GENEVA (AFP) - A free port on the fringes of Geneva where billions of dollars of fine art is stored is under scrutiny for tax evasion and money laundering after a high-profile case involving a top Swiss dealer and a Russian billionaire.
Behind its nondescript facade, the heavily-guarded toll-and customs-free zone that makes up the Geneva Freeports is storing a jaw-dropping number of priceless artworks, including Picassos, Van Goghs and Monets, and other precious goods.
The area houses warehouses spread over 150,000 sq m - with nearly a quarter of that occupied by Natural LeCoultre, a firm that specialises in storing fine art.
The firm's owner, Geneva businessman Yves Bouvier, was arrested in Monaco in February after allegations that he laundered money and defrauded Russian billionaire Dmitry Rybolovlev, the owner of Monaco football club, of millions.
Bouvier was a partner in Art Heritage Singapore, the firm managing the launch of Singapore Pinacotheque de Paris, the first international offshoot of the private museum of the same name in Paris. Its opening in Singapore on May 30 was unaffected by his arrest.
Bouvier, who is suspected of selling works by the likes of Picasso, Modigliani, Degas and Gauguin to Rybolovlev at hugely inflated prices, has denied any wrongdoing.
Free ports, or bonded warehouses, attract the super rich in hordes as they can store fine art, furniture and other treasures tax-free - and far from the public eye.
But now the Geneva Freeports finds itself at the centre of unwelcome controversy, amid questions over its role and opaqueness.
Thierry Ehrmann, the founder and president of art market information specialist Artprice, said Wednesday the Geneva free port had become a "clearing house for international art." More than half of art traded globally through auctions and direct sales moves through the Geneva Freeports, according to Artprice.
"If the Geneva free port collapses, the whole global art market ... will collapse," he told AFP.
Even Art Basel, the world's largest contemporary art show, which takes place in the northern Swiss city each June, would be threatened, he said.
The global art market is burgeoning with a growing hunger among the new rich, huge acquisitions by Asians and a steady stream of newly opened museums acquiring works.
When an artwork is stored in a free port it can be bought tax-free and Value Added Tax is only imposed once it is taken out.
Geneva Freeports were set up in 1854 and were initially meant to store works for only a short period. Now, however, it has held onto some works for more than a decade, according to a Swiss governmental financial body.
The canton of Geneva, which owns 87 per cent of the free port, has recently taken steps to do some spring cleaning, naming three new officials to top posts there.
"There is an urgent need to clarify things," Geneva minister Pierre Maudet said recently, calling for "transparency" and "traceability".
"In the face of risks posed by money laundering and above all the problems to its image, this company, which is vital to the Genevan economy, must shed the fortress-like mentality it has adopted in recent years," he told a local Sunday weekly.
He warned that there was a risk of "diluting responsibility" when shareholders in the free port also wear the hat of tenant and art dealer, as is the case with Bouvier.
Such a situation can "complicate oversight and lead to a true conflict of interest... that is very damaging in terms of the image" of the free port, Maudet said.
He urged better international control of the global art market.
With Geneva figuring among the world's leading international storage places for high-end art, he stressed that the canton "cannot wait for a market worth hundreds of billions of francs to regulate itself."