Art Scandal Indicative of Fraud in Global Art Market. A case involving the misrepresentation of the price of art pieces may be indicative of fraud in the global art market. CNBC reports that Swiss businessman and art dealer Yves Bouvier was arrested in Monaco last month in connection with a fraud investigation. Bouvier owns a large art-shipping company and operates freeports, large storage centers containing billions of dollars worth of art, in Switzerland, Luxembourg and Singapore. He is accused of inflating the prices of pieces by millions of dollars.
According to CNBC, Russion billionaire Dmitry Rybolovlev claims that Bouvier overcharged him by millions. Forbes reports that one of the pieces was an Amadeo Modigliani. Bouvier bought the piece from hedge-fund billionaire for $93.5 million, according to Cohen’s art adviser Sandy Heller. However, Rybolovlev bought it from Bouvier for $118 million, an inflation of over $20 million, including fees. Works by Leonardo da Vinci, Pablo Picasso and Paul Gauguin are also said to be involved.
Case Might Affect Galleries And Billionaire
The case might ultimately affect top galleries and billionaire collectors in New York, London and Hong Kong, CNBC reports. In addition to inflated pricing, it may also reveal tax fraud, global money laundering and potential bribery.
The rich use freeports to store items in duty-free zones; the maximum-security storage sites are frequently located near airports. When art is transported into freeports, there is no customs duty payable. Sales taxes are also not required for a sales transaction inside, which could total millions for major pieces. In recent years, regulators have become increasingly critical of freeports for their secrecy and tax benefits, CNBC reports. Bouvier, however, has always insisted that they are not used for tax evasion or money-laundering. He said in an interview with Spears magazine earlier this year that the storage areas are a convenience for major art collectors, “Collectors have a problem: they buy too much,” he said to Spears. “They are addicts. They have space at home for one and they buy 10.”
According to CNBC, many art dealers are hoping that the case will shed more light on the art market, which is unregulated and opaque. “Collectors have no way of knowing what pieces are really being bought or sold for,” one collector said, according to CNBC. “Maybe this case will break that open.”
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