Ukrainian crew member who tried to sink Russian oligarch linked yacht: ‘It was my first step for the war with Russia’

But on February 26, with the ship docked on the Spanish island of Mallorca, in the Mediterranean, all that changed.

Ostapchuk saw media reports of a Russian missile strike on an apartment building in his home city of Kyiv. It was similar to the one he lived in with his wife, when he wasn’t aboard ship.

At that point, he said, “I think, my home can be next.” That’s when he decided to sink the yacht. “It was my first step for the war with Russia.”

In an interview with CNN from Ukraine, Ostapchuk, 55, said he connected the destruction in his home city straight to the man he calls the owner of the Lady Anastasia: Russian oligarch Alexander Mikheev. He’s the chief executive of Russian weapons company Rosoboronexport, which sells everything from helicopters, to tanks, to missile systems, to submarines.

Alexander Mikheev is the director general of Rosoboroexport, a Russian supplier of weapons and military aircraft. He is among the Russian oligarchs sanctioned by the US on March 15 in relation to Russia's war on Ukraine.

His mission, Ostapchuk decided: To scuttle the Lady Anastasia.

The latest phase of Russia’s war on Ukraine had begun two days earlier, with forces attacking from Russia, Belarus and Russian-annexed Crimea. As the offensive unfolded, the US and the European Union responded with economic sanctions and the seizure of assets linked to oligarchs in Vladimir Putin’s circle.

And perhaps no assets so clearly symbolized how Putin’s enablers had thrived under his rule quite like oligarchs’ yachts, some of them nearly as long as the height of the Washington Monument, sporting helipads, swimming pools, and extravagantly opulent interiors.

Ostapchuk said he headed to the Lady Anastasia’s engine room, where he opened a valve connected to the ship’s hull. As water flooded in, he made his way to the crew quarters, where he opened another valve.

“There were three other crew members on board besides me. I announced to them that the boat was sinking, and they had to leave,” he said, in Russian.

Hide and seek

By most standards, the Lady Anastasia, with a crew of nine, is sumptuous: A master stateroom with a Carrara marble bath; cabins for 10 guests; a jacuzzi on the sun deck that’s stabilized against the ship’s movement, and so on.

Russian oligarchs own among the most lavish yachts in existence. The Dilbar, a 512-foot yacht, is owned by billionaire Alisher Usmanov, according to the Treasury Department, which on March 3 identified the Dilbar as “blocked property.” It has two helicopter pads and cabins for dozens of guests. Usmanov didn’t respond to CNN queries about the yacht.

Or take the Amore Vero, a yacht that French authorities seized March 2. They say it’s linked to Igor Sechin, a sanctioned Russian oil executive and associate of Putin. (The company that manages the vessel denies it’s owned by Sechin.) A former crew member of the yacht, who asked not to be named because he’d signed a non-disclosure agreement, said the Amore Vero includes a safe room on its lowest deck.

“It wasn’t even on the official drawings of the boat,” he said. “There was a secret door with a hidden camera. And you could pull the wall away and inside there were beds, emergency communications, a bathroom, and CCTV.”

The yacht called "Lady Anastasia" reportedly owned by Russian oligarch Alexander Mikheyev is seen at Port Adriano in the Spanish island of Mallorca, Spain March 15, 2022. REUTERS/Juan Medina

Though officials in various countries have attributed ownership of yachts to Russian oligarchs, the paper trail between ship and owner is typically obscured, running through shell companies and complicated legal structures. Spain, for example, says it has “provisionally detained” yachts while it sorts out ownership.

Mikheev was sanctioned by the US State Department on March 15.

When CNN tried to contact Mikheev about ownership of the Lady Anastasia, a spokesman for Rosoboronexport responded via email that the company “never comments any information about the personal life of employees and their property, except in cases stipulated by the legislation of the Russian Federation.”

