German resort town’s disagreement over Russian oligarch resonates nationwide

It reflects Germany’s ambivalence to becoming a sanctuary for wealth in a culture that cherishes privacy but which critics say has allowed the mega-rich to accumulate assets in secrecy.

And while Britain, France, Italy and Spain have seized yachts and other property since Russia’s invasion of Ukraine and subsequent imposition of sanctions against influential Russians, Germany seems to have remained idly by.

“For years Germany has been attracting dirty money from all over the world. For too long we have not looked closely enough, and now we are suffering the consequences,” said Lisa Paus, a member of parliament German.

A government task force to enforce the sanctions has just started.

Germany’s rocky relationship with the oligarchs has shone an uncomfortable spotlight on the Bavarian lakeside community around Tegernsee, where residents and officials say at least three homes belong to the German-born businessman Uzbekistan Alisher Usmanov.

Usmanov, who has interests in mining and telecommunications and a net worth Britain estimates at more than $18 billion, has been described by the European Union as a “pro-Kremlin oligarch with particularly close ties with Russian President Vladimir Putin” when he imposed sanctions on him.

His holding company USM, whose website describes Usmanov as an entrepreneur, investor and “one of the most generous philanthropists in the world,” did not respond to requests for comment. Two other companies he owns did not respond.

Thomas Tomaschek, a council member from Rottach-Egern at the southern tip of Tegernsee, called for a protest this month to say Usmanov was no longer welcome, even though restaurants, carpenters and hoteliers had taken advantage of his presence.

The event drew 300 people, representing prominent members of all parties in a town of 5,000, but also a backlash.

Tomaschek says he received an email saying “shame on you” for protesting “against a Russian who clearly lives as a private individual in Rottach-Egern”. Another wrote: “Should someone who shook hands with Putin be deprived of assets in Germany?”

A caller shouted “Nazi pig” into the phone, prompting him to press charges and pull an ax for chopping wood from his door in case someone violent appeared. Local police confirmed they were investigating.

Chart: Germany fights ties with oligarchs:

‘SAFE HAVEN’

Angry grassroots activists are now drawing attention to Germany’s impotence when it comes to seizing assets.

Mathis Lohaus, a researcher at the Freie Universitaet Berlin who focuses on corruption, is outraged that no one seized a superyacht that the United States says belongs to Usmanov and was docked in the port of Hamburg.

Lohaus said he took to Twitter to express his frustration when Germany failed to seize the ship, which has an indoor swimming pool, two helipads and is valued at more than $600 million.

“The whole story of Germany over the past few years has been one of half-hearted enforcement,” Lohaus said.

There was no confiscation of the yacht, a spokesman for Hamburg’s economics ministry said last week.

Meanwhile, a leading financial crime campaign group recently launched a petition to German Finance Minister Christian Lindner demanding action.

“Germany offers them all a safe haven for their dirty money. This must stop now!” reads the Finanzwende petition. The finance ministry said in an email response to Reuters that it was working on crackdowns.

Chart: Suspicious Transactions:

Part of Germany’s problem with enforcement has been bureaucracy, with responsibility split between ministries.

In an effort to address the issue, Germany said last week it was forming a task force to oversee the implementation of sanctions in its finance, economy and interior ministries, as well as customs and police.

There are also cultural and historical factors at play.

Hartmut Baeumer, a former judge and now president of Transparency International Germany, said Germans are risk averse when it comes to dealing with legal issues, while belief in strong protection of human rights individual is profound.

“We Germans continue to overcome the consequences of the Nazi era. The pendulum has swung very far in the direction of privacy and individual freedoms,” Baeumer said.

‘A PLACE OF BILLIONAIRES’

German and international elites have long sought refuge in the hills around Tegernsee, which lie between Munich and the Alps, and Rottach-Egern bills itself as Europe’s premier beauty farm and “first-class, stylish” hotels .

Last week, the average house price in Rottach-Egern on a popular property portal was over 4 million euros, while the average taxpayer in the surrounding county pays 66% more income tax than those in the rest of Germany.

“Tegernsee is a place for billionaires,” a prominent local businessman said on condition of anonymity.

Gerhard Hofmann, city manager of Rottach-Egern, said he had never witnessed such an uproar in his hometown.

Usmanov “just wanted to have peace,” Hofmann said, adding that the oligarch helped the local economy by employing local architects and businesses.

“As a city, we are neutral,” he added.

(Reporting by Tom Sims; Editing by Alexander Smith)

By Tom Sims

James R. Rhodes