Select Committee on Culture, Media and Sport Minutes of Evidence


Memorandum submitted by Sotheby's

  1.  Sotheby's engages primarily in the public auction sale of fine and decorative works of art and has offices located in more than 30 countries. Auctions are conducted in 14 auction centres throughout the world. Sotheby's has, therefore, a commercial interest in not having stolen or smuggled works of art circulating in the art market, and strongly opposes the destruction of archaeological sites, art theft and illegal export. The Company fully supports the goal of suppressing the illicit traffic in works of art and takes numerous precautions, as outlined below, to minimise the risk of inadvertently offering for sale any objects that may constitute part of the illicit market.

  2.  Sotheby's submits information on the following topics identified by the Committee in its Press Notice as being of interest:

    Sotheby's role in combating the illicit art market;
    the UNIDROIT and UNESCO Conventions;
    the 1993 European Directive;
    the effects of the illicit market;
    practical solutions to fight the illicit market; and
    spoliation in connection with the loss of works of art during the Nazi era.

SOTHEBY'S ROLE IN COMBATING THE ILLICIT ART MARKET

  3.  Sotheby's Worldwide Compliance Department. To strengthen our defence against the illicit trade in works of art, Sotheby's was the first in the art industry to establish a Worldwide Compliance Department, including a European Compliance Officer. The Compliance Department reports to the Audit Committee of the Board of Directors of Sotheby's Holdings, Inc and has primary responsibility for ensuring the implementation of Company policies on such issues as the international movement of works of art. These policies are periodically reviewed and revised by the Compliance Department.

  4.  Each employee is personally responsible for understanding and complying with Sotheby's internal policies. The Compliance Department trains employees; monitors observance of company policies; conducts systematic audits to track compliance; answers employees' questions about Company policy and investigates complaints. Violations of the Company's rules may subject employees to disciplinary action, including termination of employment.

  5.  Employees are obliged to comply with Sotheby's internal policies and the laws of the countries in which the employees are doing business, including applicable export or import laws. Employees have been instructed to report any potential or actual violations of Sotheby's policies or of local law to either the Legal Department or the Compliance Department.

  6.  The Worldwide Compliance Department includes three qualified lawyers, who work closely with, and are supported by, Sotheby's Worldwide Legal Department, which has been expanded to include nine lawyers based in the major auction locations of London and New York. A network of law firms around the world support the Legal and Compliance Departments.

  7.  Sotheby's policies. Sotheby's will not sell property if it knows that it was illegally exported or imported unless irregularities can be legally rectified before the sale. If an employee suspects, or has knowledge of, an illegal export or import, they must report their concerns to the Legal Department.

  8.  When providing either pre-sale estimates to clients abroad or receipting property from clients in a country with relevant export controls, it is Sotheby's policy to advise the client in writing that they must comply with applicable export and import control laws.

  9.  To ensure that works of art are offered for sale by Sotheby's with good title, all sellers are required to provide written confirmation of their legal ownership. Sotheby's requires sellers to warrant that they have good title and that both title and right to possession will pass to the buyer. In addition, sellers agree to indemnify the buyer for breaches of this warranty.

  10.  Sotheby's also requires sellers to:

    —  confirm in writing that the property has been lawfully exported as required by the laws of any country in which it was located, that required declarations upon the export and import of the property have been properly made, and that any duties and taxes on the export and import of the property have been paid;

    —  indemnify the purchaser if there is any third party claim to the property; and

    —  provide Sotheby's with all information they have regarding the provenance of the property.

  11.  Catalogue circulation. To minimise the risk that lost or stolen items have inadvertently been included in a Sotheby's sale catalogue:

    —  all lots with a low pre-sale estimate of £500 or more are routinely reviewed at Sotheby's expense by the Art Loss Register;

    —  relevant catalogues are circulated to appropriate international governmental and law enforcement agencies; and

    —  if there is reasonable basis to believe that property has been stolen, Sotheby's Legal Department is to be informed immediately.

  12.  Provenance. Provenance is the history of ownership of an item. Sotheby's generally publishes provenance that in its opinion contributes to scholarship or assists in distinguishing the work of art. The identity of the seller or prior owners may be withheld for a variety of reasons.

  13.  As is evident by the broad public support for such measures as the Data Protection Act there are numerous legitimate reasons a person may want to protect their privacy. It may be uncomfortable for the seller to advertise their identity in public if they are selling out of financial necessity. In addition, the seller may have bona fide concerns about unwanted solicitation from auction houses, dealers, art insurance brokers or others. There are also reasonable concerns about security from theft.

