Art Crime and its Prevention: A Handbook for Collectors and Art Professionals

(2016).

INTRODUCTION AND ACKNOWLEDGMENTS

Arthur Tompkins

Art crime is continually in the news. Even as I write this short introduction, the art world and the wider world is ringing with the mid-November 2015 news of the armed theft of masterpieces valued at many millions of euros, from the Castelvecchio Museum in Verona, Italy. Fifteen masterworks, including paintings by Tintoretto and Rubens, were taken by three masked men who overpowered guards and a cashier, and kept them at bay as they selected the works to steal. Thus is the art world, and humankind’s shared artistic and cultural heritage, tragically and again diminished. As John Donne put it so succinctly and evocatively in December 1623 (317 years before Ernest Hemingway took it, in October 1940, as both the title and epigram for his For Whom the Bell Tolls):

No man is an Iland, intire of it selfe;

every man is a peece of the Continent, a part of the maine;

if a Clod bee washed away by the Sea, Europe is the lesse, as well

as if a Promontorie were, as well as if a Mannor of thy friends

or of thine owne were;

any mans death diminishes me, because I am involved in Mankinde;

And therefore never send to know for whom the bell tolls; It tolls for thee.

The multidisciplinary nature of the study of art crime, pioneered by the Association for Research into Crimes against Art (ARCA), the co-publisher of this volume, highlights both the way in which crimes against art cross many intellectual and professional boundaries, and the way in which art and cultural heritage belongs to all humankind and should, as John Donne thought, be a concern of all humankind. From the ancient archaeological treasure house of the Fertile Crescent, currently under fire from fundamentalists and iconoclasts of the most destructive bent, through to the impenetrable and rarefied world of the contemporary art market, and on to the virtual (but often vulnerable) world of the internet, and on all of the many islands of endeavour in between, scholars and researchers and practitioners are striving to research, to avoid or to minimise, and to prevent or indeed make right, or simply to document and understand, crimes against art and against humankind’s shared cultural heritage.

This book brings together many of those scholars and researchers and practitioners, to distil and present their accumulated wisdom and experience in this developing area. Whilst this book cannot and does not pretend to be exhaustive (impossible in a field where the creative but misguided efforts of numerous malefactors are constantly evolving and refining their criminal techniques), the wide range of chapters covers many of the more commonly encountered art crimes, from theft to fraud to vandalism to looting to fundamentalist iconoclasm, and more. Some are intensely practical, others more reflective and conceptual in their approach; but all offer to working professionals – be they curators, collectors, museum or gallery directors, or students of art crime – insights born of experience, research and wide knowledge.

Villains and the Art Market

The largely unregulated and unconstrained art market is analysed by Tom Flynn, long-time observer and commentator of this field, as a complex set of interlocking aesthetic and economic systems, intersecting but also discrete, each with its own set of codes, conventions and relationships. He notes, in particular, that the larger auction houses have become more akin to globalised financial institutions deploying ever more opaque financial constructs and sheltering behind a veil of secrecy and confidentiality, which encourages or fosters a perception of exploitability. These characteristics underline the critical importance of appropriate provenance, of due diligence, and of ensuring authenticity.

Marc Balcells examines the prevalence and incidence of art theft around the world, noting both the evolving scope of the ‘art’ involved, and the problems besetting the integrity of the data upon which a criminological and substantive analysis of such crime must necessarily be based. He undertakes an evidence-based description of the various motivating factors driving art thieves and art thefts. He then builds on this analysis to offer both preventive measures and policy recommendations, including the need to avoid the recurrent myths and to build a more robust data set.

Toby Bull, from his perspective as a serving Hong Kong-based law enforcement officer, delves deeply into both the ways in which art thieves seek to profit from the criminal endeavours, and best practice when it comes both to achieving the recovery of stolen art, and the fraught area of the use of rewards to effect that recovery. He highlights the invalidity of the recurring myth of the gentleman art thief, pointing instead to the far more common use of stolen art being either to sell back, or to use as collateral, by opportunistic and often versatile and well-connected criminals who steal art and then try to work out what to do next. He distinguishes a ransom from a reward, and sets out in detail the circumstances, legal and practical, in which the latter can both be offered in an appropriate and timely fashion and enhance the chances of recovery and arrest.

