Amanda Gray, Managing Associate in Art Law of Mishcon Private, discusses the intricacies of crime in the art world and how to protect yourself as a seller, buyer or enthusiast in her article Your Monet or your life, featured in the Autumn edition of Art & Museum.
Frequently glamorised, the links between art and crime are longstanding. Whether it is a theft of a Van Gogh or the Greehalgh forgeries the reporting of art crime always contains a frisson of intrigue, that most other areas of crime do not command.
However art crime comes in many shapes and sizes, some crimes are incredibly mundane, others more sensational. Regardless of whether you are a collector, dealer, or artist, the implications and effect can often be far from attractive - hard won reputations of experts, collectors and their legacy have often been damaged; collections tainted by association; and livelihoods lost. It is not a victimless crime.
Aside from the more obvious crimes of theft, looting, handling and criminal damage, those involved in the business of buying and selling art need to be aware of their position and potential exposure. For any party in an art transaction whether you are a buyer, seller or intermediary such as a dealer, you need to know who you are doing business with (as much as is possible), and what is being transacted on.
Too often it is apparent that something is amiss with a transaction and/or those involved. Art transactions are known for being complex and opaque, rarely do you get Party A - the seller, transacting direct with Party B - the buyer. In the usual course you would expect Party A to have an agent who will act as a facilitator in the sale, for which they will take a commission. Party B is also likely to have their own agent who in turn will deal with Party A’s agent. In addition there may also be introducers, further agents and legal advisors for all parties involved, which creates further layers in the process. It is perfectly legitimate practice when done in accordance with the laws of agency and contract.
Often, for very valid commercial or personal reasons, a collector may not want it to be known that they either own, are selling of acquiring a particular work, or that they have sufficient funds to purchase a work. However this lack of transparency, coupled with the thrill of an acquisition, does provide the perfect climate for those who may want to commit a crime. Under current legislation, there are questions that you as a party to a transaction should consider as a matter of course, in relation to the artwork, the parties involved and the structure of the transaction. This is particularly the case if you will be accepting or sending monies on behalf of any other party. Here are a few examples of the types of questions you should be asking:
- Have you seen the artwork or been provided with undisputed evidence of ownership and provenance?
- Who is your client? Have you verified their identity? Have you identified any parties on whose behalf they are acting?
- Are you being asked to do anything unusual, such as provide an invoice evidencing the transaction to an unknown third party?
- Of the parties known to you, have you dealt with them before? Are they known in the art market, and if so, what is their reputation? What is their connection to the artwork or to the ultimate seller or buyer?
If you are new to the art market and believe you are being offered the opportunity of a life time - for example to be part of a sale on a Picasso (it has been known) - you need to start asking questions and seek appropriate advice (or walk away).
Too often, it transpires that a work does not exist, the work was a fake, or the sale itself was an exercise in money laundering. The art market is also not immune to cybercrime, emails can be targeted, account numbers changed and funds diverted.
The methods adopted are also becoming increasingly sophisticated, similarly if monies are coming into your accounts (for example because you are the seller or agent) you need to ensure that you have done due diligence on the source.
An equal level of scrutiny needs to be applied to the artwork or artefact.
If you are the owner of the artwork, regardless of whether you intend to sell – it is recommended that you prepare an inventory of your artworks and do some due diligence on them. Collectors often do not have inventories, and consequently artefacts are not always identified as lost or stolen. We have been involved in recovery of stolen artefacts where the client was only aware of the theft of pieces from their collections when an auction catalogue notice was brought to their attention or where they were subsequently informed by a dealer.
If you are looking to loan, or sell a piece from your collection, it is worth taking the time to identify any issues with the work at the outset. It may result in you deciding to take a different approach. Some of the key issues to consider are:
- How, when and where the work was acquired? Has the dealer or type of artefact been involved in any controversy?
- Was the work acquired in the 1980s or earlier when standards of due diligence were not as high
- What was the country of origin of the work and how old is the artefact? (Is it possible that it is a looted artefact of protected by international laws?) Where did you buy the work (different laws apply in different jurisdictions as to the passing of good title)
Export/Import documentation: Are there are any anomalies or inconsistencies on the import/export documentation?
Provenance: Are there any gaps in the history of ownership that may cause concern in reference to the wider historical context for example looting or the Second World War?
Authentication/attribution documentation: What documentation was provided with the work? Could it have been taken from another original work to validate and authenticate the work in question? Which experts have assessed the work – are they known? Has it been faked?
In many ways whether the original purchase was made in good faith becomes a moot point with regard to reputation. If the piece is called into question, the fallouts from private sales and withdrawal from auction can be costly, result in protracted negotiations and sometimes can be very public and political depending on the piece. If assertions about the sources of work are right, a shadow is cast over your collection and ultimately your legacy. Subject to the significance of the artefact, the ripples caused by a looted, stolen or allegedly looted artefact can be global. Therefore these are matters that you should consider presale - even if it is a private sale. If you are an acquiring party, or agent you should certainly be raising these questions about due diligence. Reliance on warranties and an indemnity in a contract is not sufficient. You could be walking into a costly and public matter that may end in litigation, or at the very least leave you as the victim of a scam.
You want to be assured of what you are buying as much as you can be. Often even with sophisticated parties the heart rules the head - think of the various experts and collectors who have been duped in the recent forgery cases. Fraudsters play on the desire to acquire and for new discoveries to be made, so it is advisable to take steps to protect your position.
Amanda Gray is a Managing Associate in Mishcon de Reya LLP, specialising in Art Law and the field of Luxury Assets