Saturday, April 9, 2016

Panama Papers expose art world's offshore secrets


Panama Papers: Dmitry Rybolovlev used offshore company to hide art from wife, leaked documents reveal

Russian billionaire transferred ownership of paintings by Picasso, Van Gogh and Monet to firm based in British Virgin Islands
by Cristina Ruiz  |  4 April 2016
Panama Papers: Dmitry Rybolovlev used offshore company to hide art from wife, leaked documents reveal
Dmitry Rybolovlev. Photo: AP Photo/Lionel Cironneau)
The Russian billionaire Dmitry Rybolovlev used a company registered in the British Virgin Islands to hide art from his former wife Elena during their divorce proceedings. The same company helped Rybolovlev move paintings by Picasso, Van Gogh and Rothko, among others, out of Switzerland to London to keep them out of Elena’s grasp.

The revelation comes from the International Consortium of Investigative Journalists (ICIJ) which has spent the past year examining over 11 million documents leaked from Mossack Fonseca, a Panama-based law firm specialising in wealth management and the creation of offshore shell companies. The leaked data covers nearly 40 years up to 2015 and provides an unprecedented look at the offshore banking industry and how money is moved secretly, and sometimes illegally, around the world.

The ICIJ has worked with the German newspaper Süddeutsche Zeitung and 100 other news organisations to analyse the data in what amounts to the biggest media collaboration ever undertaken.

The offshore holdings of 12 current and former world leaders including the prime ministers of Iceland and Pakistan, the king of Saudi Arabia and the children of the president of Azerbaijan have been exposed. World leaders who have embraced anti-corruption platforms such as the Ukrainian President Petro Poroshenko and the family of Chinese president Xi Jinping also feature in the leaked documents, writes the ICIJ.

Mossack Fonseca “has serviced enough Middle East royalty to fill a palace,” the ICIJ reports. The Panamanian firm also “has details on at least 33 people and companies blacklisted by the US, including Mexican drug lords and terrorist organizations…Its fingers are in Africa’s diamond trade, the international art market and other businesses that thrive on secrecy.”

The art connection

In December 2008 Elena Rybolovleva filed for divorce from her husband Dmitry, who is now embroiled in a separate legal battle with his former art advisor Yves Bouvier. The Rybolovlevs were based in Switzerland and under Swiss law each spouse was entitled to an equal part of the couple’s wealth.

But tracking down Dmitry Rybolovlev’s assets was not easy. Mossack Fonseca had helped the businessman transfer ownership of many of his art assets to a company they set up for him in the British Virgin Islands, Xitrans Finance Ltd. This off-shore firm owned paintings by Picasso, Modigliani, Van Gogh, Monet, Degas and Rothko and “also bought Louis XVI-style desks, tables and drawers made by some of Paris’s grandest furniture makers,” the ICIJ writes.

“As the marriage broke down, according to notes from a court hearing sent via email to Mossack Fonseca in January 2009, [Rybolovlev] used Xitrans Finance Ltd to move these luxury items out of Switzerland to Singapore and London, beyond [his wife’s] reach.”

Update, 6 April: In a statement, the Rybolovlev family's lawyer said the "description and references to the divorce proceedings of Mr Dmitriy Rybolovlev are misleading", since it "fails to state that the ex-spouses Rybolovlev amicably settled their matrimonial dispute and announced in a joint statement dated 20th October 2015". He added that Rybolovlev "has never used any offshore entity to conceal any assets". Xitrans Finance was established in 2002, six years before the divorce proceedings began, and that its use "as a holding entity to constitute a remarkable art collection has been publicly disclosed in numerous publications worldwide and is perfectly legitimate,” the lawyer said.



Panama Papers expose art world's offshore secrets

Leaked documents reveal owners of "looted" Modigliani, how a UK billionaire guaranteed a milestone auction and links to the Chinese elite
by Cristina Ruiz  |  8 April 2016
Panama Papers expose art world's offshore secrets
The Victor and Sally Ganz auction at Christie's © STAN HONDA/AFP/Getty Images
The International Consortium of Investigative Journalists (ICIJ) has turned its attention to the art world in its ongoing examination of documents leaked from Mossack Fonseca, a Panama-based law firm specialising in wealth management.

The ICIJ has revealed that a painting by Modigliani that is being claimed by the grandson of Oscar Stettiner, a Jewish gallery owner whose art was seized by the Nazis, is owned by a company controlled by the Nahmad family of art dealers, who have previously denied that the work was in their possession.
Modigliani 's Seated Man with a Cane (1918)
Modigliani 's Seated Man with a Cane (1918)
The canvas in question, Seated Man with a Cane (1918), was bought by the Nahmads at auction in 1996, reports the ICIJ. They paid just over £2m for the painting at Christie’s London in June of that year. In November 2008, the Nahmads tried to sell the work at Sotheby’s New York with an estimate of $18m to $25m, but there were no bids on the canvas.

