Louise McBride - barrister, art collector and daughter of Dr William McBride, the celebrated but controversial obstetrician - is a passionate woman. So when the tall, raven-haired lawyer learnt in 2010 that her prized Albert Tucker painting, Faun and Parrot, 1967 - which she'd bought for $85,000 from Christie's Auction House a decade earlier - was a fake, she resolved to take on Australia's art establishment.

The year before, in 2009, McBride had decided the time had come to liquidate some of the art collection she'd shared with her ex-husband, the high-profile advertising executive Greg Daniel. Among the pieces she was preparing to sell was Faun and Parrot, 1967, but when she and her art consultant, Vivienne Sharpe, met at Fratelli Paradiso in Sydney's Potts Point to complete the paperwork, Sharpe had some unwelcome news to share.

"Vivienne took my hand and held it and said, 'We have a problem with one of the works. I've withdrawn the Tucker from the sale because Geoffrey Smith [from Sotheby's Australia] has raised some concerns over the work's provenance,' " McBride would later testify. "I felt sick. The painting had come from Christie's. It had been hanging in my house for 10 years and lots of people had seen it. How could there be a problem now?"

But there was. Over the next year, as McBride began to investigate the history of Faun and Parrot, 1967, she was amazed to uncover some very murky goings-on in the glittering world of fine-art dealership. She was particularly interested in documents that came to light revealing that Christie's had become concerned about the provenance of the painting soon after it had sold it to her, yet had said nothing.

In July this year, she went to the Supreme Court in NSW seeking damages not just against Christie's, but also the man who'd consigned the painting to auction, Sydney classic-car and art dealer Alex Holland, and her former friend, Vivienne Sharpe, who'd bid on the painting on her behalf. If successful, McBride is likely to receive damages somewhere in the region of $120,000. But it's not just about the money. This action, she tells me, is also about lifting the lid on the business of forgeries in the Australian art market, which is estimated to be worth $300 million a year.

Opening the case, her barrister, Francis Douglas QC, claimed that 20 to 30 per cent of Australia's secondary art market was concerned with handling of works that were forgeries. Some art-world stalwarts, such as Sydney gallery owner Denis Savill, have since declared this estimate "ridiculous", while other experts, such as Robyn Sloggett, who runs Melbourne University's Centre for Cultural Materials Conservation and who is regarded as the country's foremost expert in identifying forgeries, states confidently that "one in 10 artworks cannot be securely provenanced". By this, she means not only forgeries that have been created and sold with the specific intention to deceive, but also works that began life openly as copies and have subsequently been "strengthened" by the addition of signatures, dates, old frames or antique backing boards.

"The faking of an artist's work not only defrauds a purchaser, it results in a contraction of the artist's market once the presence of such works becomes public," says Stephen Nall, lawyer, art dealer and stepson of one of Australia's best-known painters, Robert Dickerson, whose distinctive drawings of angular faces sell for between $7000 and $10,000, and his paintings for much more. In 2010, the family of the 90-year-old artist took unprecedented action that resulted in the destruction of a forged Dickerson drawing to prevent it from finding its way back onto the market.

On August 27 this year, Victoria police charged Melbourne art conservator Mohammad Aman Siddique and art dealer Peter Gant with fraud relating to their handling of three forged Brett Whiteley paintings between 2007 and 2009. The charge followed a raid on Siddique's business premises in Collingwood in March, during which police seized more than 30 paintings, art materials, photographs and art books.

Ugandan-born Siddique, 65, is contesting the legitimacy of the raid in the Victorian Supreme Court. A well-known conservator who trained at London's Courtauld Institute of Art and Chelsea College of Arts before moving to Australia in the late '80s, Siddique brought with him the latest restoration techniques. As his renown spread, he soon found himself in the pay of many of Melbourne's most prominent art dealers.

"He's a very good restorer, very able," agrees Stuart Purves, owner of Australian Galleries in Melbourne. "He's also fast."

The case of the three forged Whiteleys is a sensational one. All three had been offered for sale as part of the artist's famous Lavender Bay series, painted 41 years ago and inspired by views from his Sydney harbour home. Orange Lavender Bay, the first of the three fakes to be identified, was sold for $1.1 million to Sydney luxury-car dealer Steve Nasteski in 2009. The joint agents on the sale were dealers Peter Gant and John Playfoot.

When Nasteski tried to sell the painting again in 2010, Deutscher Menzies auction house sounded the alarm. Nasteski went to the police in July of that year but withdrew his complaint after Playfoot refunded his money. But the Victoria Police, which has a specialised art-fraud squad based in Prahran, took an interest, especially as more fakes were beginning to emerge.

