Wednesday, February 8, 2017

Big Money: What Geneva’s Art King Lost in Battle with Russian Billionaire

From Bloomberg, Feb. 7:
  • Spat with billionaire Rybolovlev runs from Monaco to Singapore
  • Battle has forced Bouvier to suspend Shanghai free port
As he described the two-year legal battle with the man who had been his best client, art dealer Yves Bouvier contemplated the damage that has left him down by nearly $1 billion.

“When something like this happens in your life, your outlook on life and on people changes, as do your priorities,” Bouvier said in an interview. “As to the future, I don’t know what I’m going to do.”

Bouvier, a minority shareholder in the Geneva Free Ports, created a network of tax-free art storage warehouses in Singapore and Luxembourg while discreetly acquiring dozens of works by Pablo Picasso, Claude Monet and Amedeo Modigliani to sell to Russian billionaire Dmitry Rybolovlev. Then, in February 2015, he was arrested on fraud charges by a team of eight Monaco police officers outside a seafront mansion owned by the Russian.

The fight between the two men has spurred a debate across the art world about whether Bouvier acted illegally or simply benefited from the lack of transparency in the art market, allowing him to generate enormous profits from his deals with the Russian. In the roughly $60-billion-a-year business of fine art, a central question has become what duty, if any, middlemen have toward collectors or sellers.

Rybolovlev, who made his fortune when he sold two Russian fertilizer producers in 2010 and 2011 for almost $7.5 billion, says Bouvier overcharged him by about $1 billion for a series of paintings that now make up one of the world’s great 20th century collections. Rybolovlev contends that Bouvier had a fiduciary duty to act in his clients’ interest, but instead misrepresented the prices at which he was able to secure paintings. That amounted to hidden markups of tens of millions of dollars on several canvases, Rybolovlev says.

Lost Revenue
Bouvier says there was no broker-client relationship between the two men and that Rybolovlev was merely a good repeat customer who willingly paid top dollar. Bouvier says that as a result of the hit to his reputation he’s foregone “many hundreds of millions of dollars” in revenue from art deals in each of the past two years as his networks dried up, leaving him with "insignificant" revenue from dealing art.

“Today, I can no longer discreetly buy a painting,” said Bouvier, 53, dressed in jeans and a blue-and-gray merino wool hoodie, after tucking into a lunch of leeks, steak tenderloin and fries at Geneva’s Hotel Kempinski. “Before, if I wanted to buy a canvas, people dealt with me normally. Now, after what’s happened, they’re twice as difficult to negotiate with or they don’t even want to negotiate with me because they’re afraid.”

In Monaco, the criminal probe is entering its third year and is now under a new investigating magistrate. Ron Soffer, his Paris lawyer, said in a separate exchange that he’s confident Monaco will decide not to formally charge Bouvier and close the case.

Rybolovlev also sued the dealer in a civil action in Singapore, where Bouvier is a resident, initially resulting a freeze of as much as $500 million of Bouvier’s assets in March 2015. That injunction was reversed five months later by the Singapore Court of Appeal. Judges there are set to deliberate at the end of this month on whether Singapore is the appropriate jurisdiction for the case....MORE
Nov. 2016
Big Money: "What Did Sotheby’s Know And When Did They Know It"
Dirty deeds, not dirt cheap.
It's pretty well established that the punishment for an agent's breach of the duty of loyalty to his principal is death.
At least in Russia at any rate

From Art Market Monitor:
Perhaps you’ve heard of this lawsuit where the dealers who bought a $10,000 painting and sold it for $80m are upset that the buyer was representing another buyer who sold it for almost $50m more?...
July 2016
Big Money: "An Auction House Learns the Art of Shadow Banking"
Nov. 2015
Art (and money laundering): Swiss Government's Tough New Controls On Freeports Effective January 1
Nov. 2015 
Art: War Between the 'Freeport King' and the Oligarch and How Dmitry Rybolovlev Made a Quick $300 Million
Sept. 2015 
"Oligarchs and Orchestras: Inside Luxembourg’s Secretive Low-Tax ‘Fortress of Art’ Warehouse"
June 2008 
The Power of Potash: Russian Billionaire Part of Record Deal For Trump Mansion