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Owner of Asia’s ‘Fort Knox’ Sues Over Failed Freeport Sale

Chanyaporn Chanjaroen and Hugo Miller

(Bloomberg) -- Swiss art dealer Yves Bouvier is suing a group of businessmen who he alleges agreed to buy his Singapore freeport for about $60 million before repeatedly delaying and ultimately reneging on the deal.

Jaime Ordonez and two associates caused Tayrona Pacific Star Pte to breach the terms of an October 2019 contract to buy Le Freeport, according to a lawsuit filed in Singapore’s High Court. They pushed the deal completion date back on four separate occasions, citing among other things a negative article about Bouvier’s business on one occasion and concerns about the condition of Le Freeport’s infrastructure on another, the lawsuit alleges.

Before each completion date, and even after the fourth, “the defendants would raise alleged issues that were not previously contemplated, discussed or communicated,” Bouvier’s lawyers said in the April 15 filing.

“We strenuously deny these false allegations,” Ordonez said in an emailed reply to Bloomberg, speaking on behalf of his business associates and their companies. “The defendants in this suit are not even the parties to any agreement to buy the Freeport,” said the Colombian who is a Singapore resident, while declining to comment further as the matter is before the court.

Read more about the plans to sell Asia’s ‘Fort Knox’

Bouvier has been trying to sell his Singapore facility since 2017, after stepping back from earlier plans to operate a global network of luxury freeports for the world’s rich to stash their valuables. He sold his shipping and storage company Natural Le Coultre in 2017 for an undisclosed sum but remains co-owner of a Le Freeport in Luxembourg, a similar facility in the tiny European country.

The would-be buyers’ alleged delays preceded the economic slump caused by the coronavirus, and the pandemic may make it harder for Bouvier to shop around the facility. The agreed sale price of S$83.3 million ($60 million) as stated in the lawsuit would have been less than the roughly S$100 million it cost to build.

Bouvier declined to comment on the sale price via a representative.

Freeport’s Condition

Among the factors cited by the defendants for not completing the purchase were the freeport’s “bad physical and technological condition,” as well as a news article in Malta about Bouvier’s businesses that made it difficult to secure the release of the funds needed to complete the transaction, according to the suit.

A spokesman for Bouvier rejected the notion that the facility was in poor shape. The Freeport is in “absolutely perfect condition,” he said, citing its score of 98.06 out of 100 on a recent insurance-risk-management survey, “making it one of the safest places in the world to store precious goods.”

Ordonez, who was once involved in the movie business, is a director of Tayrona Pacific Star, the company that allegedly agreed to buy the Singapore facility. He is also a director of Tayrona Capital Financial Group Pte., an investment and hospitality company that owns half of Tayrona Pacific Star and is a defendant, according to the lawsuit.

Scudo Pte., which owns the other half of Tayrona Pacific Star, and its owner Jeff Tay Toh Hin are among the seven entities and individuals that are defendants, the filing shows.

Opened in 2010, the Singapore vault sits on a large tract of land near Changi Airport. Known as “Asia’s Fort Knox,” it was supposed to be part of the city-state’s push to lure luxury collectors, wealth managers and banks looking to ramp up gold bullion trading. However, China’s clampdown on luxury spending and the exodus by many banks from physical commodity storage meant it never fulfilled its promise.

The venture accumulated S$18.4 million in losses over about a decade to 2018, its latest filings show.

Le Freeport’s outstanding debt to DBS Group Holdings Ltd. stood at S$20 million as of 2018, the Singapore bank said last year. A DBS spokesperson declined to comment on the current figure.

The case is Worldwide VGS B.V., Le Freeport Real Estate Pte. v. Jaime Alfonso Ordonez Arturo et al, S350/2020, Singapore High Court.

(Adds comment from Bouvier’s spokesman in ninth paragraph)

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