Arrival of Russian superyacht pits Hong Kong against US

HONG KONG

Hong Kong’s leader John Lee said Tuesday 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 Tuesday 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 Monday 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.”

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.

Russian oligarchs have begun docking their yachts at ports in places like Türkiye, 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. The yacht is currently sailing under a Russian flag.

Britain handed control over its colony Hong Kong to China in 1997, promising to respect its semi-autonomous status as a separate economic and customs territory. The semi-autonomous city’s status as an international business hub and financial center has suffered in recent years after Beijing imposed a tough national security law on the city, aimed primarily at stamping out dissent following months of antigovernment protests in 2019.

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.

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

The State Department spokesperson said U.S. companies “increasingly view Hong Kong’s business environment with wariness” amid Beijing’s undermining of Hong Kong’s high degree of autonomy and its freedoms.