Next up was Big Blue Lavender Bay, purchased by banker and Sydney Swans chairman Andrew Pridham for $2.5 million in 2007 from a former Deutscher and Hackett auctioneer, Anita Archer, who later told a court she'd bought the painting from Peter Gant for $2.2 million. (The dispute was settled privately in 2012.) Guy Angwin, a Melbourne restaurateur, was given the third Whiteley, Through the Window Lavender Bay, by Peter Gant as security when the dealer fell behind on repayments on a loan Angwin had made to him.

Angwin had come to know Gant because his restaurant was near the dealer's gallery and, in an error of judgment he has come to rue bitterly, he lent Gant a substantial sum of money.

It didn't take long for investigators to wonder whether there might be a link between the problematic Whiteley trio and the McBride case and, as they began to sift through the piles of paperwork, one man's name floated insistently to the top: Peter Gant, the Melbourne art dealer with a long history of fielding questions concerning the provenance of artworks he'd sold.

Once a well-respected gallery owner in Melbourne, Gant, now in his late 50s, ran Peter Gant Fine Art and Gallery Irascible in Carlton from the 1980s until 2010. Of medium height, with a full head of white hair and a turned-up nose, he looks like a regular Australian knockabout bloke. Gregarious, charismatic and a consummate networker, Gant moved effortlessly between the worlds of horse racing and art. Auction houses turned regularly to him when looking for premium stock for their shows. "He was a very respected dealer, someone who could get hold of really high-quality work," says Chris Deutscher, from Sydney's Deutscher Hackett auction house, who was once a close friend of Gant's.

In the early days, Gant had been in business with another Melbourne dealer, Bill Nuttall, who still runs Niagara Galleries in Punt Road. Lauraine Diggins recalls the pair being close to some of the wealthiest art collectors in Melbourne. "Peter had this capacity for getting the trust of people," she says, "and [he and Nuttall] did really well. But then they fell out and went their own ways."

Controversy was never very far from Gant. As far back as 1989, Gant had sold a fake Russell Drysdale to a Sydney property developer, Robert Ojeda, and shared the commission with Chris Deutscher, who'd sourced the painting, in good faith, in the UK. When the client discovered it wasn't authentic, he arrived at Gant's gallery accompanied by an armed henchman to demand back his $250,000. According to later testimony from Gant, they locked him in the gallery along with the girls working for him at the time "and the big thug had a gun and demanded the money or else he said he was going to have me dead, my family dead".

In 1993, Gant was charged with deception for selling a John Perceval he didn't own, but acquitted. That same year he filed for bankruptcy, which was annulled after six months. And when, in 1998, John Playfoot appeared in a London court for selling a batch of Lalique glass that was alleged to have been irradiated to turn it purple, thus making it more valuable, he named Gant as the supplier.

Gant continued trading until another bankruptcy application in 2000. Again, he managed to pay off his debts to avoid bankruptcy. As later bankruptcy documents reveal, it was rich clients, friends and associates - Robert Le Tet, Guy Angwin and John Playfoot - who helped him out financially over the years.

Faun and Parrot, 1967, which depicts a grey axe-head figure, the faun, being attacked by a colourful parrot with a long, luxuriant tail, features several motifs that Australian modernist Albert Tucker was using in the late 1960s and closely resembles authentic works by the artist that appeared in an exhibition in Mexico City in 1968. Perhaps the forgers hoped that the works issuing from this period of his life would be less rigorously documented than others. Either way, they went about creating a trail of ownership, a provenance, that would strengthen the work's legitimacy.

When Louise McBride bought her painting, the Christie's catalogue named the owner as Barry O'Sullivan, the owner of engineering supplier Southern Bearings in Abbotsford, Victoria, whose father had allegedly bought it in the late '60s from the Flinders Lane Tolarno Galleries in Melbourne.

But McBride later discovered that the painting had passed through multiple hands in a short time, allegedly bought by Peter Gant from O'Sullivan before being on-sold to Sydney dealer Alex Holland in late 1999. Holland then consigned it to Christie's, where it was purchased by McBride in May 2000. At least two other Tuckers, later identified as problematic, were also sold by major auction houses at this time.

In a conversation with Good Weekend, O'Sullivan denies ever having been involved in consigning the work. "I have sold a Tucker through Gant, but not that one," he says. He adds that he'd never seen a fax on his letterhead that had been used to back up the sale, via Christie's, to McBride. It had been sent from Gant's office fax machine, thus raising questions about who had been its author.

