Tag Archives: art collecting

The Art-World Insider Who Went Too Far – The New Yorker

Yves Bouvier made hundreds of millions of dollars selling paintings. Was it fraud?

Source: The Art-World Insider Who Went Too Far – The New Yorker

The Geneva Freeport, which may be the world’s most valuable storage facility, consists of seven beige warehouses and a large grain silo in La Praille, an industrial zone a short tram ride from the city’s lakeside panorama of banks and expensive hotels. One recent morning, rain was falling on the chain-link fence that runs through the property, and snow was visible on the mountains to the south. Iris scanners, magnetic locks, and a security system known as Cerberus guard the freeport’s storerooms, whose contents are said to be insured for a hundred billion dollars, but the facility retains a blue-collar feel. There were signs to the showers. Men stood around in aprons and smoked. Everything about the place tells you to look the other way.

The freeport began, in 1888, as a group of sheds near the waterfront. It was one of countless similar spaces around the world, where customs authorities allow duties and taxes to be suspended until goods reach their final destination. In time, however, the Geneva Freeport became legendary. It grew very large, and its official status—the freeport is eighty-six per cent owned by the local government—and kinship with the opaque traditions of Swiss banking made it a storage facility for the international élite. Under the freeport’s rules, objects could remain in untaxed limbo, in theory, forever. Treasures came and they did not leave. A generation ago, these goods were cars, wine, and gold. More recently, they have been works of art.

Yves Bouvier was among the first to see the potential of the freeport as an adjunct to the art market. A blond, compact man of fifty-two, Bouvier is the owner of Natural Le Coultre, a moving and storage company and the largest tenant in the complex. For more than a hundred years, the firm shipped everything from citrus fruit to industrial machinery; during the First World War, Natural Le Coultre supplied prisoners of war with Red Cross food parcels. Since 1997, however, when Bouvier took over the firm from his father, it has handled only paintings and sculpture. Bouvier refurbished the company’s premises at the freeport, which include two showrooms, and encouraged a framer to open a workshop in the building. Since 2013, Natural Le Coultre has rented more than twenty thousand square metres in storage space and has had well over a million objects in its care.

Every item passes through a single packing room, where it is unwrapped, photographed, and studied for damage. On the morning I visited, a Bob Dylan painting had arrived, along with a Picasso bronze from Greece. There were hammers hanging in order of size, and a stack of crates containing works by Léon Pourtau, a minor Impressionist. Ramon Casais, who has worked in the freeport for the past thirty years, agreed to show me a corridor of locked storeroom doors only after he had gone ahead to make sure there was absolutely nothing to see.

Specialist logistics companies, like Natural Le Coultre, are the quiet butlers of the art world. They operate deep inside it but are not quite of it. When an artist has made a sculpture out of butter, or scalpels, or half a passenger jet, it is up to a shipper to get it from Hong Kong to Miami in the same condition as when it left, and to make no fuss. To do their work, shippers must know many things. They are given records of private sales and the names of collectors, in order to navigate customs. In the course of a typical day, stopping by the homes of dealers and the back rooms of galleries, they learn who answers the door and the phone number of the assistant, and see the other pictures on the walls. The shippers’ professional indifference means that they are often in the room at moments of extreme commercial sensitivity. “Imagine that I am in Basel and I need to show a client a painting,” Thomas Seydoux, a dealer and a former chairman of Impressionist and modern art at Christie’s, told me. “Ninety-nine per cent of the time, you are going to show it with a transit agent.”

This intimacy means that, once you find your shipper, you tend to stick with him. Relationships last for decades, built on trust and a sense, usually unspoken, of absolute limits. In sixteenth-century Venice, diplomats were instructed to employ illiterate valets, who would be unable to read any secret documents they were asked to carry. A transit agent “should by default be a blind man,” Seydoux told me. “That is the very nature of his job.” Everything works fine, as long as people stay within their allotted roles. Seydoux said, “You can’t win somebody’s trust by saying you are blind and then open your eyes.”

[…]

Bouvier speaks an imperfect, gestural English, but he explained that becoming a shipper allowed him to immerse himself in “the feeling and the difficulty of art.” He had no formal training, just what passed through his hands. “It started with the touch,” he said. “You have all the panoply: small, huge, it’s with value, with no value. You have everything, so you learn.”

Shipping also introduced Bouvier to the complicated lives of the rich—their taxes and their divorces—and the other ancillary trades that help the art world go around: restorers, framers, hired experts, operators of tiny galleries in Paris clinging on from sale to sale. He realized they all had needs of their own.

[…]

Bouvier financed purchases that dealers couldn’t afford on their own. He sorted out cash flow and bills. He became adept at setting up offshore companies—Diva, Blancaflor, Eagle Overseas—to enable galleries to buy specific works and mask the identity of other investors in a transaction.

[…]

“When you buy, it is always to sell,” he said. “You always have the buyer before you have the seller.” On August 16, 2000, he bought a Paul Gauguin landscape, “Paysage aux Trois Arbres,” from Peintures Hermès, a Swiss gallery associated with the Wildenstein family of art dealers, for $9.5 million. Two weeks later, he sold the picture to Mandarin Trading, a Bahamas-based art fund, for $11.3 million, making a profit of sixteen per cent. Mandarin Trading later sued the Wildensteins for fraud, alleging that it was the victim of a scam to inflate the value of the painting. The case was dismissed in 2011. I once asked Bouvier what drew him to particular propositions. “In the mountains, it was the same,” he replied. “I go in the place which is the most complicated, the most risky place.”