But Ostapchuk said he had no doubts. “Why, you know, if a creature looks like a dog, barks like a dog, bites like a dog, it is a dog. Therefore, if in the course of ten years, the yacht [was] used for vacations only [by] Mr. Mikheev and his family, then I think that he is definitely the real owner of this yacht.”

Amid a growing list of sanctions and seizures, yachts that have been reported to be owned by Russian oligarchs have sped to countries where sanctions are unlikely to be enforced, according to data from the website MarineTraffic.
Two yachts reportedly owned by Roman Abramovich, an oligarch and ally of Putin who has been sanctioned by the European Union and the United Kingdom, docked at ports in southwestern Turkey on Monday and Tuesday. One of the yachts, the Solaris, had been docked in Barcelona until early March, while the Eclipse — among the largest yachts in the world — departed the Caribbean around the same time and crossed the Atlantic.
Both vessels appeared to skirt EU waters on their way to Turkey, taking a circuitous route that went around several Greek islands. Turkey, though a NATO member, has made clear that it will not sanction Russia for its aggression against Ukraine.
A small group of protesters waving Ukrainian flags and chanting “no war in Ukraine” tried to block the Solaris from docking at a port in Bodrum, Turkey on Monday, as the massive yacht loomed over them. Some of the protesters were members of a Ukrainian junior sailing team who had left their country before the invasion to compete in a sailing competition in Turkey, the BBC reported.
Several other Russian-linked yachts appear to be headed to Middle Eastern or South Asian countries that also declined to impose sanctions on Russia. The Clio, a yacht reportedly owned by Putin ally and aluminum magnate Oleg Deripaska, and the Quantum Blue, reportedly owned by retail billionaire Sergey Galitsky, were both off the coast of Oman this week, the MarineTraffic data shows. The Clio listed its destination as Dubai before changing direction to Mumbai, while the Quantum Blue had been docked in Monaco before departing in early March. Deripaska has been sanctioned by the US and UK, while Galitsky has not.

Meanwhile, at least a half-dozen other yachts tied to Russian oligarchs have stopped transmitting location data altogether in recent weeks, according to MarineTraffic.

The Galactica Super Nova, a yacht reportedly owned by Russian oil executive Vagit Alekperov, was last recorded leaving the port of Tivat, Montenegro, and sailing into the Adriatic Sea early on March 2 — the day after the Montenegrin government announced it would join the EU in imposing sanctions on Russia. While Alekperov has not been sanctioned, he was included on a 2018 US Treasury Department list of Russian oligarchs.
Georgios Hatzimanolis, a spokesperson for MarineTraffic, said the likeliest explanation for the lack of location data is that the yachts have switched off AIS, an automatic tracking system. International maritime regulations generally require vessels as big as the oligarch-linked yachts to keep AIS on unless they are going through areas known for piracy, Hatzimanolis said. Turning off a transmitter could potentially increase the danger of a collision when vessels are traveling through busy waters.

“It is unusual,” Hatzimanolis said of the yachts going dark. “But these are unprecedented times for these yachts and their owners. They’re trying to keep out of the way and get to destinations where they won’t be sanctioned.”

‘You have to choose’

After he began flooding the compartments, Ostapchuk told the other three crew members on board what he’d done.

They, too, were Ukrainian, he said. But, fearful he’d just cost them their jobs, they yelled at him that he was crazy, according to a summary statement at his arraignment.

Then they called the port authorities and the police. Port workers brought a water pump and prevented the boat from sinking. Ostapchuk was arrested.

“I made a statement to the police that I tried to sink the boat as a political protest of Russian aggression,” he told CNN.

“You have to choose. Either you are with Ukraine or not. You have to choose, will there be a Ukraine, or will you have a job… I don’t need a job if I don’t have Ukraine.”

Before he tried to sink the Lady Anastasia as a protest against Russia's war on Ukraine, Taras Ostapchuk served as the yacht's chief engineer for a decade. This 2013 photo was taken in Corsica, in the Mediterranean.

