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Handling stolen goods

Last November, Sotheby’s New York was set to auction Blanchisseuses souffrant des dents by the Impressionist master Edgar Degas, carrying an estimated value of $350,000 to $450,000. But at the eleventh hour, the small, six-by-eight inch portrait of a laundrywoman with an aching tooth was mysteriously withdrawn from sale.

Last November, Sotheby’s New York was set to auction Blanchisseuses souffrant des dents by the Impressionist master Edgar Degas, carrying an estimated value of $350,000 to $450,000 (€248,000-€318,900). But at the eleventh hour, the small, six-by-eight inch portrait of a laundrywoman with an aching tooth was mysteriously withdrawn from sale.

In the Sotheby’s auction catalogue the work was listed as bearing an impeccable provenance, having passed through the collections of Madame Jeantaud of Paris – whose husband had been the painter’s comrade in arms during the Franco- Prussian war – and then Carle Dreyfus, a collector and former decorative arts curator at the Louvre.

What the catalogue failed to mention, however, was that upon his death in 1953 Dreyfus’s entire private collection had been donated to the French nation, to be displayed at the Louvre and the Musée d’Orsay. Subsequently, the painting had been placed on loan at the Havre Museum in the north of France in 1960, from where it was stolen 13 years later and disappeared.

Its whereabouts remained unknown until 2010, when a member of the museum’s staff browsing through a Sotheby’s catalogue spotted it. The museum contacted the French Ministry of Culture, which alerted Sotheby’s and the work was removed from auction. According to a statement issued by the auction house, the consignor was a “long- standing private client of Sotheby’s, who was shocked to learn about this and is being extremely cooperative.”

And so they might. The theft is currently being reinvestigated by French and US police and the French Ministry of Culture has initiated negotiations for the return of the Degas with the owner who put it up for sale. Welcome to the complex world of art restitution.

Sotheby’s said that after receiving the piece it had contacted the London-based Art Loss Register — the largest private international database of stolen, missing and looted artworks — as part of its due diligence, but the painting was not listed. If it had been then the current owner might have been spared an unpleasant – and potentially costly – surprise.

“We have database of over 300,000 objects registered that are missing, stolen, looted or in some way illegally dispossessed or in dispute from their legitimate owners,” said MaryKate Cleary, the ALR’s Manager of Historic Claims and Research. “We encourage people to register if they have experienced a loss and that way when the work does reappear on the art market we can stop the sale of it and prevent it going to another possessor until the dispute can be resolved.

“We ask for any known provenance at the time the item details are submitted to us, and we search across a series of checklists, the primary one known as a ‘Red Flag’ list, which comprises names of dealers or collectors known to have had items looted from them during the war period or anyone known to have been involved in the illegal dispossession of items from their owners. If a name like that comes up, the item may not be formally registered with us but that would be enough for it to be referred to historic claims for additional research and a certificate would certainly not be produced at that time.”

Until recently, provenance research was the province of art scholars dealing with issues of attribution and authenticity. But the recent wave of legal claims by heirs of Holocaust victims whose art works were looted or otherwise misappropriated by the Nazis, and claims by “source” countries for objects they believe were unlawfully exported, have raised awareness of the need for increased due diligence in acquiring works of art or antiquities.

Artworks and cultural property have always been seized, paraded and redistributed by winning armies. But the scale of the systematised confiscation, sale and looting undertaken by the Nazi regime was unprecedented.

After World War II the Allies called for the restitution of confiscated artworks, but more than 70,000 items remain un- restituted. The issue re-emerged in the 1990s, facilitated by the declassification of war records and the end of the Cold War, which meant that many works which the Nazis looted and which the Soviet regime had taken from East Germany finally came to light as Eastern European regimes collapsed. Restitution was given international sanction by the 1998 Washington Conference on Holocaust Era Assets. This called for the identification of un-restituted artworks and free access to records and archival materials.

One of the most famous Nazi-era restitution cases was the dispute over ownership of Egon Schiele’s Portrait of Wally, a painting which was stolen from Austrian-Jewish art dealer Lea Bondi Jaray by a Nazi agent in the 1930s in Vienna. After the war Bondi Jaray enlisted the help of art dealer Rudolf Leopold to have it returned, but Leopold bought it for himself in 1954, and refused to acknowledge Bondi Jaray’s ownership. Bondi died in London in 1969, but the dispute rumbled on. The painting became the subject of court proceedings in New York after it was loaned in late 1997 to the Museum of Modern Art as part of an exhibition of Schieles.

