By; A.M.C. Knutsson
In recent days numerous articles have been
released outlining the role of art in the Panama Papers. (For an outline of the
nature of the Panama Papers click here.)
Based on these leaked files, journalists
have mapped how art has figured within a system of tax avoidance and ownership
concealment. Both for the money and for the art, the purpose of these ventures
can be described as a superficial repudiation of ownership, in order to fortify
the same and to protect the assets from various types of intrusions. The usage of shell-companies can thus safeguard
the real owners from challenges to
their ownership as they officially are not the named owners.
One example of this is the case of Dmitry
E. Rybolovlev, the Russian billionaire collector, who according to the
International Consortium of Investigative Journalists (ICIJ) used the infamous
law firm Mossack Fonseca to protect his ownership of his $2 billion art
collection during his divorce proceedings.[1]
The divorce proceedings started in
December 2008 and according to Swiss law, which the couple resided under, the
two spouses were entitled to equal parts of their wealth. However, Mossack
Fonesca had been instrumental in transferring ownership of the collection,
which included, among others, paintings by Picasso, Van Gogh, Modigliani and
Rothko, to the company Xitrans Finance Ltd in the British Virgin Islands. This
meant that they could no longer be found nor considered part of their shared
wealth in the divorce proceedings. [2]
On April 6 Rybolovlev's family lawyer made a statement claiming that the "description and references to the divorce proceedings
of Mr Dmitriy Rybolovlev are misleading", as it "fails to state that
the ex-spouses Rybolovlev amicably settled their matrimonial dispute and
announced in a joint statement dated 20th October 2015".[3] He further points to the fact that Xitrans
Finance had been established in 2002, several years before the divorce
proceedings and that its use "as a holding entity to constitute a
remarkable art collection has been publicly disclosed in numerous publications
worldwide and is perfectly legitimate.”[4]
Nevertheless, according to the Panama Papers
Mossack Fonseca has for decades been helping spouses to shield assets from
their better halves. Martin Kenney, an asset recovery specialist based in the
British Virgin Islands has been helping wives from numerous countries including
the UK, USA and Russia to recover hidden possessions. According to him, “These
offshore companies and foundations . . . are instruments in a game of hide and
concealment.”[5]
Another type of ownership obscurity can be
seen in the case of the Seated Man with a
Cane, a Modigliani painting bought in 1996 by the International Art Centre
(IAC) and valued at $18-25 million.[6]
According to a restitution claim filed by Philippe Maestacci on October 28,
2011, this painting had been looted by the Nazis from his grandfather, the art
dealer Oscar Stettiner. Stettiner's inventory had been sold by Marcel Philippon
a Nazi-appointed administrator after Stettiner fled from Paris in 1939. The
Modigliani had been sold in 1944 and as early as 1946 Stettiner tried to
retrieve the work but died two years later without resolving the claim. [7]
In 2011 Maestracci picked up the struggle and sued the art dealing Nahmad
family, often associated with the IAC, seeking the return of the painting.
However, the suit was withdrawn when the Nahmads claimed that the IAC owned the
painting and rather than themselves.[8]
Indeed the ICIJ has reported that “The Nahmads have
insisted in federal and state court in New York that the family does not
possess the Modigliani.”[9]
The Panama papers have now revealed that the International
Art Centre has been owned by the Nahmad family for 20 years and since 2014 the
patriarch David Nahmad has been the sole owner.[10]
Confronted by the ICIJ David Nahmad's lawyer, Richard Golub, insisted that
"Whoever owns the IAC is irrelevant", and the main issue is that
Maestracci has no evidence that his grandfather, Stettiner, was the painting's original
owner.[11]
This standpoint seems not to be commonly shared and on April 8 the Geneva
Prosecutor's Office searched the facilities in the Geneva Ports looking for the
lost painting.[12]
It was later revealed that the painting had been confiscated by the prosecutors
during the raid.[13]
While the restitution claim remains to be settled the reappearance of the
painting and the confirmation of David Nahmad's ownership finally makes it
possible for Philippon to proceed with his restitution claim.
According to Anders Rydell who has studied
Nazi looted art, this case is not unique but he has found several other cases
of Nazi confiscations figuring in the leaked files, which have also been hidden
away through shell-companies and thus been beyond the reach of restitution
claims. With the release of the Panama Papers he observes that "Maybe the
right full owners may get their art back."[14]
In addition to these ownership battles,
ample works of art are believed to be hidden away from sight as well as tax
through shell-companies in the Free Ports. [15]
The story of hidden art has just started to unfold and has still a long way to
go. What the new discoveries in the Panama papers reveal is not all that
surprising, but rather a sad prediction revealed to be true. The art market has
long been known to involve shady deals and international crime syndicates. The
revelation that art is hidden away should not be news to any of us, but perhaps
the emergence of the Panama Papers actually offers a rare opportunity to
resolve some of the long standing mysteries which has troubled the art market.
Perhaps this will allow restitution claimants fresh material which can enable
them to proceed with their cases. Perhaps long lost paintings will be
rediscovered from the bowls of the world's Free Ports. Perhaps not. We will
wait and we will see.
___________________________
[1] http://www.nytimes.com/2016/04/12/arts/design/what-the-panama-papers-reveal-about-the-art-market.html?_r=0, access 15 April 2016
[2] http://theartnewspaper.com/news/news/panama-papers-russian-billionaire-dmitry-rybolovlev-used-offshore-company-to-hide-art-from-wife-leak/, access 15 April 2016
[6] http://www.nytimes.com/2016/04/12/arts/design/what-the-panama-papers-reveal-about-the-art-market.html?_r=0,
access 15 April 2016
[7] http://www.artnet.com/magazineus/news/artnetnews/nahmad-gallery-sued-for-allegedly-looted-modigliani.asp,
access 15 April 2016
[8] http://theartnewspaper.com/news/museums/panama-papers-expose-art-world-s-offshore-secrets-/,
access 15 April 2016
[10] http://www.nytimes.com/2016/04/12/arts/design/what-the-panama-papers-reveal-about-the-art-market.html?_r=0,
Access 15 April 2016
[12] http://www.artmarketmonitor.com/2016/04/09/swiss-prosecutors-raid-freeport-looking-for-modigliani/,
Access 15 April 2016
[13] http://www.bloomberg.com/news/articles/2016-04-11/modigliani-painting-sparks-criminal-probe-and-geneva-art-search,
Access 15 April 2016
[15] http://www.dn.se/kultur-noje/konst-form/konstvarlden-kopplas-till-panama/,
Access 15 April 2016
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