The Concept of Due Dilligence and the Antiquities Trade
Neil Brodie
In March 1999 the Council for the Prevention of Art Theft (CoPAT) introduced two codes of due diligence for use by art dealers and auctioneers. They were prepared in response to concerns mounting about the theft of art and other cultural material and its subsequent movement through the market. The high incidence of theft and the circulation of stolen material erodes public confidence and discourages potential purchasers, and it also generates financial risks. Dishonest dealers are few and far between but even an honest dealer, or collector or museum, may lose money if caught inadvertently in possession of stolen goods. Thus all sectors of the art market stand to benefit from a reduction in criminal activity, and it is against this background that the new CoPAT Codes should be considered.
The concept of ?due diligence? has come into focus over the past ten years following the judgement in Indiana on the return of the Kanakari? mosaic fragments to Cyprus and the drafting of the 1995 Unidroit Convention (where demonstration of due diligence at time of purchase is a necessary prerequisite of compensation should a stolen object be reclaimed).
In the 1989 Kanakari? case the Indiana District Court judge dismissed Peg Goldberg?s claim of a good faith purchase on the grounds that she had not been adequately diligent at the time of purchase (Gerstenblith 1995, 113). In particular, she:
- knew that the mosaic fragments came from an area under military occupation;
- knew that the fragments were unique objects of a type that do not ordinarily enter commerce;
- knew that there was a great disparity between the apparent value of the fragments and the price paid;
- knew very little about the seller or the dealers involved, although she did know that one had a criminal record;
- knew that the transaction was carried out in great haste;
- made no enquiry about the status of the fragments to any Cypriot, cultural or commercial organization.
Any or all of these circumstances should have put her on her guard, and she could not in all honesty claim that she had not been aware of the illicit nature of her purchase.
Article 4(4) of the 1995 Unidroit Convention makes a similar set of recommendations for the exercise of due diligence in transactions involving cultural material:
In determining whether the possessor exercised due diligence, regard shall be had to all the circumstances of the acquisition, including the character of the parties, the price paid, whether the possessor consulted any reasonably accessible register of stolen cultural objects, and any other relevant information and documentation which it could reasonably have obtained, and whether the possessor consulted accessible agencies or took any step that a reasonable person would have taken in the circumstances.
Lyndel Prott (1997, 46) has discussed Article 4(4) in some detail. When considering the circumstances of the acquisition regard should be paid to the place and time of transfer and the type of packaging. Objects from areas known to have recently been heavily looted must be treated as suspect (e.g. Cambodia, Mali) and more rigorous investigation of their original acquisition is called for, while the illicit origin of some classes of antiquities can be presumed (Cycladic figurines, Apulian vases). Simple checks with registers or data bases of stolen art are not recognized by Prott as sufficient for cultural objects as, generally, they are not listed. She recommends instead that full use should be made of other resources such as the duplicate catalogue for the Kabul Museum held at Mus?e Guimet and that of the Angkor Conservation Centre held at the Ecole fran?aise de l?Extr?me Orient.
The 1999 CoPAT Codes now set a standard of diligence which, if adhered to, is designed to protect honest dealers and auctioneers from the activities of thieves and their accomplices, and also to impede the free flow of stolen material through the market. The dealers code recommends that they should endeavour to:
Request a vendor to provide their name and address and to sign a form identifying the item for sale and confirming that it is the unencumbered property of the vendor and they are authorized to sell it, and this form will be dated.
- Verify the identity and address of new vendors and record the details.
- Be suspicious of any item whose asking price does not equate to its market value.
- If there is reason to believe an item may be stolen:
a) Attempt to retain the item while enquiries are made.
b) Contact the officer with responsibility for art and antiques within the local police force area.
c) Check with relevant stolen property registers.
d) Pass to the police any information which may help to identify the person(s) in possession of such items.
e) If still uncertain, refuse to buy, sell or value it.
- If requested, submit catalogues to the officer with responsibility for art and antiques within the local police force area.
- Look critically at any instance when requested to pay in cash and avoid doing so unless there is a strong and reputable reason to the contrary. In the absence of such a reason, pay by cheque or other method that provides an audit trail.
- Be aware of money-laundering regulations.
- Appoint a senior member of staff to whom employees can report suspicious activities.
- Ensure that all staff are aware of their responsibilities in respect of the above.
Previous codes of professional conduct have warned dealers to act with probity but the CoPAT codes go further in describing a set of specific precautions. Their introduction was accompanied by the appointment of an art and antiques liason officer in each of the United Kingdom?s 47
police forces in a move to maximize their effectiveness.
