Aija London Seminar – Art Law Today a Short History Of
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AIJA LONDON SEMINAR – ART LAW TODAY A SHORT HISTORY OF ART FRAUD A presentation by Edward Henry QC Barrister at The British Library, 13th October 2018 QEB HOLLIS WHITEMAN, 1-2 LAURENCE POUNTNEY HILL, LONDON, EC4R OEU 1 Fame, at last, as I now have a “Warholian” 15 minutes to address you on a subject that spans centuries. Where to begin? Why do we love Art? Crave it? Collect it? Why is there, for some, this rapacious desire to acquire it? Art justifies and exalts our existence, but there is a paradox at its heart, for as Picasso famously said, “Art is a lie that helps us realise the truth.” I am here to talk about a different kind of deceit, one less noble, but equally (indeed, if not more) lucrative: fraud in Art. This is a huge subject, and to condense it into fifteen minutes is a pretty monumental task, so I am going to focus on the areas of risk. There are four key variables in any transaction: The Seller, the Buyer, the Goods and the Money. The Seller – Michelangelo – Florence in the 1490s The young sculptor, not yet twenty, working in Florence for a junior branch of the Medici family was asked to artificially age some of his work by his canny employer. Michelangelo used acidic earth to distress the sculptures for his patron who passed them off as ancient antiquities. Michelangelo then followed suit. It is accepted that he originally made his working capital by forging ancient Roman sculptures. All of this took place before he found fame and acclaim as an artist and sculptor. 2 His most famous fake was “The Sleeping Cupid.” It is debatable as to whether he buried it in a garden, only later to dig it up like some amateur archaeologist, feigning its discovery, but there is no doubt that he was involved in a spectacular fraud on an unsuspecting Cardinal, Raffaello Riario of San Giorgio, who eventually found out that the piece was a hoax and demanded his money back from the dealer. But at the same time, the Cardinal recognised Michelangelo’s sublime talent and virtuosity, and invited him to Rome where he found fame, and his genius flourished. The Sleeping Cupid was later acquired by King Charles I, but it seems that it was lost in the Whitehall Palace fire of 1689. Had it survived, notwithstanding its original status as a fake, it would now be priceless. Obviously, in this example, the seller had a buffer: the dealer. Due-diligence requires an exhaustive exploration of provenance, both as to the work and the vendor – know your seller and check the catalogue raisonné – but there is often a lack of transparency. Vendors and buyers often wish to remain anonymous. The Buyer Pascal sums up the dilemma facing those caught up in a bidding war: “…they seek it as if the possession of the objects of their quest would make them really happy. …They do not know that it is the chase, and not the quarry, which they seek.” 3 Such people are vulnerable, and can be exploited. The Bouvier affair is a current example. Rybolovlev (the vendor of the $450m Salvator Mundi) claims that Bouvier misrepresented his role in procuring some 38 works of art for a total of $2bn, and pocketed $1bn in the process. Rybolovlev claims Bouvier was acting as his agent and that he was not aware of the huge profit he was making on the sales; Bouvier says he was acting as an art dealer and thus free to set his own prices! In the introduction to her 2016 book Crime and the Art Market, Riyah Prior writes that sky-rocketing prices for Contemporary and Modern art at auction have led to a sense “that the art world is not grounded in any objective value system or set of controls.” Was that what Banksy intended to demonstrate in that dazzling theatrical coup, his “Girl With Balloon” canvas spectacularly ‘self-destructing’ live at Sotheby’s? This is now, perhaps, the most publicised and notorious stunt in auction history, shredding the image once the hammer had come down on the now re-titled “Love is in the bin.” It raises many questions: were Sotheby’s in on it, or oblivious? How was the shredder activated? What is the story behind the story? Is it a profound meditation on the absurdity of the prices currently being realised, or merely exploitation? I favour the former. There are so many examples of buyers being the victims of fraud, most recently the fiasco, which led to the downfall of Knoedler & Co, and the rampant online trade in fake Damien Hirst authenticity certificates. I want, therefore, instead to concentrate on the buyer as market manipulator – and perhaps the greatest was Joseph Duveen, Lord Duveen of Millbank. 