In some cases, those jobs may be in jeopardy anyway. On March 15, Spanish authorities provisionally detained the Lady Anastasia while they determine whether it falls under European sanctions and can be seized. It was one of three yachts linked to Russian oligarchs they detained that week. Others have been seized or detained in France, Germany, Italy and Gibraltar.

On March 7, the company managing the yacht Dilbar laid off all 96 crew members, saying that sanctions prevented normal operations of the ship, according to Forbes.

Sanctions on Russian oligarchs seem to have sparked challenges and confusion among some yacht crews. The seafarers union Nautilus International held a question-and-answer session with yacht professionals earlier this month and received questions such as, “Should we be resigning from all Russian yachts?” and “What am I owed if I’m dismissed/laid off due to sanctions on my vessel?” Union representatives counseled members to check the terms of their contracts.

‘They should be held responsible’

When CNN spoke with Ostapchuk from Ukraine on Wednesday, the conversation was immediately interrupted by an alert of an incoming Russian attack. Later, after Ostapchuk returned from a shelter, he said that as soon as Spanish authorities had released him on February 27 he’d gone back to Ukraine.

“Now I serve in the army, and I hope that my service will bring our victory closer,” he said.

He added that he hopes the oligarchs who backed Putin will feel the bite of sanctions.

“They should be held responsible, because it is they who, with their behavior, with their lifestyle, with their unquenchable greed, they precisely led to this … In order to distract the people from the real plunder of Russia by these rulers, that arrange diversionary wars with other countries, that are innocent.”

CNN’s Drew Griffin and Yahya Abou-Ghazala contributed to this report.

Anti-sanction measure: Russia moves to seize hundreds of planes from US and European owners

President Vladimir Putin signed a law Monday as part of the government’s anti-sanction measures that will allow Russian airlines to register planes leased from foreign companies in Russia, where they will be issued local certificates of airworthiness, according to a statement from the Kremlin.

The bill will make it possible for Russian airlines to keep their foreign leased aircraft and operate the planes on domestic routes, while making it harder for foreign companies to reclaim their jets without Russian government approval.

US and European sanctions imposed on Russia require leasing companies to repossess all planes they leased to Russian airlines by the end of the month.
Western aircraft makers such as Airbus (EADSF) and Boeing (BA) have already cut off Russian airlines’ access to the spare parts they need to maintain and safely fly their jets. Russian airlines operate 305 Airbus jets and 332 Boeing jets, according to data provided by aviation analytics firm Cirium.

Russia also has 83 regional jets made by Western manufacturers such as Bombardier, Embraer and ATR. Only 144 planes in the active fleets of Russian airlines were built in Russia.

Cirium data shows that 85% of those foreign-made planes are owned by leasing companies, and puts their combined value at $12.4 billion.

It was unclear how the leasing companies could have taken possession of these planes while they remain on Russian soil. Additional sanctions prohibiting Russian aircraft from flying to most other countries has restricted its airline industry essentially to domestic flights.

Leasing companies have not responded to a request for comment on Russia’s actions, and it is unclear if they’ll even want those planes back. The planes will not have access to replacement parts and won’t have valid airworthiness certificates that would be accepted by western airlines.

“These jets won’t be supported with parts and maintenance any longer,” said Richard Aboulafia, managing director of AeroDynamic Advisory. “It’s a real issue if they lose their certificates of airworthiness, which can happen if proper records aren’t kept, or especially if they’re cannibalized for parts.”

Losing access to 85% of its foreign-built planes would be a crippling blow to the country’s economy.

Russia is the world’s largest nation by landmass, more than twice the size of the continental United States. It needs a viable airline industry to keep its economy working, said Charles Lichfield, the deputy director of the GeoEconomics Center at the Atlantic Council, an international think tank.

“It is an important part of Russia’s economy,” he said. “They want some basic domestic industry to remain in place. Russians don’t fly as much as Americans do. They don’t fly to Siberia for vacation.”

Its airline industry is a crucial link for businesses, not only for international flights but also for domestic service for its energy sector, due to the need to transport engineers, other workers and equipment to and from its far flung oil fields.