In 2011, Philippe Maestracci, Oscar Stettiner’s grandson, sued the Nahmads in US federal court for the return of the Modigliani; the suit was withdrawn after the Nahmads said that the painting was owned by a company called the International Art Center and not by them.

Three years later, in February 2014, the administrator of the Stettiner estate sued the Nahmads again, arguing that the International Art Center is a Panamanian shell company, which is an “alter ego of David Nahmad and other Nahmad family members”, according to the court papers. “The Nahmads have insisted in federal and state court in New York that the family does not possess the Modigliani,” the ICIJ reports.

But the leaked Mossack Fonseca documents show that “the Nahmad family has controlled the Panama-based company International Art Center (IAC) for more than 20 years… David Nahmad, the family leader, has been the company’s sole owner since January 2014”, the ICIJ reports. Mossack Fonseca first set up the IAC for the Nahmads in 1995.

When the ICIJ confronted David Nahmad’s lawyer, Richard Golub, with documentation showing that the Nahmads own the International Art Center, Golub said: “Whoever owns IAC is irrelevant. The main thing is: what are the issues in the [ongoing] case, and can the plaintiff prove them?”

The Ganz auction

The ICIJ has also shed new light on an auction of Modern art at Christie’s New York in November 1997. The sale of work collected by Victor and Sally Ganz included pieces by Picasso, Jasper Johns, Robert Rauschenberg and many others. It made a then record $206.5m and “proved a milestone in the transformation of art into a global commodity”, the ICIJ writes.

The Mossack Fonseca papers show that many of the key works in the Ganz collection were sold six months before the Christie’s auction to a company called Simsbury International Corp. This was set up in Niue, an island in the South Pacific, and administered by Mossack Fonseca. The works were sold to Simsbury for $168m from Spink & Son, the London auction house then owned by Christie’s, according to the ICIJ.

The man who controlled Simsbury was the British billionaire Joseph Lewis, who was then the richest man in England and the largest shareholder at Christie’s. The terms of the deal stipulated that the Simsbury-owned works would still be offered for sale as part of the Ganz collection at Christie’s: if they made more than Simsbury had paid for them, Lewis and Spink & Son would share the difference, the ICIJ reports.

The Ganz family and Lewis declined to speak to the ICIJ about the revelations.

Agents to the art world

The offshore dealings of other major art collectors are also detailed by the ICIJ. Mossack Fonseca’s records mention “enough art to fill a small museum”, they report.

Chen Dongsheng, the founder and chairman of China Guardian, the world’s third biggest art auction house after Sotheby’s and Christie’s, and grandson-in-law of Mao Zedong, is one of many rich Chinese businessmen and political leaders who have moved assets offshore. He is the sole director and shareholder of Keen Best International Limited, a company set up by Mossack Fonseca in the British Virgin Islands in 2011.

YSL’s Mondrian Dress Achieves $27,000 at Auction

YSL’s Mondrian Dress Headlines Leslie Hindman’s April Couture Auction

YSL’s Mondrian Dress Headlines Leslie Hindman’s April Couture Auction
(l-r) Mondrian dress by Yves Saint Laurent, "Delphos" gown by Mariano Fortuny, and a newsprint shift dress by Scott
(Courtesy Leslie Hindman Auctioneers)
A series of dresses created by Yves Saint Laurent, inspired by a Piet Mondrian painting he bought, is among the designer’s most iconic creations. On April 7, one of these pieces will headline the Luxury Accessories and Couture auction at Leslie Hindman Auctioneers in Chicago.
Estimated to fetch between $4,000 ­and $6,000, the shift dress — originally a sleeveless number — comes from the collection of an important client, who had asked the designer to customize it by adding sleeves, making the example, comprising black and white lines, as well as red and yellow accents, all the more unique.
Another piece of historic couture at the sale is a 1920s Mariano Fortuny apricot "Delphos" gown. Named after a Greek classical sculpture, the simple column gown remains prized for its design of vertical pleats that were permanently set in silk by a process that has never, even until now, been successfully duplicated. One example was one of only two garments acquired for the collection of the Museum of Modern Art in 2003; another sold for a world record auction price of $10,000 in December 2001 at Doyle New York. This one, from Estate of Mary Taussig Hall of St. Louis, Missouri, carries a pre-sale estimate of $1,000 to $2,000.
Another piece of historic interest is a black-and-white newspaper dress circa 1967. Oddly enough, it was borne of the age of the space race, when paper companies such as Scott made paper garments for a population that believed it would soon be living on the moon, without the ability to do laundry. Dresses like these were sold at grocery stores, presumably conveniently located near some toilet paper. This example, sporting headlines from the Chicago Sun-Times, has a pre-sale estimate of $100-$200.
Elsewhere in the 510-lot sale are pieces by other important designers such as Balenciaga, Christian Dior, Oscar de la Renta, Andre Courreges, Bill Blass, and Carolina Herrera.
Notable accessories in the sale include an Hermès 34cm black porosus crocodile “Kelly” handbag, circa 1950, with gold hardware and monogrammed initials “SHL” (estimate: $10,000-$12,000), as well as an Hermès gold taurillon clemence 30cm “Birkin” handbag, circa 2006, with palladium hardware (estimate: $6,000-$8,000).