  14.  Moreover, the identity of prior owners may no longer be known given the age of an object or the fact that it is not unique. If Sotheby's receives an inquiry from an interested party to provide additional provenance, and such provenance exists, then it can, under appropriate circumstances, be made available. In some cases, Sotheby's may be restricted to giving a generic provenance such as "the seller was a French nobleman who acquired the work directly from the artist in the 1960s". In response to an informal inquiry regarding title to an object, Sotheby's may request that the seller release the auction house from its duty of confidentiality or that the seller appoint an intermediary to speak with a claimant. Information may also be provided in response to valid legal process such as a binding Court order.

THE UNIDROIT AND UNESCO CONVENTIONS

  15.  Sotheby's welcomes initiatives in this area including the Government's conclusion that the UNIDROIT Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property and the UNIDROIT Convention on the Return of Stolen or Illegally Exported Cultural Objects are inconsistent with English law (House of Commons Written Answer,7 February 2000).

  16.  Sotheby's supports and endorses the principles outlined in the document previously submitted to this Committee by the British Art Market Federation regarding the UNIDROIT and UNESCO Conventions, and includes the statements made therein by reference.

THE 1993 EU RESTITUTION DIRECTIVE REGARDING RECOVERY OF CULTURAL OBJECTS UNLAWFULLY REMOVED FROM A MEMBER STATE

  17.  The 1993 EU Directive governs movement of cultural objects within the European Union and grants the right to a Member State to bring an action in another Member State for recovery of an item that was unlawfully removed from the requesting Member State's territory. The 1993 EU Directive has essentially codified a key feature of the UNIDROIT and UNESCO Treaties by granting to Member States the right to have their export control laws enforced or respected by other Member States. Despite the availability of this option, during the last seven years there have been less than a dozen instances in which any Member State has taken advantage of this right.

EFFECTS OF THE ILLICIT MARKET

  18.  Sotheby's draws the Committee's attention to the Art Loss Register's submission that although the number of lost or stolen items in the ALR database has increased dramatically in the last 10 years, the number of allegedly stolen items that appear to match items in auction catalogues has decreased. This suggests that there is an ever-widening gap between the illicit market and the legitimate market. This may be due, in part, to the commitment of Sotheby's and others in the legitimate art market to avoid selling looted, stolen or smuggled property as well as to the increased public awareness of the activities of the Art Loss Register.

  19.  A very few stolen/looted property inquiries are received by Sotheby's outside of those few received as a result of the Art Loss Register's work. For example, in the UK during 1999 there were inquiries about approximately 0.25 per cent of the lots included in catalogues for sale.

  20.  Although Sotheby's believes that the problem affects a comparatively small number of objects, all the major UK auction houses are greatly concerned about the negative effects of publicity given to the illicit art market. The often repeated, but to date unsubstantiated, allegations in the press that the illicit market is second only to the illegal drug market, taint the legitimate trade in works of art. Therefore, the auction houses have a strong business interest in the elimination of the illicit market. Sotheby's are suggesting for consideration the following measures to help in the battle against the illicit market.

PRACTICAL INITIATIVES TO COMBAT THE ILLICIT ART MARKET

  21.  Given that there are already numerous laws in effect in the United Kingdom governing different aspects of the art market, and given the great gap between the legitimate and the illicit markets, the enactment of further laws or regulations does not seem justified. Further legislation risks the unintended effect of overburdening and weakening the legitimate art market without solving the underlying problem of the illicit market. The lack of cases brought by signatories to the UNESCO Convention and the negligible number of claims arising out of the 1993 Directive during the last seven years further indicate that legislative remedies are not perhaps the most practical solution to this complex and serious problem.