“Aviation is an incredible enabler of economic growth, both domestically and internationally,” said Robert Mann, an airline consultant and analyst. “Without it, you take it back to an almost agrarian economy, trying to operate with a railroad network.”

Russia doesn’t need all the planes it is seizing, as the blow to its economy from the sanctions will greatly reduce the need for air travel, said Betsy Snyder, credit analyst covering aircraft leasing companies at Standard & Poor’s.

“The Russian economy is tanking,” she said. “No one will be going in and out of Russia, the Russian citizens are losing their money so they don’t have the money to travel going forward. It could be that [airlines] will be a much smaller business.”

That raises the possibility that many of the planes being seized would be cannibalized for parts.

“If you don’t have parts manufacturing authority, then you shouldn’t be making it yourself,” Mann said. “You don’t know what standards were used. Have you gotten the internal characteristic right? When you put it into a turbine section of an engine, will it perform like it was designed?”

Flying on Russian planes is about to get much more dangerous

Mann said that when a part reaches the end of its designed usefulness, known as “green time,” an airline must choose between flying with parts that should have been replaced for safety reasons or robbing parts from other planes.

“You can go through that process as long as you have planes that have green time,” he said. ” As you run out of airplanes, your network gets smaller and you can fly fewer hours every day, until you don’t have an airline.”

So even keeping the planes won’t necessarily keep the Russian airline industry operating.”Within a year Russia will cease to have any kind of viable airline industry,” Aboulafia said, adding that the its airline industry could soon find itself somewhere between the heavily sanctioned industries in Iran and North Korea.

Can a country as large as Russia live without a modern, viable airline industry? “That’s a thesis that has never been put to the test,” Aboulafia said. “But it’s about to be.”

Russia owes Western banks $120 billion. They won’t get it back

The Wall Street giant said Thursday that it is “winding down its business in Russia in compliance with regulatory and licensing requirements,” a Goldman Sachs spokesperson said.

The departure follows a scramble by Western banks to tally their exposure to Russia after President Vladimir Putin ordered the invasion of Ukraine, triggering punishing sanctions that cover most of the country’s financial system, including its central bank and top commercial lenders — VTB and Sberbank.

It also comes after a stampede of Western businesses out of just about every other sector of Russia’s economy, and as ratings agencies warn that a Russian debt default is imminent.

International banks are owed more than $121 billion by Russian entities, according to the Bank for International Settlements, which suspended Russia’s membership on Thursday. European banks have over $84 billion total claims, with France, Italy and Austria the most exposed, and US banks owed $14.7 billion.

Goldman Sachs (GS) earlier disclosed that it had credit exposure to Russia of $650 million in December 2021.

Other banks with more to lose could soon follow Goldman Sachs out of Russia. Kremlin spokesperson Dmitry Peskov said Thursday that the economic situation in Russia is “absolutely unprecedented” and blamed the West for an “economic war.” Moscow has pledged to retaliate for the sanctions, and some banks have suggested that their assets could be seized or nationalized by the Kremlin.

Fitch Ratings warned previously that “large western European banks’ asset quality will be pressured by the fallout from Russia’s invasion of Ukraine,” and that their operations also face increased risk as they race to comply with international sanctions.

French bank Societe Generale (SCGLF) said last week it is “rigorously complying with all applicable laws and regulations and is diligently implementing the measures necessary to strictly enforce international sanctions as soon as they are made public.”

The bank said it had almost $21 billion in exposure to Russia at the end of last year.

Societe Generale “has more than enough buffer to absorb the consequences of a potential extreme scenario, in which the group would be stripped of property rights to its banking assets in Russia,” it said.

