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. Mr. Safra, a Lebanese billionaire,
died in 1999 after a fire was started in his Monaco penthouse,
which is located above HSBC's Monaco office. That penthouse, dubbed
"La Belle Epoque," was bought by Mr. Rybolovlev and is now his
residence.
For over a decade, Mr. Rybolovlev, who made his fortune in
Potash mining, worked with Mr. Bouvier to build a vast art
collection that included Picassos and Rothkos.
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 EUR257.5 million ($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. In a statement given to
the Monaco police in February, Mr. Rybolovlev noted that Ms. Rappo
was a family friend, who had introduced him to Mr. Bouvier,
according to a transcript.
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 name instead, according
to legal filings.
On Feb. 27, after the bank's phone call, HSBC wrote to the head
of Monaco's police force, to clarify that 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.
Ms. Rappo's attorney filed an initial complaint regarding the
bank's error in April, with Monaco's public prosecutor, according
to court filings. That complaint was later closed without any
finding of wrongdoing, filings indicate.
In June, Ms. Rappo's attorney filed a second complaint about the
error with the investigative judge, Mr. Kuentz. The attorney wrote
that, "It is impossible to exclude the possibility that [HSBC's]
false statement was made at the request of Mr. Rybolovlev, who is
furthermore one of the biggest customers of the bank."
Last month, Mr. Bouvier applied to become a co-plaintiff in the
June complaint. His application was rejected on the grounds that
the bank's errant letter didn't do him harm. He is appealing that
ruling, his attorney said.
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(END) Dow Jones Newswires
November 19, 2015 17:36 ET (22:36 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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