Robert Morgenthau, the Manhattan District Attorney, dramatically subpoenaed the painting in 1998. The State Court of Appeals ruled in 1999 that “seizure” of an artwork loaned for exhibition was prohibited under New York State law, at which point the US government immediately commenced a civil forfeiture action in New York, alleging that the painting was stolen.

The case finally came to a conclusion last July, less than a month after the death of Rudolf Leopold and a week before the case was due to be heard in a federal court in Manhattan, when the US government and the Leopold Museum reached an agreement. Under the terms of the settlement the Leopold Museum paid $19 million to the estate of Lea Bondi Jaray – and the estate released its claim to the painting.

The museum also agreed to permanently display a sign next to the painting setting out its provenance, acknowledging that it had been owned by Lea Bondi Jaray and stolen by a Nazi agent. It also agreed that the painting should be exhibited at the Museum of Jewish Heritage in New York before its return to Vienna.

“The Portrait of Wally restitution was really the first big case in terms of Holocaust era assets,” says Howard Spiegler of New York law firm Herrick, Feinstein LLP, which represented the Lea Bondi estate. “The moment the work was subpoenaed at the Museum of Modern Art, it sent shock waves around the world. It was an extremely successful resolution for the estate, which reflected the true value of the painting and acknowledged both Lea Bondi Jaray’s ownership and the family’s long quest for justice.”

The Leopold Museum may also have been mindful of the fate of another protracted restitution contest in the US courts. In 2006 its sister museum in Vienna, the Belvedere, was obliged not only to relinquish five works by Gustav Klimt to Maria Altmann and four other heirs of the Bloch-Bauer estate, but to suffer the indignity of seeing one of them, the Portrait of Adele Bloch-Bauer I, acquired by cosmetics heir Ronald Lauder for $135 million – at the time the highest sum ever paid for a painting – and go on public display in the Neue Galerie in New York.

The opening up of archives in the Austrian Culture Ministry in 1998 had revealed how the post-war Austrian government had effectively forced Holocaust survivors to relinquish property in exchange for export permits for others. It prompted the government to pass a new set of restitution laws declaring the coercive export-permit process null and void, and opened the way for Altmann to recover the Klimts.

The four remaining paintings were sold at Christie’s in New York in November 2006 for a total of $192.7 million, with a second portrait of Adele Bloch-Bauer fetching almost $88 million alone.

Issues of Holocaust-era provenance have not just created problems for public collections. In 2006, at the peak of the art market, the Andrew Lloyd Webber Foundation found itself barred from selling The Absinthe Drinker, a work from Pablo Picasso’s blue period, at Christie’s in New York. The heirs of Paul von Mendelssohn-Bartholdy obtained an injunction after arguing that the German- Jewish art collector had been coerced into selling the work to avoid persecution in 1935 to an art dealer with a reputation for selling looted artwork.

The Foundation was understandably aggrieved. Lord Lloyd Webber had purchased the work in good faith at Sotheby’s in 1995 for £18 million (€20.5 million), then the highest sum ever paid for a Picasso at auction, and the painting had been in the US since 1936.

The Foundation dismissed the claim as “utterly spurious, without legal or factual substance” but, despite this, a confidential settlement was reached with the claimants in 2010. The Absinthe Drinker was finally sold at Christie’s in London last June for £34.7 million.

It’s a lesson for those who bought artworks several decades ago. Pierre Valentin, a London-based partner at law firm Withers, says: “When works were acquired in the 1960s and 1970s, the Holocaust was not such a prevalent issue in art sales and fewer questions were asked. At that time a sale would be evidence of good faith. That no longer applies.” From the mid-90s, he says questions should have been asked and you should be safe. But, he adds: “The buyer is expected to take a proactive approach and cannot just rely on the word of the seller.”