3 Reasons Why Every Entrepreneur Should Take A Road Trip This Year

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3 Reasons Why Every Entrepreneur Should Take A Road Trip This Year

I am the co-founder and CEO of, a web app that automates the finance and accounting processes for small businesses and startups. As a first-time CEO, I’m learning as I go about the nuances of managing people, products, and processes. Prior to founding BodeTree, I played a key role on the strategy team of a Fortune 500 company and provided valuation and financial opinions as a consultant. I graduated from Arizona State University with an undergraduate degree in finance and studied economics at Babeş-Bolyai University in Cluj-Napoca, Romania. In addition to writing for Forbes, I’m a frequent contributor to The Wall Street Journal, Entrepreneur Magazine, and MSNBC.

I’m a frequent traveler, but more often than not that means hustling from one major airport to the next. My longest travel time usually clocks in at less than five hours. Recently, however, decided to shake things up and make the 14-hour drive from Denver to Phoenix.
I haven’t taken a road trip like that since I was a kid, and the experience was fascinating. The process of driving through America for two days led to a lot of realizations about the nature of entrepreneurship and the market I serve. The process was so valuable, in fact, that I think every entrepreneur who finds themselves operating in a bubble, especially those on the coasts, should take a road trip and reconnect with the rest of America.
Humanize your understanding of the market
When you’re an entrepreneur, it is natural to think of your addressable market in terms of statistics. At BodeTree, I’ve always thought about our market as being comprised of 30 million small businesses, 90% of which don’t have organized accounting. It’s deceptively easy to do back-of-the-napkin calculations and back into slide-deck ideas of market penetration.
The reality, however, is far more complicated. I stopped at a number of small businesses on my trip and observed their owners as they worked. It became abundantly clear that each and every small business owner is unique, with different motivations, goals, and expectations. While I had an intrinsic understanding of this after working in the industry for years, the process of witnessing small business owners in action drove the point home with newfound clarity.
Recommended by Forbes
This fundamentally human observation of the market my company tries to serve resonated with me on a personal level. I walked away from the experience with a more holistic understanding of the market and my company’s ability to serve it.
Gain a fresh perspective
When you’re building any kind of innovative product, you tend to focus a disproportionate amount of time catering to early adopters. More often than not, these early advocates are young, urban, and relatively sophisticated. When you couple this with the fact that many entrepreneurs base their operations in urban environments where these types congregate, it becomes easy to see how a perception bubble can develop.

I sometimes forget just how big and diverse the United States really is. While driving through small towns and vast stretches of open land, I realized just how insulated my life is from the reality of the individuals I’m trying to serve.

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That realization made me think back to a story about the legendary movie producer Jerry Weintraub. Weintraub was fond of telling the story of how he kept a flock of pink plastic flamingoes in the grass near the entrance of his Hollywood office. When asked about the unique design choice, he responded that he kept them there to remind everyone that it’s the mainstream public that determines if a movie is a hit, not the Hollywood elite.
Driving through rural America made me realize just how right Weintraub was, and gave me a fresh understanding and appreciation for our diverse domestic cultures. Any entrepreneur looking to serve the broad market would be wise to cultivate the same appreciation inside of their own business.
Better understand the challenges of scaling your business
Perhaps the most significant feeling I experienced on my journey was a feeling of dread regarding the challenge of scaling BodeTree in rural areas. Much of the infrastructure that we take for granted, from high-speed internet to ubiquitous cell coverage, doesn’t exist in the same capacity throughout much of the country.
In essence, the experience helped me to broaden my understanding of the market and my company’s place in it. Many of the assumptions, such as the general level of technological savvy or quality of infrastructure, were turned on their head once I reached some of the more rural communities along the way.
My understanding of the small business market evolved and became more nuanced, and I better recognized the dangers of an insulated urban perspective. Entrepreneurs of all walks can benefit from this type of wake up call. So, if you’re looking to reconnect and expand your understanding of the U.S. market, take a road trip this year. You’ll definitely learn a thing or two along the way.

Chris Myers is the Cofounder and CEO of BodeTree, a web application designed to help small businesses manage their finances.