  22.  Rather than introducing new legislation, Sotheby's believes that the public should be made aware of the risks and problems associated with the illicit market backed by a substantially increased government commitment. Sotheby's believes the stronger enforcement of existing laws and remedies and increased financial support of the art fraud sections of law enforcement may be more practical solutions. Sotheby's suggests the following ideas for consideration:

    (i)  Commit resources of staff and money to assist in staffing and training foreign and domestic customs and law enforcement officers regarding methods to prosecute and understand issues of art theft and smuggling;

    (ii)  Encourage enactment and enforcement of anti-corruption laws in art source countries, followed by training in anti-corruption investigation and prosecution techniques;

    (iii)  Promote the revision of tax laws regarding ownership, donation and inheritance of works of art in those countries with an active black market in order to create incentives for citizens in those countries to report finds, to collect their own heritage and to donate their collections back to the source countries;

    (iv)  Increase criminal and civil penalties within the context of each country's existing legal systems for looting, art theft and smuggling of cultural patrimony;

    (v)  Benefit from the dramatic improvements in modern technology to develop publicly and internationally available registries that would include items of truly outstanding cultural patrimony (including archaeological sites);

    (vi)  Develop publicly available, sophisticated art loss registries, that would accept descriptions and photographs of stolen items, whether from archaeological digs, churches, museums or private collections;

    (vii)  Maintain a publicly available registry requiring archaeologists excavating in source countries to provide photographs and descriptions of the objects found on the digs within a short and reasonable time from the date of each find;

    (viii)  Research methods to support prompt completion of archaeological digs and to make mandatory publication of the finds without delay; and

    (ix)  Create a task force among government representatives of art market countries, source countries, archaeologists, members of the art market and financial specialists to explore creative ways to fund the above activities.

SPOLIATION IN CONNECTION WITH THE LOSS OF WORKS OF ART DURING THE NAZI ERA (1933-1945)

  23.  It has been Sotheby's longstanding policy not to sell any work of art that is known to have been stolen or where there is credible evidence that it may have been stolen—whether by the Nazis or by anyone else. Sotheby's increased focus in this area over recent years stems, not from a change in this policy, but from an increase in scholarship in the area of looted art and the greater accessibility of archival material.

  24.  The international exposure given to a work offered at public auction by Sotheby's and the wide circulation of Sotheby's catalogues gives potential claimants and research bodies a good opportunity to identify works which they believe may have been looted. However, Sotheby's appreciates that this alone may be insufficient to enable the heirs of victims to identify their families' missing property.

  25.  To supplement the international public notice inherent through the circulation of our catalogues worldwide, Sotheby's has focused its work in this field in the following main areas:

    —  trying, through Due Diligence, to prevent the inadvertent sale by Sotheby's of unrestituted looted art;

    —  developing working relationships with researchers, scholars and institutions in this field; and

    —  consulting with families of the victims of looting.

  26.  To achieve these goals Sotheby's has taken the following steps:

  27.  Sotheby's Task Force. Sotheby's has formed an International Task Force to support its specialists throughout the world in dealing with Holocaust issues. The Force comprises of two full-time professional war loot researchers based in New York and London and in-house lawyers. To its knowledge, Sotheby's is the only institution in the art market to employ full-time, trained researchers who are multi-lingual and devoted exclusively to researching provenance issues related to the Nazi era. Sotheby's is advised by a network of specialist consultants in Europe and the Americas.

  28.  Request for unified international database. In February 1998, in a public statement made to the Banking & Financial Services Committee of the United States Congress, Sotheby's called for the formation of a single, reliable, database which would allow victims, auction houses, dealers and museums to determine quickly and accurately whether a particular work of art was looted during World War II.

  29.  Financial support of the Art Loss Register database. In June 1998, together with Aon Insurance, Sotheby's took the decision to lead the financial sponsorship of the Art Loss Register's Holocaust Initiative. As a result, since 1998, Sotheby's worldwide catalogues have been reviewed by the Art Loss Register, both in respect of recently stolen property, and art seized during the Holocaust.

  30.  Sotheby's database. Sotheby's has created a database of nearly 2,500 names which, in the event of any appearing with a war time provenance, can trigger further inquiries ascertaining the legality of the work in question. This database is available to all Sotheby's specialists.

  31.  Gratis catalogue circulation. We provide gratis copies of relevant catalogues to the key organisations involved in this area including:

    —  The Commission for Art Recovery;

    —  The Commission for Looted Art in Europe (formerly the European Commission on Looted Art);

    —  The Ekkart Commission;

    —  Holocaust Art Research Project located in Washington DC; and

    —  The New York State Holocaust Claims Processing Office.

  32.  Consultation with leading researchers in the field. Sotheby's works with the above specialist organisations, when researching works of art which are of concern. It regularly consults and shares information with the leading individuals in the field including Konstantin Akinsha, Monica Dugot, Hector Feliciano, Willi Korte, Marc Masurovsky, Lynn Nicholas and Jonathan Petropoulos. Sotheby's consults with various owners of private archives, such as dealers, victims and private collectors. It also turns to the Art Loss Register for help on specific lots and encourages victims to lodge their lists of lost property with the Art Loss Register.