Colette Loll opens her chapter with a detailed dissection of the pervasive anxiety in the modern art marketplace occasioned by high prices fostering an environment of fraud and mistrust, before turning to the fast-developing world of the online art marketplace, and in particular work done to develop a proactive anti-fraud initiative in this domain, in search of effective solutions. In essence, she notes that the move of the art market into the online space has had the effect, here as in so many other areas, of rendering irrelevant aspects of the traditional art market so as to make compelling the active interaction of technology, data analysis and multi-disciplinary specialists.

Art lawyer Louisa Gommans lays out a road map for the prospective buyer of art, setting out essential steps to be taken before an art work is purchased (due diligence, provenance research, informed reliance on connoisseurship and forensic testing), and before a seller or dealer is relied upon. Then, if the worst happens, she describes the steps to be taken by the dispossessed or defrauded owner, and the importance and relevance of several aspects of the legislative and legal environment as it applies to a particular transaction.

Finally in this section is my own chapter focusing on the two major hurdles that confront private litigants seeking to recover stolen art across national borders: the variable law relating to the acquisition of good title to a stolen art work, and limitation periods that preclude legal action after the passage of time. These issues are resolved in different ways in different legal systems around the world. The resulting legal landscape confronting a litigant can thus be confusing, depending on where it is that a stolen art work surfaces, which is often continents and decades away from where it was originally stolen.

Collections and Crimes

Penelope Jackson, drawing on her long experience as an art-museum director and curator, opens the section on ‘Collections and Crimes’ by focusing, in a practical and systematic fashion, on what can and should be done to protect objects in collections. Subdividing her discussion into factors relating to the organisation, the object, and empowering protection, she highlights planning, asset registers, auditing and personnel management, databases and process development and recording in the first area; physical layout, conservation, hanging and displaying techniques, and the development of a proactive community around the objects in the second area; and finally aspects of human involvement, physical setting and illumination, and adherence to protocols. In the end, as she notes, no one factor is a universal answer, but rather it is an informed combination of all that will enable the difficult but critical balance between the viewer experience and protection to be appropriately struck.

Dick Drent, an experienced museum security specialist, subdivides his hands-on discussion of protecting art into strategy, tactics, technology, and new paths for proactive security. He advocates transforming the exhibiting organisation into a ‘high-reliability organisation’, putting proactive security at the heart of its approach to developing and executing all aspects of a formal security plan in an unforgiving environment, where the art is always, albeit variably, at risk. The use of predictive profiling, ‘red-teaming’ and an effective working security chain are all analysed and described, as is the careful and informed use of an institution’s available security budget. A spectrum of innovative security technologies are described, culminating in the use of predictive security intelligence, all aimed at removing the surprise aspect of any threat to an organisation’s art.

Virginia Curry brings to bear her long experience with public law enforcement in the art world, widening the focus to include a law-enforcement perspective on theft of art, and also vandalism, forgery and fraud. Art crime in times of armed conflict, and Nazi-era looted art, are highlighted by reference to both the work done by the Blue Shield and the importance of the 1998 Washington Principles. She notes the difficulties with earlier reliance on connoisseurship, and describes the downfall of the storied Knoedler Gallery, before turning to the importance of research prior to purchasing and, after a crime, of dealing appropriately and effectively with law enforcement.

Art insurance has a very long and distinguished history, and forms the backdrop to Dorit Straus’s guide both to navigating its complexities, and to adopting industry best practice so as to minimise fine-art losses, during transportation, storage, installation and display. She dissects the insurance transaction itself and the critical features of the all-important policy document. She then turns to various cautionary tales of attempts, over the years, to defraud insurers, including fraudulent valuations, fake robberies, loss of value by forgery or fakery, and fraud by galleries or other consignees.