The restitution debate around antiquities has also intensified. One high profile case is that of the Sevso Treasure, a horde of massive Roman-era silver bowls, salvers and ewers acquired by the Marquess of Northampton on the advice of the late Peter Wilson, a former deputy chairman of Sotheby’s, for an undisclosed sum in the 1980s. It had probably passed through the hands of several dealers before it arrived in London with an export licence from Lebanon, later claimed to be a forgery.

In 1990, when a Sotheby’s auction was announced and the silver was put on display in New York, legal claims for the treasure were lodged by Lebanon, Hungary and Yugoslavia. A US court found in 1993 that none of these countries could prove title and confirmed that the Marquess was the legal owner. The silver, with a notional value of more than £100 million but now shorn of any agreed provenance, is regarded as practically unsaleable.

The Marquess, who made the purchase as an investment, said recently that he hopes the silver will be sold and that it has “cursed” his family. At a similar impasse is the estate of the late French fashion designer Yves Saint Laurent which, in 2009, auctioned two Qing bronzes that had been removed from a water clock in the Summer Palace in Beijing in 1860 by invading British and French troops. Christie’s International had proceeded with the sale only after a Paris court rejected a lawsuit to block the auction brought by advocacy groups and China’s Foreign Ministry who were calling for the return of the artefacts.

The two bronzes attracted a winning bid of €31.4 million but the Chinese National Treasures Fund, a group backed by the Ministry of Culture that retrieves relics abroad, then revealed that the purchaser was Cai Mingchao, a Chinese antiques collector and government adviser, who refused to pay for the goods. Pierre Bergé, Saint Laurent’s partner, says that he hopes to sell the bronzes one day to a “courageous” buyer but is emphatic that China will never get them.

So how can an owner prove that he is the rightful owner of an antiquity?

Documentary evidence, is the short answer, including proof of the date an object left its country of origin and the way the owner acquired it. UNESCO’s Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property and a number of national laws designed to protect cultural heritage make it hard for items with less than spotless provenance to reach market.

This, says Valentin, means that “there are very large collections that are effectively now unsellable because the provenance is such that they must have either been unlawfully excavated or illegally exported.”

However, even when an owner has untainted title to a work, it is still possible to lose ownership of an artwork.

Salander-O’Reilly Galleries, once the largest and most varied private art dealership in New York, collapsed into bankruptcy in October 2007, leaving artists, collectors, investors and other dealers to scrap over their competing claims to hundreds of artworks caught up in the fraudulent business dealings of owner Lawrence Salander.

The dealer, who was jailed last August, pleaded guilty to 29 counts of grand larceny and one count of scheming to defraud after selling artworks he did not own and keeping the proceeds. He frequently exchanged works that were not his in order to pay off outstanding debts, solicited investments to purchase artworks or shares in artworks that he then improperly resold to other clients, and failed to inform or pay consigners when their works were sold. The Manhattan district attorney’s office estimated the overall scope of his fraud at $120 million.

Among those conned were Earl Davis, son of the artist Stuart Davis, who died in 1964, who entrusted his father’s paintings to Salander for sale, only for them to be stolen and sold off at low prices. Former tennis player John McEnroe lost $2 million after Salander persuaded him to invest in paintings which the dealer did not actually own.

Salander also sold works by Robert De Niro Sr, without informing his son, the actor, or remitting proceeds. “The moral of this case is, be careful who you consign your artwork to,” said Manhattan District Attorney Morgenthau. “We are often involved in drafting and negotiating consignment agreements with art dealers covering loans of artworks or requirements for sellers’ approval,” says Spiegler, “but it is entirely possible that a good faith purchaser could gain title if it appeared that the dealer had the authority to sell.

Certain legal protections, such as filing a security interest or lien in an artwork, are also available, which can protect the consignor with respect to claims by the dealer’s creditors.”

And finally, restitution claims come from the most unexpected quarters. George O’Dowd – better known as the singer Boy George – was unaware that an icon that hung above his fireplace had been looted from a church in Cyprus during the Turkish invasion of 1974 and subsequent partition of the island. He had bought the icon from a London art dealer in 1985 without knowing its origin.

Extraordinarily, the icon was visible in the background during a television interview at his home last year, and it was spotted by officials from the Church of St Charalambos in the Cypriot village of New Chorio-Kythrea. The singer handed back the work without asking for any money in return. He has been left, however, with a blank space above his fireplace from where it was legally restituted. A small price for doing the right thing.

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