The question vexing investigators is this: who painted the fakes? The glossy red door of Victorian Art Conservation, Aman Siddique's premises, was bolted shut on both occasions Good Weekend visited in August and a phone call to the restorer resulted in a hang-up as soon as I identified myself as a journalist.

Soon after, though, Siddique's lawyer, George Defteros, a well-known criminal lawyer in Melbourne with a client list that reads like a gangland who's who, rang and said he'd be happy to talk on his client's behalf. At his office, we sat down to discuss the March raid.

"My client is very angry about [the situation] because he doesn't feel he's done anything wrong," Defteros told me. "He's a man of no prior convictions, he has a very good reputation. Who is alleged to be the deceiver and who is the deceived? The warrant doesn't specify this."

Indeed, the warrant refers only to "paint, solvents, sketches, notebooks or any other item used in the manufacturing of the fraudulent Brett Whiteley paintings and related documents". But no Whiteleys - fake or otherwise - were found on the premises. Victoria Police did, however, seize about 30 paintings, including seven by Charles Blackman, 11 by Howard Arkley, photo-books of Arkley's works and an Arthur Streeton. Incongruously, Defteros's office in suburban Prahran was still cluttered with the seven bubble-wrapped Blackmans that had been returned by the police.

"I've asked my client to come and collect them but he's very upset about the raid," explained the lawyer. "He says they have been devalued and are now stigmatised because of the raid."

"Are they real Blackmans?" I ask, looking at the paintings more closely.

"We believe they are," he replies evenly.

It seems strange to have hundreds of thousands of dollars' worth of paintings sitting in a lawyer's office, but then that depends on whether they are real or fakes. As Defteros points out, it is no crime to copy a painting or to sign the artist's name on it. It is only when a person attempts to sell it as that artist's work that fraud occurs. Proving that intent can be difficult. The police will also need to establish clear links between Siddique and Gant to make their case. A committal hearing is expected early next year, with a trial to follow. "I suspect there are more Whiteleys out there and we would like to hear from the owners," says Detective Justin Stefanid of the Victoria Police.

Meanwhile, Stephen Nall is keen to talk about the rash of fake Robert Dickersons that began to appear on the market in the mid-2000s. Having grown up with the artist's work, he counts himself as an expert when it comes to identifying his stepfather's hand. "I saw approximately 12 fakes, which doesn't sound like many but is significant enough to be concerning," he says. "I saw one published in a Deutscher Menzies catalogue and that was a turning point for us because we realised that even the auction houses couldn't tell what was good and what was bad."

After Nall contacted the auction house, it was withdrawn from sale. But within a few years, the same forgery, Pensive Woman, was back on the market. "Someone came to us in 2008 and 2009, saying that they'd seen two works by Blackman and one by Dickerson in a collection owned by a self-managed superannuation fund and they believed they were fake," he says. Dickerson himself offered a certificate to the company confirming that it held a fake so that the super fund could get its money back from the dealer, but the last thing he wanted was to see the work simply returned to the same dealer. "Unfortunately, we had to sue," says Nall.

Together, Robert Dickerson and Charles Blackman sued Melbourne dealer Margaret Stewart, who'd sold the forgeries of their works to the super fund. And the person who'd sold the works to her? Peter Gant.

The case, which was heard in the Victorian Supreme Court in 2010, was extremely taxing for Dickerson, who was then 85, while Blackman, 82, wasn't well enough to testify. Despite the testimony of experts, Gant insisted that the works were genuine and defended the action on the basis that the artists weren't party to the sale and so had no standing to sue. But Justice Vickery also ruled that the works were indeed copies and should be destroyed. It was a landmark judgment.

In July 2010, in the courtyard of the Dickerson Gallery in Sydney's Woollahra, Blackman and Dickerson, surrounded by family and friends, held a ceremonial burning of the three works. As the smoke billowed, Blackman's friend and power of attorney, Tom Lowenstein, said the case represented a significant step in the treatment of forgeries. "This is a symbolic way of saying we don't want these things to be resurfacing in the marketplace," he said.

No findings were made against Margaret Stewart or, indeed, Peter Gant. Justice Vickery was prepared to declare the works fake but not to say who was responsible. He said he couldn't make a finding against Gant without hearing further submissions and noted that, if he were to do so, the consequences could be "most serious" for the art dealer. However, Gant was again placed in bankruptcy: he owed the tax office $1.9 million and Blackman and Dickerson $300,000 in costs.

Asked in the NSW Supreme Court during the Tucker case earlier this year about his role in selling the trio of forged Whiteleys, Gant defiantly insisted that all the paintings were real - and that the experts, all of them, were wrong. "None of them were fakes," he stated from the witness box.