[…]

Building a collection involves a thousand small, complex tasks: storage, shipping, condition reports, restoration, making copies, framing, due diligence, insurance. For these services, Bouvier would charge an extra two per cent of the purchase price of any painting he sold them.

[…]

Major buyers typically build collections through several dealers and auction houses, knowing that they will be charged the maximum the market can bear. To protect their interests, many also employ an art adviser or consultant, who works for them and is paid a retainer or a commission—in the region of five per cent—on the works that they acquire. Very rarely are all these roles performed by one person.

[…]

The relationship between art dealer and collector is particular and charged. The dealer is mentor and salesman. He informs his client’s desires while subjecting himself to them at the same time. The collector has money, but he is also vulnerable. Relationships start, prosper, and fail for any number of reasons. It is not always obvious where power lies. Over time, each one can convince himself that he has created the other.

[…]

Access to the oligarch was strictly controlled. “Besides his lawyer and his hairdresser, I don’t think he sees normal people at all,” Rappo once told me.

[…]

Hidden behind company names and, often, dealers working on his behalf, he tended to disguise his role in transactions. “To be invisible is the best way to make business,” he said.

[…]

The income from his dealing enabled Bouvier to expand his storage facilities. For several years, he had been looking to build a freeport outside Europe similar to the one in Geneva. In 2005, he settled on Singapore. In 2008, Bouvier decided to base himself in the country as well. The Singapore Freeport, which required new legislation to be passed by the national parliament, opened in 2010. Bouvier put Tony Reynard, his childhood friend, in charge. The freeport, which abuts the city’s international airport, is an over-engineered hybrid of vault and temple. It cost Bouvier a hundred million dollars to build. At first, no bank would finance it. “They thought we were loonies,” Reynard said.

A freeport offers few tax advantages and scarcely any security features that a standard bonded warehouse cannot provide. But Bouvier’s development in Singapore carried within it two ideas. The first is that freeports will become hubs in the sixty-billion-dollar international art market, destinations in themselves—places for scholars, restorers, insurers, art-finance specialists, consultants, and dealers. The second idea is that the ultra-rich don’t want just another warehouse. “If you buy a painting for a hundred million, what do you want? You want to feel well,” Bouvier said. “Why else do people travel in first class?”

In Singapore, Bouvier specified each component, from the fire-resistant walls, coiled through with steel, to the height of the doors: three metres, to admit the largest contemporary installations. “I chose everything,” he said. “The door handles. I’m obsessive about that.” He used a lighting artist named Johanna Grawunder, whose work he collects, and commissioned an enormous sculpture, “La Cage sans Frontières,” by the Israeli artist and designer Ron Arad, to stand in the atrium.

The opening of the Singapore Freeport, and its immediate success—Christie’s took a space—brought Bouvier international attention. The facilities tapped into a fascination with the tastes and financial shenanigans of the one per cent. Bouvier opened a second, slightly smaller freeport in Luxembourg, in September, 2014, and The Economist noted his role in the development of “Über warehouses for the ultra-rich.” He made plans to replicate the model in Dubai and to act as a consultant for a vast new project in Beijing.

[…]

He bought a Gauguin that had not been sold since the Second World War and a lost Leonardo da Vinci, “Salvator Mundi,” that had been sensationally rediscovered. On its display at the National Gallery in London, the da Vinci became one of the most talked-about pictures in the world. According to Rappo, Rybolovlev wanted it for the wall of his study. Bouvier brought the painting to the Russian’s apartment in New York, where, Rybolovlev told me, he experienced a profound emotional reaction—“a vibration”—in its presence. He bought the picture for $127.5 million.

[…]

ery transaction at the top end of the private art market involves a chain, a cast of characters that stretches from the buyer to the seller: finders, agents, lawyers, lenders. It is rare for the principals to know everyone involved, and it can be improper to ask. Bouvier was a master at making chains—short, long, simple, or twisted, depending on the deal. If he knew that a seller would prefer an approach from an auction house, he would send someone, usually from Sotheby’s. Otherwise, Bouvier would send an intermediary. Often this was a Corsican named Jean-Marc Peretti, who was investigated for running an illegal gambling circle in Paris in 2009. Bouvier is attracted to outsiders in the art world. “The best people are just good businesspeople—they are butchers,” he said.

[…]

Bouvier told me that such blurring of who exactly owns what, and when a transaction occurred, is commonplace in the art market. When you walk into a gallery, you never know what the dealer is selling on consignment, what he owns outright, or how prices have been arrived at. “It is not lying,” he said. “There is always a part of the story which is true.” But Bouvier was ruthless in exploiting what was left unsaid. “Joueur de Flûte et Femme Nue,” which Bouvier sold to Rybolovlev for twenty-five million euros, he had bought the day before for just three and a half million. He made a sixty-million-dollar profit on the Klimt.

[…]

In the early nineteen-fifties, Rothko began experimenting with powdered pigments, solvents, and egg to lend extra force to the colors in his canvases. He wanted viewers of his pictures to feel as if they were inside them. When Bouvier drew back the curtains, the painting seemed to explode in front of his eyes.

[…]

Around this time, I spent a day at the Luxembourg Freeport. The building is made of sixty-five hundred tons of concrete. Heavy doors are locked with six-digit codes.

[…]

As he spoke, Bouvier kept four Nokias and a BlackBerry within reach at all times. When one of them rang, he would turn it over, to see which realm of his dealings the inquiry was coming from. He reminded me, in a not entirely unlikable way, of an animal busy in carrion, like a jackal.