From the point of view of the archaeologist concerned about the destruction of archaeological sites around the world, the CoPAT Codes may seem at first sight to be largely irrelevant. Their purpose is to combat straightforward theft and they are designed accordingly. They are not intended to solve problems caused by the illegal export, smuggling or cross-jurisdictional transacting of antiquities. Thus, for instance, as pointed out by Prott, material recovered during unrecorded and illegal excavation will not appear on any stolen property register and its absence is no guarantee of its legality
It is interesting to note, however, that the CoPAT Codes draw attention to money-laundering regulations. This marks a significant departure from previous professional codes, and definitions of due diligence, and extends the concern of the CoPAT Codes to areas of international crime outside of straightforward theft and handling of stolen goods. It is not surprising. According to Scotland Yard the majority of art is stolen for the purpose of laundering money, and art sales are often components of the laundering process (Mayes 1996, 1; Ulph 1998, 343).
Antiquities dealers are at risk from the activities of money launderers just as surely as they are from those of thieves, and dealers in unprovenanced antiquities certainly have more to fear from recent legislation. Since the late 1980s, Parliament has approved a series of Acts aimed at discouraging crime by depriving criminals of its proceeds, and which have been co-ordinated and given better focus by the Money Laundering Regulations of 1993 which passed into British law as the implementation of EU Directive 91/308/EEC of 10 June 1991. It is now recognized that these new laws offer a better means of combatting art crime and, by extension, the illicit trade in antiquities, than those contained in the 1968 Theft Act. Indeed, one senior police officer has gone so far as to describe these new laws as a ?godsend? (Hill 1996, 288).
Under the Theft Act a dealer can be found guilty of handling stolen goods provided that it can be established that he or she had reasonable cause to believe that they were stolen. Mere suspicion of theft is not strong enough for a successful conviction. But now, under the 1988 Criminal Justice Act and the 1994 Drug Trafficking Act, it seems that a dealer or auctioneer acting as an intermediary to arrange a transaction can be convicted of assisting another person to retain the proceeds of a crime, if there is good reason to suspect that one of the parties to the transaction has engaged in or benefited from a criminal action (Snaith 1998, 381). Legal commentators have not been slow to point out that suspicion implies a more uncertain state of knowledge than belief (ibid., 381).
Yet it remains the case that the majority of antiquities on the market are without a full and properly documented provenance, and if the method of their original acquisition is unknown then it must be suspect. The appearance on the market of a previously unreported Apulian vase, for instance, must immediately arouse the suspicion that it has been recently looted or smuggled. And how could any reasonable person fail to realize that the flood of unprovenanced material now pouring through the market from the major drug producing areas of central and southeastern Asia and Latin America is anything other than suspect? Direct links between drugs trafficking and antiquities smuggling in Central America for instance have been reported on more than one occasion. In Belize and Guatemala jungle airstrips are used by criminals to smuggle out drugs and antiquities (Yemma 1997; Dorfman 1998; Varadarajan 1998) while at the receiving end a smuggler?s plane arriving in Colorado from Mexico was found to contain 350 lb of marijuana and many thousands of dollars-worth of Pre-Columbian antiquities.
There is also evidence to suggest that antiquities are being used to launder money. In September 1999, 271 artefacts which had been stolen from the Corinth Museum in 1990 were recovered in a warehouse in Miami stored in twelve fish crates (Lynch 1999; also see ?In the News?). Yet in Miami where, over the past ten years, there have been several seizures of stolen or looted archaeological material (from Greece, Ireland, Peru and Guatemala), US Customs have discounted the presence of an organized ?antiquities smuggling racket? and blamed instead the large quantities of ?dirty? money present in south Florida (Tasker 1999).
Although the new CoPAT Codes were ostensibly designed to tackle the problems caused to the art market by theft, the threats posed by launderers were also given some thought. As a result, the Codes are at some points similar to the money-laundering regulations (Snaith 1999), but there are also some significant omissions.
An audit trail is a central defence against laundering as it records the movement of money through the market. The CoPAT Codes require the identification and verification of vendors, and emphasize the need to create an audit trail by payment by cheque, but there is no similar requirement to record and verify the identity of a purchaser, so that any trail is lost at point of purchase. Dealers are also warned to be suspicious of asking prices which seem to depart from the apparent value of an object. But there are other circumstances which might provide grounds for suspicion, including payment by cash for high value objects and the unusual transfer of funds across jurisdictions, or from off-shore financial centres. The circumstances discussed by Prott in relation to Article 4(4) of the Unidroit Convention are also relevant, but not highlighted in either of the codes.