France’s BNP Paribas (BNPQF) said on Wednesday that its exposure to both Russia and Ukraine totals €3 billion ($3.3 billion).
Italy’s UniCredit (UNCFF), which has been operating in Russia since 1989, said last week that its Russian arm was “very liquid and self-funded,” and that the franchise accounts for just 3% of the bank’s revenue. On Tuesday, it said that its exposure to Russia totals roughly €7.4 billion ($8.1 billion).
Credit Suisse (CS) said Thursday that it has exposure to Russia of 1 billion Swiss francs ($1.1 billion).
Deutsche Bank (DB) said in a statement on Wednesday that it has “limited” exposure to Russia, with gross loan exposure of €1.4 billion ($1.5 billion). The German lender said it has significantly reduced its exposure to Russia since 2014, with further action taken over the past two weeks.
US banks could feel pain, too. Citigroup (C) disclosed last week that it had roughly $10 billion in total exposure to Russia.

Mark Mason, the bank’s chief financial officer, told investors that the bank has been performing tests to evaluate the consequences “under different stress type of scenarios.” He said the bank could lose roughly half its exposure in a “severe” scenario.

Citi said Wednesday that it would stick to its plan of exiting its consumer banking business — but it might be very hard to find a buyer given the political and economic climate.

“As we work toward that exit, we are operating that business on a more limited basis given current circumstances and obligations,” it said in a statement. “With the Russian economy in the process of being disconnected from the global financial system as a consequence of the invasion, we continue to assess our operations in the country,” it added.

The European Central Bank addressed the risk to the banking sector on Thursday, saying that Europe’s financial system has enough liquidity and there were limited signs of stress.

“Russia is important in terms of energy markets, in terms of commodity prices, but in terms of the exposure of the financial sector, of the European financial sector, Russia is not very relevant.” said Luis de Guindos, vice president of the central bank.

“The strains and the tensions that we have seen are not comparable at all to what happened at the beginning of the pandemic,” he added.

Asia markets sink as tensions between Ukraine and Russia climb

Japan’s benchmark Nikkei 225 (N225) fell 1.9%, and Korea’s Kospi (KOSPI) lost 1.4%. China’s Shanghai Composite (SHCOMP) and Australia’s S&P/ASX 200 were both down more than 1%.
Hong Kong’s Hang Seng Index (HSI) fell 3.2%, poised to post the biggest daily loss in five months.
The plunge in Asia was preceded by a similar drop for US stock futures earlier on Monday evening local time. Dow (INDU) futures were down 458 points, or 1.4%. S&P 500 futures were down about 2.3%, while Nasdaq futures were down 3.3%.

“It feels like the situation can dramatically escalate at any moment and that’s going to keep investors on edge for now,” wrote Craig Erlam, senior market analyst at Oanda, in a research note on Tuesday. “We may well be on the brink of something terrible happening and that’s continuing to feed into the negativity in the markets,” he added.

Chinese Tech Stocks hammered

Worries about a renewed tech crackdown by Beijing have also dealt a blow to some of the biggest Chinese companies in the sector.

The Hang Seng Tech Index, which tracks 30 largest tech companies listed in the city, lost 3% on Tuesday, on track to drop for a third day in a row.

On Friday, Chinese authorities released new rules ordering food delivery platforms to cut service fees they charge businesses.

Online food delivery platform Meituan fell 6% on Tuesday. The stock has plunged 23% since Friday.

Social media and gaming giant Tencent fell nearly 2%. The firm also holds a major stake in Meituan.

Alibaba Group (BABA), which owns food-delivery platform Ele.me, dropped 3.9%.

Oil surges

On the oil front, the uncertainty about Ukraine was further reflected by a spike in futures. US crude futures jumped 3.1% to trade at $93.86 per barrel. Brent crude rose 1.5% to $96.78 per barrel.

A summit between US President Biden and Russian President Vladimir Putin is unlikely, a senior administration official told reporters, following intelligence and indications on the ground that Russia is likely to take military action in neighboring Ukraine.
Markets were closed in the United States on Monday due to the Presidents Day holiday. Last Friday, the Dow closed down nearly 233 points, or 0.7%. The S&P 500 and Nasdaq Composite ended the day with losses of 0.7% and 1.2%, respectively. All three indexes finished last week in the red for the second straight week.