Memorandum submitted by the Art Loss Register
The thrust of the evidence sought from the private
sector databases is around:
1. What do you do?
(a) Background
The Art Loss Register was founded in 1990 as
an industry initiative by the Art Trade and the Insurance companies
to tackle the problem of stolen art and increase recoveries. Its
mission is:
— To identify and recover stolen and
missing works of art.
— To deter art theft and unauthorised
sale of works of art.
— To provide a central "checkpoint"
to prospective purchasers and lenders.
— To reduce the trade in stolen art.
Its shareholders include the major auction houses,
insurance companies, the International Foundation for Art Research,
and management but it operates as an independent commercial concern.
It is the central internationally recognised database available
for searching of stolen and looted items of which there are, on
the database, in excess of 140,000 uniquely described and many
others which are not unique but which may have been stolen or
looted at the same time and may be recovered through "proof
of association". The company has a staff of 20 including
13 fine art graduates speaking 8 different languages, in offices
in London, New York and Cologne. (See Flag 6) (not printed)
(b) Recoveries
The company has been responsible for the recovery
of over £85 million of stolen art over the last 10 years,
all of which are fully documented. The company is not merely a
passive database matching operation but also has extensive experience
in the research of Holocaust-type losses and in active recovery
efforts including close liaison with the police in many countries.
For example, during 1999 the company undertook 80 days negotiations
for the return of a Ce«zanne, sold subsequently at Sotheby's
for £18 million. At any one time the company is handling
over 200 recoveries, some of which take years to complete.
(c) Operations
The recovery process begins with the registration
on the database of lost items by theft victims and their insurers
which are then systematically checked against the catalogues of
the major auction houses, enquiries and searches for major museums,
dealers and galleries, financial institutions and law enforcement
agencies around the world. When an item is matched with an item
on the database, the ALR notifies the theft victim and law enforcement
authorities. At that point the work of art may be detained and
the parties negotiate a settlement often with the ALR's help,
or legal process commences, or efforts are made to support the
police if the objects location is not known.
(d) Holocaust research
The company also maintains a substantial database
of Holocaust victims' claims for looted art and antiques and provides
a research service both for them and for the art trade who wish
to confirm before they purchase that an item has no Holocaust
connection.
2. How does this assist the trade?
(a) Auction Houses
The major Auction Houses contract with the Art
Loss Register for their catalogues to be searched prior to sale
in order to identify any stolen objects which can then be withdrawn,
and the experts frequently refer to the Art Loss Register on specific
items before cataloguing. The catalogues often carry a statement
that they are submitted to the ALR and search certificates can
be obtained from us. The Company does not merely identify a stolen
object, but provides a service to the Auction houses, whereby
an innocent purchaser who has consigned the item for sale is them
given assistance by the Art Loss Register in recovering their
purchase price by a process of "down-lining" ie moving
down the chain of buyer and seller until bad faith is demonstrated.
This enables the object to be surrendered without undue cost to
the consignor and leads to an increase in intelligence for the
police and further recoveries.
(b) Dealers
Over 250 dealers use the Art Loss Register to
check items before they purchase. The same service of "down-lining"
is provided to them, together with extensive research on provenance
and Holocaust related issues. The codes of conduct of many of
the trade associations encourage searching with the Art Loss Register
of which some are shareholders. The ALR are part of the vetting
committee of the major fairs.
(c) Museums
Over 30 museums subscribe to the Art Loss Register
for items to be checked against the database before purchases
and further research undertaken if necessary and a search certificate
provided.
(d) Collectors
Increasingly collectors require a Search Certificate
before purchase and they and museums may wish to check their inventory
in order to confirm that there have been no claims on items, which
they hold.
(e) Art stolen from the Trade
A significant proportion of the items on the
ALR's database were items stolen from the trade itself. Recovery
of the items reduces the insurance cost for the trade and provides
a deterrent to future theft.
The searches above are all conducted under a
contract between the ALR and the member of the art trade, which
requires co-operation with the police in the event of a match.
(f) Active Searching not under Contract
In addition the Art Loss Register reviews many
auctions, auction sites, dealer sites on the Internet, advertisements
in trade magazines where there is no contract with the individual
dealer. Searches under contract vary between 250 and 300,000 per
year and those not under contract another 100-200,000 per annum.