The last chapter in this section marks something of a departure from the others, as it deals in depth with an ongoing and difficult problem: the intersection of indigenous art and the contemporary art world. Whilst this issue has its origins in the colonial era, the wide diaspora of indigenous art from that time continues to present problems today. Ngarino Ellis traces in detail the arc of the history of looting and theft of art in colonial-era New Zealand, from the late eighteenth century through to the present day, so as to assist readers who are compelled by circumstance to interact with indigenous art in their own settings. Whilst her recommendations and guidance are focused on the New Zealand setting, the principles underlying those aspects of the chapter will, with appropriate changes, be equally applicable to other countries and collections that find themselves at the same crossroads.

Art and Conflict

The final section of the volume is concerned with art crime in times of armed conflict. I open it with a discussion both of the motivations and reasons underlying art crime in such situations, and the international community’s current, but now dated and in parts problematic, attempt to deal with such crimes: the Hague Convention of 1954. The ambit of the Convention is described, the central protective obligations imposed on states are detailed, the particular problem of the Convention’s relevance to non-state combatants is considered, and shortcomings of the Convention are identified. Relevant and recent events in both the International Criminal Tribunal for the former Yugoslavia and the International Criminal Court are described, and a checklist of actions to be taken before, during and after an armed conflict is given.

Laurie Rush, drawing on her pioneering work with the United States military, takes the reader on a sweeping historical survey of the looting of antiquities from the coast of Sicily in 648 BCE to the notorious free ports in contemporary Switzerland, detailing a variety of case studies and techniques, including the concealing of looted antiquities in fake tourist items, underwater archaeology, the link between looting and terrorism, and steps that the art trade could and should take.

The destruction of parts of the ancient city of Palmyra, the depredations of Ansar Dine in Timbuktu, and the destruction of the Bamiyan Buddhas, all feature in the opening sections of Alexander Gillespie’s scene-setting survey of iconoclasm. With the international community thus far seemingly impotent to prevent such crimes, his description of the work of the United Nations Security Council, the importance of education and debate, and of taking what steps can be taken to interdict the flow of looted antiquities, all loom large. In order for us all better to understand the present fundamentalist-driven destruction of humankind’s shared cultural heritage, his detailed and insightful survey of iconoclasm, and the evolution of attitudes and responses to the looting of cultural heritage during warfare, from the ancient and classical worlds, through the Crusades, on to the American Civil War, and finally through the Napoleonic conflicts and the two World Wars, is illuminating and valuable. As he notes, the seemingly sudden emergence and acceptance of the need to value and protect cultural heritage as an international norm has now become the yardstick against which the actions of the iconoclasts must be measured. This has itself resulted in a number of international conventions and instruments as manifestations of the fact, as Gillespie notes, that the destruction of cultural heritage during armed conflict is the antithesis of the collective norm that has taken four thousand years to evolve.

Thanks …

My thanks go first to Noah Charney and ARCA, for introducing the world (and, serendipitously, me) to the disciplined and systemised study of art crime in all its varied manifestations. To Lynda Albertson, hard-working CEO of ARCA, and to the staff and interns and students and friends of ARCA over the years, for all of their annual (and infectious) inspiration and enthusiasm in Amelia, in Umbria, my sincere thanks. It has been, and continues to be, quite a ride.

My heartfelt thanks go to each of the authors of the chapters that make up this book. You politely put up with my regular intrusions into your busy lives, and with my injudicious prodding and cajoling and enquiring. Thank you.

And especial thanks to Lucy Myers, Lucy Clark, Lucie Ewin, our copy-editor Abigail Grater, and all the team at Lund Humphries, who first accepted the idea, and then graciously and carefully and professionally shepherded us through the process from beginning to end.

And finally, thanks to you, the reader.

Arthur Tompkins is a District Court Judge based in Wellington, New Zealand. He teaches the ‘Art in War’ component course at the Association for Research into Crimes against Art’s annual Postgraduate Certificate Programme in Art Crime and Heritage Protection Studies, in Umbria, Italy.

I

VILLAINS AND THE ART MARKET

1 The Art World

» Compliant Victim ?

Tom Flynn

2 Go Research an Art Thief

» The Importance of Empirical Research on Art Theft

Marc Balcells

3 Methods of Profit

» Rewards, Ransoms and Buy-backs – Knowing the Rules of Engagement

Toby Bull

4 Art, Anxiety and the Online Marketplace

Colette Loll

5 Art Crime Law

Louisa Gommans

6 International Art Crime Law

Arthur Tompkins

1

THE ART WORLD

COMPLIANT VICTIM?