  33.  Sotheby's Training Programme. Sotheby's operates a rolling programme to train relevant art specialists in their offices around the world: to check the provenance of works which come in for sale against its database; to consult with its specialist war loot researchers; and to examine paintings physically for the appearance of brands and markings on canvases that indicate it may have come from a Holocaust victim or been seized by the Nazis. In response to requests from the specialists and as part of the training process, Sotheby's lawyers have developed written standards of research that have been circulated to relevant specialists. If the specialists discover any possibility that an item was wrongfully taken during the Nazi era, they have been instructed to contact the Task Force lawyers immediately. Sotheby's has also organised seminars for museums and research bodies to exchange their knowledge and experience in this field.

  34.  Provenance. In respect of works of art created prior to 1933 (the beginning of the Nazi regime), it is Sotheby's policy to disclose in its catalogues the fullest possible provenance for the war years. It further requires every consignor to disclose by contract what they know of the provenance of a consignment.

  35.  Where provenance information may sometimes be lost for the years 1933 to 1946, or the owner may simply not have independent proof of the location from which an object came or as to the identity of past owners, Sotheby's believes that the absence of such documentary proof should not of itself taint a work.

  36.  There are a variety of reasons that provenance information from more than 50 years ago no longer exists. It is, of course, much easier to trace and reconstruct the history of an important or well-known object. In contrast, it is understandably far more difficult to uncover the provenance of less important works. There is likely to be a lack of any published exhibition history for these items and they typically are owned by less well-known collectors.

  37.  The difficulty of provenance research is compounded by the fact that many of the items are not unique (such as prints or multiple paintings of the same subject by the same artist). The change in attribution of the work from one artist or maker to another may further frustrate research efforts. Finally, the titles or descriptions of an item may change over time. A painting may at one time be described as "a tap room scene", and later be called "a carousing couple" and still later be called "a Dutch interior".

  38.  Sotheby's may discover through its own research that property was taken during the Nazi era. In these cases, it either arranges for the consignor or their agent to contact directly the victim or the heirs or work directly with the consignor and the heirs to reach resolution. There are often, in effect, two victims involved: an innocent current owner and the losers or their heirs. Given this possibility, it is important to consider each matter on a case by case basis.

  39.  Sotheby's has offered assistance to the National Museum Directors' Conference in the investigation of provenance of works in public collections acquired through Sotheby's.

  40.  Consolidation of governmental archives. The issues involved are international in scope and are best solved by using global resources and contacts. For example, there are currently publicly available governmental archives in a variety of locations worldwide, including: the United States, Berlin, Koblenz and Magdeburg, Germany, Amsterdam, The Netherlands and in various locations in Eastern Europe. Each of these archives contains potentially valuable information to victims. Sotheby's would, therefore, encourage a greater governmental commitment to provide funding and resources to copy and organise these materials and make them publicly available in one repository and on the Internet.

  41.  Mediation. The claims in this field are often complex. Whenever possible, Sotheby's has actively encouraged independent mediation and discussion as opposed to litigation to facilitate resolution of a claim. It has been Sotheby's experience to find that when current possessors and victims elect to mediate rather than litigate their respective claims, the process has been more productive.

  42.  Spoliation Advisory Panel. Sotheby's supports the creation of the Spoliation Advisory Panel as an alternative to litigation of Nazi era claims in connection with property in a UK national collection or a UK museum or gallery established for the benefit of the public.

  43.  Database. Though not, as previously mentioned, a complete solution, to this problem Sotheby's strongly endorses a unified, international database that will facilitate the research of provenance and provide a place for victims to list lost items. The Art Loss Register has already made substantial progress toward achieving this goal. However, Sotheby's is requesting that more institutions, victims, collectors and governments both submit available information to expand the existing ALR database and more regularly search the database.

  44.  Lists of buyers and sellers. Sotheby's already has a practice of obtaining and maintaining the names and addresses of buyers and sellers. Sotheby's would support legislation requiring all auction houses, fairs and dealers to maintain records of the names and addresses of sellers and buyers. As always, such information could be made available to appropriate interested parties, subject to Sotheby's duties of agency and confidentiality, or pursuant to applicable legal process, such as a court order.

May 2000


 
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