4 Duveen was the greatest dealer of the twentieth century. His business model was disarmingly simple: "Europe has a great deal of art, and America has a great deal of money." He acted as the transatlantic bridge. He had a brilliant espionage network of intelligence – he bribed butlers and maids in all the finest aristocratic houses and then meticulously contrived to encounter the cash-strapped nobility broaching the subject of a sale. He bought high, and sold higher, but he always bought back the Art he had sold at the highest price, indeed higher than what he had sold it for. It was a deliberate strategy – he wanted to reinforce the myth of the “Duveen eye” which promised ever increasing valuations. After his death, when his successors took a more cautious approach, the market in the works he sold (for a period of time) collapsed, along with the firm. A more recent example of this mischief is the Aristophil scandal in France, summed up in The Art Newspaper: The world's greatest private stock of manuscripts, which includes around 130,000 items and several cultural treasures, is coming to market. Acquired over a dozen years by the scandal- hit Aristophil Company, the precious pieces are due to be auctioned at Drouot as early as next September, under the guidance of the auctioneer Claude Aguttes. Gérard Lhéritier, the founder of Aristophil, was charged with organised fraud in 2015. He is accused of setting up a Ponzi scheme by greatly inflating prices for the works he collected and adding big returns for investors. Attracted by the hope of 8% annual interest, 18,000 clients bought shares in the 54 5 collections he assembled with contracts totalling around €850m. The investigation is ongoing, but Lhéritier has denied all the charges against him, claiming that he was merely speculating on an undervalued niche market. More than €100m of his assets were seized, forcing his company into bankruptcy. The Goods It is all a question of attribution. Let the buyer beware. The risks are obvious: apart from fraud, as in forgery/fakes, issues of theft, bribery, breach of export licenses, handling stolen goods, war crime looting and offences associated with the financing of terrorism or other criminal activity are live issues. Whilst Interpol have maintained that there is no data to substantiate this, it is believed that stolen art constitutes the third most commonly traded illicit good after arms and drugs. There are other imponderables – where, in the past, there was no inclination or incentive to offer masterpieces in lieu of inheritance tax there sometimes existed the abuse of obliterating signatures to avoid death duties (“It’s not a Raphael, it must be his studio, or a copy.”) Here the genuine masterpiece is being disguised or degraded. Then, historically, there is the nature of the workshop or studio – where (conversely) a dealer might elevate a work with an over- optimistic attribution, from studio of, to the Master in person. The alliance between dealer and expert can distort the market. Witness Duveen, aided and abetted by the cynical connoisseurship of Bernard Berenson. Berenson, who lived in splendour in the Villa I Tatti, now The Harvard University 6 Center for Italian Renaissance Studies, in Florence had an arrangement with Duveen to share profits on punchy attributions. It paid well. Imagine, if you will, Berenson’s arcadian estate of olive groves, vineyards, and gardens so close to Florence, Fiesole and Settignano, and then contrast that with Bolton in Lancashire. I give you the Greenhalghs. The Greenhalghs, were a working-class family from there, who sold dozens of forgeries to museums, collectors, and other unwitting buyers over the course of 17 years. They had a diverse range of goods, stretching from faux Egyptian antiquities to works by modern artists including Barbara Hepworth and Otto Dix. All were made by Shaun Greenhalgh, whose elderly parents, Olive and George, helped dupe buyers into believing the works’ provenance. The Greenhalghs’ victims included the Art Institute of Chicago, which wound up with a sculpture of a faun thought to be the handiwork of Paul Gauguin; former U.S. President Bill Clinton, who bought a bust of Thomas Jefferson; and even the local Bolton Council, which purchased an exquisite, supposedly 3,300-year-old Egyptian alabaster statue for £400,000 in 2003. Shaun was eventually detected having botched some cuneiform script on an Assyrian relief that he was attempting to sell to The British Museum. He served nearly five years in prison for more than 40 known forgeries he created between 1989 and 2006. He claims a Leonardo, La Bella Principessa is actually a Greenhalgh, depicting Alison, a check out girl he was enamoured of in the 1970s. Then you have the notorious case of Elmyr de Hory who alone painted and sold approximately one-thousand forgeries in the styles of Matisse, Van Gogh, and other celebrated masters.