Tom Flynn

What is ‘the art world’? The philosopher Arthur Danto has suggested that the art world ‘stands in relation to the real world in something like the relationship in which the City of God stands to the Earthly City’.¹ In this formulation the art world assumes a quality of unreality, of detachment from everyday life, its objects somehow resisting conventional economic assignments of value and utility. ‘Certain objects, like certain individuals, enjoy a double citizenship,’ Danto writes, citing Andy Warhol’s Brillo Boxes as a case in point by noting that ‘the Brillo box of the art world may be just the Brillo box of the real one, separated and united by the is of identification.’

The ‘is of identification’ is itself a product of the codes and conventions created, understood and shared by the complex network of interdependent, social and institutional relationships of which ‘the art world’ is comprised. However, instead of conceiving of the art world as a single, unified city or planet, we might consider it a composite of different celestial bodies like the solar system. The dictionary offers a range of definitions of ‘the world’, from ‘the earth as a planet, especially including its inhabitants’, to ‘a complex united whole regarded as resembling the universe’, and even ‘any star or planet, especially one that might be inhabited’.²

Such cosmic notions are helpful for an understanding of the diverse creative activities, private and professional institutions, commercial structures, social codes, symbolic practices, and yes, occasionally unethical and illegal behaviours, that make up what is commonly termed ‘the art world’.³ We might extend the planetary metaphor even further by visualising the art world as a kind of orrery. Invented by Enlightenment scientists, orreries were designed to represent the orbital movement of each planet relative to the sun. Like the orrery, the art market is also a product of the eighteenth-century Enlightenment, when the social role of the artist gradually completed its transition from that of the artisan. This was also the period when the patronage/commissioning system that had previously dominated the art market steadily began to give way to the commercial activities of agents and dealers.⁴ The various planets of an eighteenth-century orrery were set in motion by a clockwork mechanism, whereas the ‘planetary bodies’ forming our notional art-world orrery – auctioneers, dealers, museums, curators, collectors, speculators, bankers, critics – are driven by the interaction of two seemingly antithetical forces: aesthetics and economics.⁵ While they have sometimes been considered hostile to each other, it is the creative tension generated by these two discrete but overlapping ‘logics’ that results in the myriad outputs of ‘the art world’ and the creative industries that enrich our lives.

For some art buyers, the aesthetic qualities of a work of art will always take primacy over the economic benefits of ownership, while for those with a more investment-focused motivation the work’s economic profile will be of principal concern.⁶ It would be wrong, however, to assume that those of the former persuasion care nothing for the economic aspect of the art they purchase, as would be the assumption that all investment-orientated buyers are blind to art’s aesthetic qualities. It is the overlapping boundary between these categories that makes the art world so challenging and sociologically intriguing.

Primary and secondary markets

One of the critical outputs generated by the interlocking systems of aesthetics and economics is the assignment of value and price to objects in the market.

The art market is broadly separated into two sectors known as the primary and secondary markets. The ‘primary market’ concerns objects newly created by the artist or craftsperson that have never been previously transacted. In the art market this has traditionally been the sector controlled principally by art dealers. Dealers (or gallerists as they are usually termed in the North American market) seek to identify and represent artists whose work they feel has aesthetic value and thus a modicum of commercial potential. To this primary level of aesthetic selection dealers add a range of promotional and commercial services, including exhibiting the work in a gallery or at art fairs (and more recently via a range of digital platforms). The aim of these strategies is to disseminate knowledge of the artist and the work to collectors, critics, curators, academics and other interested professionals – the occupants, as it were, of the ‘field of cultural production’ – in order to build belief in, and prestige around, the artist and the work.⁷ As well as lending moral support, encouragement and friendship, some dealers occasionally add a further financial commitment to their artists by offering regular monthly stipends or more occasional forms of monetary assistance.⁸ Critical to this approach, however, is the cultivation by primary market dealers of a disinterested approach to the economic dimension of what they do. Through a disavowal of the profit-orientated motive, dealers seek to foreground their prestigious, symbolic function within the dense social matrix of art-world individuals and institutions – which includes other dealers, auction houses, critics, collectors, museums, galleries, the education system, the media, and so on.