But although there are many circumstances that may arouse suspicion, none do more than the absence of a properly documented provenance. Yet members of the antiquities trade continue to emphasize their policy of ?innocent until proven guilty? when considering the source of an acquisition, arguing that it is not their job to carry out exhaustive enquiries into an object?s provenance. But in consequence, time and again, auction houses at least have been caught offering stolen material. In future their claim that there was no reason to believe that the material was stolen will be no defence. They have every reason now to suspect that unprovenanced material may well be stolen or otherwise connected with a criminal activity. The CoPAT Codes would have done well to point out that at points of purchase the principle of ?innocent until proven guilty?, whatever its ethical basis, begins to look increasingly na?ve in the international arena of late twentieth-century crime.
To protect themselves any dealer purchasing unprovenanced material should ensure that it is accompanied by proper documentation, including export certification, from the country of origin. An export licence from an intermediary country is of no value whatsoever in this context, and indeed, in itself, is a cause for suspicion. If the correct documentation is not forthcoming then the purchase should be avoided.
EU Directive 91/308/EEC was designed to combat money laundering across Europe by imposing statutory regulation on the financial sector, and it is a measure of its success that launderers are now thought to be turning their attention to less well-regulated sectors of the economy, including the art market. It was in view of this that Mark Dalrymple, the Chairman of CoPAT, warned the trade that if a workable code of self-regulation cannot be achieved then statutory regulation will be imposed.1 Indeed, the time for self-regulation may already be past. The money-laundering regulations of some EU countries already encompass antiquities dealers (Greece, Spain and Portugal) and the European Commission has recommended to the European Parliament that statutory regulation be extended to businesses and professions outside the traditional financial sector. Specific mention was made of art and antique dealers (Financial Action Task Force on Money Laundering 1998, 10; Ulph 1998, 343).
The secrecy in which the antiquities trade operates has traditionally shielded it from the scrutiny of archaeologists concerned about the damage it might cause, and protected it from outside interference or regulation. But this secrecy now looks set to attract the attention of a sinister cast of characters, more dangerous altogether than form-waving bureaucrats or even the most rabid of archaeologists, and may yet prove to be the undoing of the very business it is designed to protect. To see off the emerging criminal threat, antiquities dealers and auctioneers must choose to operate by principles which are concordant with those of an open society and carry out their business in a manner which is readily accountable. They must act now to develop a fully transparent market so that illicit material can easily be identified and avoided.
When launching the CoPAT Codes the Home Office Minister Paul Boateng looked forward to ?a straight and uncorrupted market?,2 and for the art trade generally the Codes are indeed a large step in that direction, and can only be welcomed. But for the antiquities market they are not enough. There are longer steps yet to be made before Boateng?s ideal is finally realized.
1. Quoted in Antiques Trade Gazette 7 November 1998, 1.
2. Quoted in Antiques Trade Gazette 13 March 1999, 2.
Dorfman, J., 1998. Archaeologists and the looting trade. Lingua Franca 8, 28?33.
Financial Action Task Force on Money Laundering, 1998. 1997?98 Report on Money Laundering Typologies.
Gerstenblith, P., 1995. The Kanakari? mosaics and the United States Law on the restitution of stolen and illegally exported cultural property, in Antiquities Trade or Betrayed, ed. K.W. Tubb. London: Archetype, 105?21.
Hill, C., 1996. Recovering stolen art: practical recovery issues and the role of law enforcement agencies. Art, Antiquity and Law 1, 283?92.
Lynch, M., 1999. Priceless stolen Greek antiquities found in fish crate. Miami Herald 15 September.
Mayes, J., 1996. A global hit: the antiques rogues show. The Independent 30 November, 1.
Prott, L.V., 1997. Commentary on the Unidroit Convention. Leicester: Institute of Art and Law.
Snaith, I., 1998. Art, antiques and the fruits of crime: laundering, investigation and confiscation. Art, Antiquity and Law 3, 371?88.
Snaith, I., 1999. Art, antiques and the fruits of crime: laundering, investigation and confiscation, part II. Art, Antiquity and Law 4, 41?54.
Tasker, F., 1999. Lowbrow art smugglers target a ?hot? South Florida market. Miami Herald 19 September.
Ulph, J., 1998. Exercising due diligence, part I: Art transactions. Art, Antiquity and Law 3, 323?44.
Varadarajan, T., 1998. Temples of Doom. The Times 4 April, 11.
Yemma, J., 1997. In the underworld of looters, a growing violence. Boston Globe 4 December, A28.
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