HSBC Entangled In Artwork Feud
20 November 2015 - 7:03PM
Dow Jones News
(FROM THE WALL STREET JOURNAL 11/20/15)
By John Letzing in Zurich and Max Colchester in London
HSBC Holdings PLC has been drawn into a high-profile fight
between an art dealer and one of the bank's billionaire
clients.
Earlier this year, Swiss art dealer Yves Bouvier was detained in
Monaco after being accused of overcharging Russian collector Dmitry
Rybolovlev for paintings, and conspiring to launder the proceeds
with a resident of the Mediterranean principality, Tania Rappo.
Both have denied the allegations.
News of the alleged $1 billion fraud caused a sensation in the
art world, and a bitter legal and public-relations battle broke out
between the two sides.
Last week, Mr. Bouvier's motion to have the proceedings against
him dropped was denied in a Monaco appeals court. And on Tuesday,
Mr. Rybolovlev was questioned by Monaco authorities about a
complaint filed by Ms. Rappo alleging that he had invaded her
privacy, by secretly making an audio recording of her in a bid to
gather incriminating evidence. Mr. Rybolovlev's attorney said in a
statement that the allegation is "ridiculous."
In February, HSBC responded to a query from Monaco police
investigating the money-laundering allegations against Mr. Bouvier
with a letter stating that the art dealer jointly held accounts at
the bank with Ms. Rappo. The two were detained and questioned. But
an HSBC official called authorities and said the bank had made a
mistake, Mr. Bouvier and Ms. Rappo didn't share the accounts after
all. They were both subsequently released.
HSBC has said the error was unintentional and clerical,
according to legal filings. An HSBC spokesman declined to
comment.
Ms. Rappo and Mr. Bouvier are pressing for a fuller explanation.
They allege that HSBC may have been acting under the influence of
Mr. Rybolovlev, one of HSBC's major clients in Monaco. In June, Ms.
Rappo filed a complaint asking an investigative judge to look into
the matter.
A spokesman for Mr. Bouvier said he wants a thorough
investigation of what he deems an "incredible" mistake made by the
bank. A spokesman for the Rybolovlev family office called the
HSBC-related allegations "a diversionary tactic."
The investigative judge who received the June complaint, Pierre
Kuentz, didn't respond to requests for comment.
HSBC bought its Monaco private-bank businesses in 1999 through
the acquisition of financier Edmond Safra's Republic New York Corp.
and Safra Republic Holdings SA.
Between October 2013 and September 2014, Accent Delight, a
company based in the British Virgin Islands and owned by a trust
tied to Mr. Rybolovlev, paid 257.5 million euros ($274.2 million)
from an HSBC Monaco account to a company controlled by Mr. Bouvier,
according to documents seen by The Wall Street Journal. The
payments were for three pieces of art, according to people familiar
with the matter. The sales are just part of the roughly $1 billion
that Mr. Rybolovlev believes he may have been overcharged for
artworks sold by Mr. Bouvier, according to legal filings.
In January, a trust tied to Mr. Rybolovlev filed a complaint in
Monaco alleging that Mr. Bouvier was selling him paintings at a
significant markup. Mr. Bouvier said in a Wall Street Journal
interview earlier this year that the market determines prices for
paintings.
Mr. Bouvier is alleged to have conspired with Ms. Rappo to
launder the proceeds of the art sales via real-estate investments,
according to legal filings.
On Feb. 17, HSBC sent an initial letter to Monaco police listing
three accounts linked to companies that invested in properties that
Ms. Rappo held. The letter said Mr. Bouvier's name was also on
those accounts and he was either a proxy in the related companies
or received profits from them.
On Feb. 25, Mr. Bouvier was detained in Monaco after traveling
there to visit to his Russian client. Ms. Rappo was also detained,
and told the police that HSBC must have erased her husband's name
on the accounts and pasted in Mr. Bouvier's, according to
filings.
On Feb. 27, HSBC wrote to the head of Monaco's police force, to
clarify Mr. Bouvier wasn't linked to the accounts. The bank
apologized for its error, according to a copy of the letter seen by
the Journal.
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(END) Dow Jones Newswires
November 20, 2015 02:48 ET (07:48 GMT)
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