While dealers play an important role in promoting otherwise unknown or unrecognised artists to a wider public, this process comes with a certain amount of financial risk. It can take time for a young or emerging artist to develop his or her creative ‘voice’, requiring artist and dealer to build a meaningful, long-term relationship based on trust, mutual respect and shared aspirations. In order to offset the financial outlay that such arrangements entail, many primary market dealers engage with the ‘secondary market’, that is to say by buying and selling works that have been transacted on one or more previous occasions. One of the principal arenas for the secondary market is the auction houses.

In the European historical tradition, auction houses developed as agents for the seller, taking a small commission from the vendor on the hammer price. In the mid-1970s, however, as the market expanded and competition intensified, the bigger UK auction houses of Christie’s and Sotheby’s took the radical step of extending their commission structure to include a ‘buyer’s premium’.⁹ Under this arrangement (fiercely opposed by the UK trade at the time of its introduction in May 1975), the buyer of a lot is required to pay a commission to the auction house, levied as a percentage of the hammer price. Auctioneers were now benefiting financially from both parties in the transaction. This is still viewed by many as a conflict of interest that obscures the boundary between the roles of agent and principal.

The traditional function of the auction houses has changed in other ways as well. In 2008, Sotheby’s took the unprecedented step of offering at auction a consignment of works by the British artist Damien Hirst, in which every object came fresh from the artist’s studio, none having previously been transacted. Not only was this widely viewed as the auction houses moving into the primary market territory previously governed by dealers; it also represented a shift in the economic status of the artist. Living artists traditionally rely on their dealer as their main route to market, but Hirst chose to bypass his two main UK and American dealers and instead consigned directly to the open market via the auction block.

Auction business is currently undergoing a radical transformation as the market globalises, competition increases and ever greater levels of wealth are generated. These factors have had the effect of bringing the auction houses into closer alignment with banks, wealth managers, hedge funds, and other investment vehicles. The bigger auction houses might now be seen as discreet brokerages in which blue-chip art assets are deployed as exotic tools in ever more opaque financial transactions.

High prices

Mentions of ‘the art market’ in the mainstream media invariably refer to the rarefied zone of activity in which, almost every year, eight- and even nine-figure sums change hands for rare works, sometimes at public auction, but increasingly by private treaties forged behind closed doors away from journalistic scrutiny. In the last three or four years, reportedly, a painting by Cézanne has sold for $250 million; a work by Gauguin for $300 million; a Picasso for $179 million; and two sculptures by Giacometti together totalling $205 million.¹⁰ In other words, just shy of a billion dollars has been forked out by three or four separate individuals for just five works of art. Tellingly, the two highest priced of these sales were conducted privately and the exact sums never officially confirmed, suggesting that the prices paid might have been even higher. What effect such part-private/part-public transactions have on the creation of value within the broader market and how the market is perceived by outsiders, including the criminal classes, is yet to be properly explored.

All of the transactions mentioned above were paid by collectors enriched by the profits from either liquid petroleum (Qatar) or hedge funds (New York). This wealth factor explains the recent growth of interest in art collecting not only among Middle Eastern collectors and North American investment managers, but also among the newly enriched in Russia, China and, increasingly, South America. It is only a matter of time before the African and Indian art markets begin to engage at the top level as their economies accelerate and the wealthiest in those continents seek fashionable ways to communicate their material success. Inevitably, perhaps, as ever greater wealth is invested in art, so the art object comes to be seen as a kind of currency, a ‘store of value’, symbolising the market’s economic infrastructure.

