Yves Bouvier, Le Freeport, and the EU’s internal battle for transparency

With European parliamentary elections slated to begin May 23rd, most pollsters are focused on predicting just how much the far-right nationalist and populist contingents within the European Parliament will grow. 

That narrative, while myopic, is easy to understand – after all, Europe’s most virulently Eurosceptic and anti-immigrant hardliners, such as Italian deputy prime minister Matteo Salvini, are actively trying to forge a Union-wide electoral alliance ahead of the vote.

For many voters, the appeal of Salvini and his fellow firebrands lies in their nebulous messages to hold an “unaccountable EU” to account, much in the same way Brexit promised to “take back control” from supposedly faceless “Eurocrats.” This messaging, however, ignores the fact that public servants in the European Parliament are already holding the European Commission to account, calling out the EU’s highest-ranking officials on their failures to put the interests of European citizens first.

One of the most recent examples of dogged parliamentary oversight over the Commission’s work involves a subject that was supposed to be one of Jean-Claude Juncker’s policy priorities: improving financial transparency across the bloc. As demonstrated by the ongoing fight between Juncker and the Parliament’s committee on financial crimes, tax evasion and tax avoidance (TAX3) over Le Freeport in Luxembourg and its controversial founder Yves Bouvier, the Parliament is exercising a critical role in holding the Commission and its top officials to account. 

Thanks to its investigative work, the TAX3 committee recently released a comprehensive report outing freeports – a major economic actor in Juncker’s native Luxembourg – as a potential vehicle for fraud and money laundering and a serious loophole in Europe’s fight for increased fiscal transparency. 

Yves Bouvier’s Le Freeport: a blast from Juncker’s past

Freeports have been used in major European trading centers for centuries, and are supposed to be used to facilitate the transport of goods by exempting them from taxes on their way to a final destination. Over the past several decades, however, individuals such as Swiss businessman Yves Bouvier have turned them into massive warehouses for the indefinite storage priceless art and other goods, raising suspicions among MEPs such as TAX3 member Wolf Klinz that Europe’s ultra-rich are using the 82 opaque, tax-exempt facilities present on EU soil as a means for stashing their wealth outside the view of the taxman.

Le Freeport, which has Bouvier as its largest shareholder and offers 160 rooms and eight showrooms across its 22,000 square meters, took shape while Juncker served as prime minister and opened its doors months after he left office. Bouvier was also one of the largest tenants at Geneva’s freeport until selling his company Natural Le Coultre in 2017. 

Both the Geneva and the Luxembourg freeports are a matter of particular concern for European lawmakers. Discussing the need for greater European urgency in restituting ill-gotten property, French senator Nathalie Goulet recently described the Geneva freeport in Euronews as a home for “the most unlikely of goods with the most questionable of origins,” with archaeological works and smuggled diamonds allegedly among them, and as a “Bermuda Triangle for taxation” that foils tax services from determining the value of otherwise taxable property. 

Declining to mince her words, Goulet states that both the Geneva and Luxembourg freeports “act as shelters to these goods - and it must be repeated incessantly - from around the world, which are nearly all obviously ill-gotten.” 

Bouvier’s global network of freeports

Yves Bouvier’s name may have emerged in large part because of his key role in the Le Freeport project, which took shape under Juncker’s tenure and fits closely with the former Luxembourg prime minister’s track record of financial leniency with moneyed interests while in office. Europe, however, is hardly the only part of the world where Bouvier has been centrally involved in this secretive aspect of the global art market.

Luxembourg’s Le Freeport shares its name with a similar facility under Bouvier’s stewardship in Singapore. Bouvier’s plans to launch yet another freeport in Shanghai, on the other hand, have foundered in the midst of  intense legal disputes with his former clients commonly referred to in the art world as the “Bouvier Affair”. These legal battles have fed fears among the TAX3 committee MEPs that individuals such as Bouvier and entities such as freeports represent threats to financial transparency in the EU.

The Bouvier Affair: where there’s smoke, is there fire?  

A study commissioned for the TAX3 committee and published last October points specifically to Bouvier’s history of disputes in analyzing freeport operations in Switzerland, saying the “concentration of a worldwide network  of connected free ports and different roles could imply a risk of conflicting interests and insider trading. The fact that Mr Bouvier is entangled in an affair involving alleged fraud and insider trading, may justify such considerations.”

Those disputes include accusations that Bouvier has committed over $1 billion USD in fraud, notably by overcharging AS Monaco owner Dmitry Rybolovlev for the sale of 38 artworks over the span of ten years. Bouvier’s name has also surfaced in the legal battle over the sale of Chaim Soutine’s Piece of Beef at below market value, and in allegations put forward by Pablo Picasso’s stepdaughter that Bouvier’s business partner Olivier Thomas had stolen Picasso works he had been hired to transport.          

The TAX3 committee refuses to be rebuffed

Based on that study and its investigations, the TAX3’s final report on financial crimes, tax evasion and tax avoidance pulls no punches in its recommendations for the Commission, arguing freeports should be phased out entirely. Over the past several months, the committee’s members have called on Juncker and his deputies to act on their findings. In January, for example, MEP Wolf Klinz wrote directly to Juncker about the Luxembourg freeport and asked him to close the freeport loopholes he called a blind spot in European financial transparency. 

Juncker responded by tasking EU commissioner Pierre Moscovici with following up on the matter. Moscovici, however, provoked outrage among MEPs like Klinz by absolving freeports of any implication in systematic fraud, ignoring the examples of Yves Bouvier and other problematic stakeholders to instead claim the entities are “useful to simplify commercial operations.” In a sign of how seriously the body takes the issue, the TAX3 committee’s final report was adopted by the Plenary by a majority of 505 to 63 on March 26th

In refusing to accept the Commission’s attempt to duck the issue, the committee and the wider Parliament are offering a tangible example of EP representatives standing up to the Commission on behalf of European citizens. Juncker and his team will be leaving office later this year, but the policy decisions they make regarding major financial loopholes such as freeports now could remain in place for years to come.

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Gary Cartwright

Gary Cartwright

Gary Cartwright is publishing editor of EU Today. 

An experienced journalist and published author, he specialises in environment, energy, and defence.

He also has more than 10 years experience of working as a staff member in the EU institutions, working with political groups and MEPs in various policy areas.

Gary's latest book WANTED MAN: THE STORY OF MUKHTAR ABLYAZOV: A Manual for Criminals on How to Avoid Punishment in the EU is currently available from Amazon 

https://www.amazon.co.uk/WANTE...

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