.
A Gibraltar government source said the money would probably be frozen, rather than handed to anyone other than the oligarch.
A spokesman for JP Morgan declined to comment.
Two luxury yachts owned by Russian oligarch seized in France — video
James Jaffa, a lawyer for British firm Jaffa & Co, which specialises in yachts and represented The Axioma before it was seized, said the vessel could sell for “way below” €20m.
After the auction, the ship broker, crew wages, the shipyard and maintenance would need to be paid before the bank, he said.
A successful sale would, nonetheless, be a “benchmark” for other banks looking to recoup losses by auctioning the repossessed property and other assets of sanctioned oligarchs.
“Axioma will be a watershed moment for assets that have bank financing against them because all the other banks will realise that the asset can be sold and that they can get some or all of their money back,” he said.
However, he said assets without financial claims against them, which were seized by governments because of sanctions alone, would be harder to sell.