The historical record confirms that wherever wealth has been generated, art markets, or variants of them, have flourished. This was observable in Renaissance Florence in the fifteenth century; in sixteenth-century Antwerp; in Amsterdam in the mid-seventeenth century; in London in the eighteenth century; in Paris in the nineteenth century; and in New York in the post-war period. Following the end of Soviet-style communism in 1989 and the subsequent spread of market capitalism concomitant with globalisation, wealth generation in the world’s emerging economies reached unprecedented levels. The World Wealth Report informs us that 920,000 new millionaires were created globally in 2014, as High Net Worth Individuals (HNWIs) ‘grew in both number and wealth to 14.6 million and US$56.4 trillion, respectively’.¹¹

As the number of wealthy individuals increases in the developing world, so art markets are growing accordingly.¹² This trend has been most marked in the Asian economies, with the Chinese art market in particular seeing exponential expansion over the last decade.¹³ However, the widely reported cases of malfeasance in the Chinese market – including bribery, money laundering, the abuse of the auction process and the endemic culture of faking and unauthorised replication of works of art – prompt us to bring a level of scepticism to the rosy picture presented by some economists and research analysts. Until standards in professional practice improve, the Chinese art market will be impeded by such irregularities, which falsify price, increase risk and discourage participation.¹⁴

For better or for worse, the art market is subject to a range of characteristics and conditions that set it apart from more conventional markets and cultural realms. These might be summarised as:

the uniqueness of the art object as a non-fungible, non-augmentable ‘asset’

the emotional, social and symbolic dimension of art consumption

a lack of transparency in commercial transactions

an asymmetry or disequilibrium of information between participants

a susceptibility to various forms of insider trading

the illiquidity of art as a ‘commodity’ (it is expensive to transact and generates no cash flows)

cultural differences over such concepts as originality and authenticity.

Privacy and confidentiality

Because many art transactions are conducted beneath a veil of secrecy, it is nigh on impossible to make anything approaching an accurate quantitative estimate of the market’s true size. Confidentiality has been a characteristic of art commerce since the Italian Renaissance and can be ascribed to the unique nature of the art object as a thing subject to the vagaries both of economics and aesthetic judgment. From that peculiar conjunction is born the market price, the disclosure of which is often hindered by the imperatives of private investment. In passing on their enormous wealth, the early members of the Medici family of Florentine bankers and art patrons were sensitive to how their sumptuary activities might be perceived by the broader populace and advised their heirs to avoid litigation and not to attract attention. A full five hundred years later, a similar fear of publicity troubled the New York department store owner and art collector Benjamin Altman, who expressed concern that customers might make a connection between his high-end art collecting and the price of goods in his retail stores.¹⁵

Today, much of the art trade remains highly confidential, indeed secretive, particularly in the higher-priced sectors of the market where art consultants and advisers act as agents on behalf of the world’s wealthiest families and individuals, ensuring them high levels of privacy and anonymity. Nor is it only private collectors who run shy of publicity. In the past decade alone the market has witnessed an increase in the transactions conducted by the bigger auction houses in the form of private treaty sales rather than by public auction. These developments add a further level of obscurity to an already opaque market, hindering the efficient collecting of price data and militating against an accurate overview of market size.

Another, not unrelated issue is the dual role now undertaken by the major multinational auction houses in acting as both agent and principal in a transaction. This happens when the auction house offers a guaranteed price to a vendor in order to secure a consignment. If the work fails to sell on the appointed day, the vendor is still paid the guaranteed sum and the auction house becomes the de facto owner of the work. When first introduced in 1956, guarantees were underwritten by the auction house.¹⁶ More recently that risk has been transferred to third parties incentivised by an attractive share of the ‘upside’ – the differential between the guaranteed price and the final hammer price (if it exceeds the guarantee). This has led to allegations of a potential conflict of interest, with some commentators seeing it as a form of insider trading given that the terms of the guarantee are kept confidential between the third-party guarantor and the auctioneer. While such practices are not technically illegal, they are nevertheless widely viewed as unethical and contribute to a perception that as the art auction market moves ever closer to the financial markets so its business practices require tighter regulation.

Looking more closely at the art world today it is hard to avoid the conclusion that markets for art have entered a new era. Globalisation, unprecedented wealth generation, the internet and related social networking technologies, geopolitical upheavals, the increasing power of the banking profession: these and other factors have helped bring about a structural change in how art is traded, how art is collected, how art is understood and perceived. Inevitably, perhaps, these changes have also attracted the attention of a criminal tendency opportunistically attuned to the informalities that constitute both the market’s strengths and weaknesses. Most