"I suggest to you, Mr Gant, that you are a source of a large number of fake artworks on the Australian market," said McBride's QC, Francis Douglas.

"Well ... you are wrong," replied Gant.

The most recent spate of fakes reveals an unprecedented level of sophistication on the part of the forgers. All three "Whiteleys", for example, were listed on a 1988 consignment note purportedly connected to Whiteley's studio manager, Chris Quintas. That note is now believed to be a forgery, too.

In the case of Orange Lavender Bay, Playfoot gave Nasteski a catalogue for an exhibition, A Private Affair at Peter Gant Fine Art, dated 1989, to support its authenticity. But when it came to selling the painting again, Chris Deutscher, already suspicious, had the catalogue investigated. "It was digitally printed," he says. "It wasn't from 1988 or '89, as Gant claimed. It was new." Gant has since explained away the digital printing by saying that the 1988 exhibition never took place, but that he had copies of the catalogue printed later on in order to provide copies to customers. He denies there was ever any intent to deceive.

A University of Melbourne forensic report into Orange Lavender Bay, commissioned by Nasteski in 2010, concluded that the painting, which is signed "Brett Whiteley 88", "cannot be ascribed to the oeuvre of Brett Whiteley without further evidence". It found that the paint didn't behave like paint from 1988 and that the work was likely to be "less than five years old".

In 2007, Gant borrowed money from Robert Le Tet to buy a genuine Whiteley painting, View from the Sitting Room Window, Lavender Bay. The painting went on to become the subject of a sensational legal battle between Rod Menzies of Menzies Art Brands and Le Tet, the latter claiming possession of the painting by virtue of his loan to Gant. The case is important because it establishes that Gant had possession, for a time, of an original Whiteley from the Lavender Bay series. Experts explain that to create a passable copy, forgers need access to an original work in order to closely study the brush strokes and perfect the oeuvre. Once the technique has been mastered, it's possible to create further works from photographs.

Perhaps one of the most shocking revelations to come out of the McBride case is the deviousness of some of the most prestigious and respected auction houses in Australia. Through a freedom of information request to Melbourne University, McBride discovered that Christie's had become suspicious and sought advice from forgery expert Robyn Sloggett about Faun and Parrot, 1967 soon after the auction house had sold the painting to her in 2000.

The sudden appearance of several other Tuckers and a phone call from Tucker's estate to Fiona Hayward, at the time Christie's assistant director, querying the paintings and their confusing provenances, had put the famous auction house on high alert. A meeting was convened at Sloggett's Centre for Cultural Materials Conservation; in attendance were Albert Tucker's widow, Barbara, his executor, Lauraine Diggins, and Fiona Hayward.

Of the six works examined, four could not be supported as genuine Tuckers. McBride's painting was among the four, but Christie's failed to share this information with her in 2000 and has refused to compensate her since she found out in 2010.

Geoffrey Smith, the chairman of Sotheby's Australia who identified McBride's painting as a fake in 2010 after noticing it hadn't been included in the Tucker archive, says, "In my view, every painting is guilty until proven innocent." In the case of McBride's Faun and Parrot, 1967, the warning signs were its incomplete and confusing provenance. "Works of art do not magically appear," he adds.

Stephen Nall believes that changes to the law are urgently required to restore confidence in the market. "If a person sells more than, say, $20,000 worth of artworks in a year, they ought to require a licence," he says. "The action itself of selling a fake should be a crime, defensible only if you can prove you had a justifiable reason to believe it's a genuine work. In other words, reverse the onus of proof."

So where are the fake artworks now? Pridham's Big Blue Lavender Bay is in a secure-storage facility somewhere in Sydney; Orange Lavender Bay is back with dealer John Playfoot, who refunded Nasteski his money; and the third, Through the Window Lavender Bay, is at Gant's barrister's chambers, having been returned by a very disillusioned Guy Angwin. McBride's Faun and Parrot, 1967 is an exhibit in the current litigation and in the possession of the Supreme Court of NSW.

There are undoubtedly many other fakes that have not made headlines. Some have been returned to dealers who quietly refund the money to their clients; others hang on the walls of unsuspecting art collectors who won't know they've been scammed until they decide they want to sell.

Even if the counterfeiters are brought to book here, experts fear the next wave of forgeries will come from China, where artists can produce replicas far more cheaply. They cite the case of paintings worth $2 milliontaken from the Darling Point apartment of developer Peter O'Mara in 2010 and recovered last year in a house in suburban Sydney. One theory is that the paintings had been to China and back, where forgers studied the brush strokes to produce a new generation of fake Blackmans, Boyds and Dickersons, soon to infiltrate the Australian market.