The Art Loss Register is searching approximately one third of
the total art trade transactions of significant value worldwide
and this proportion is growing. The art trade is contributing
a substantial proportion of the costs of the operation and value
the professional advice provided from the expertise of the art
historians and those with specialist knowledge of problems of
title.
(g) Archaeological Losses
Many stolen antiquities have been identified
by the ALR and recently the International Association of Dealers
in Ancient Art (IADAA) maintains a protocol whereby all potential
purchases by their members above a value of £10,000 must
be checked against the database. An audit trial of all checks
of the database is maintained. The ALR has been involved in advising
parties in relation to major archaeological losses. In one case
involving a dispute in excess of £20 million the company
developed the concept of an international trust financed by a
major museum, which would have the items on display. The terms
of the trust would require the items to be exhibited in those
countries which had a reasonable claim and eventually repatriated
to the country should complete proof be obtained of their original
excavation. The ALR has assisted in the recovery of items from
Iraq and Iran which have resulted in arrests.
3. How does it benefit the police and/or
Customs and Excise? and
4. What co-ordination or co-operation is
there with the police/Customs and Excise?
The Art Loss Register works routinely and closely
with the great majority of the individual police forces in the
United Kingdom and with over 35 foreign police services as well
as Interpol. The company's services are free to the police and
include the following:
(a) Logging of losses submitted by police
forces. The Company receives thousands of losses from police
forces internationally and the database includes police losses
from 1970 and earlier. This is particularly valuable because in
many cases the police have destroyed their hard copy records and
the ALR is the only record remaining. The police frequently recommend
to victims that they should contact the Art Loss Register if their
insurance company has not already done so.
(b) Searches. The police frequently
refer to the Art Loss Register when they are investigating crime
and find goods, which may be stolen. The Company also provides
teams with laptops to support police raids, cataloguing items
discovered as well as searching against the database.
(c) Training. The Company contributes
to the training of policemen worldwide and participates in Interpol
and other conferences.
(d) Gathering of intelligence. The
Art Loss Register's down-lining and routine operations produce
much intelligence for the police. The Art Loss Register does not
in any way provide a substitute service for police but often police
forces will allow the Art Loss Register to down-line on a case
until evidence of criminal activity is found when the case is
passed back.
(e) Expert Evidence. The Company
provides expert evidence to police forces for trials and investigations
on matters such as whether a dealer purchased in good faith, whether
the Art Loss Register was checked etc. There have been a number
of cases of dealers claiming to have checked with the Art Loss
Register or tampering with Search Certificates.
(f) Negotiations. The Art Loss Register
does not enter into negotiations with any parties for the surrender
of stolen items or for the provision of intelligence without the
approval of the police, and this may be in several different jurisdictions.
The company has very clear Public Policy Principles (Annex C)
(not printed) and does not countenance the payment of any
money for intelligence unless this is handled by the police and
nor will the Company pay ransoms or extortion money unless the
police direct us to do so. The Company does provide significant
funds for operations where the police request money for informers.
(g) Customs and Excise. The Company
operates very closely with Customs and Excise in a number of countries,
both in providing checks on exports and imports resulting in a
number of recoveries, particularly for US Customs.
5. What compatibility is there between the
various databases (and between the databases and the ACIS database
available online)?
The ALR has already incorporated the ACIS data
available on line into its own database and already has much of
the Metropolitan Police old data incorporated from registrations
of losses over the years.
In terms of networking databases no progress
has been made although there have been various government initiatives
to do so, eg GRASP but with little success.
Various national police forces have been reluctant
to surrender their data, but a distinction should be made between
case and object data. Police often give the Art Loss Register
object data in order that we can find items but once a match is
made the Art Loss Register has not necessarily been given the
details of the owner etc and these details are held by the police.
It is clearly important that the trade should
only have to search in one place and hence why the Art Loss Register
captures any publicly available data such as from the French Police,
and Interpol in order that search of the Art Loss Register incorporates
as much data as possible.
6. Is your database sufficient and/or necessary
in relation to "due diligence" by the industry?
The wording of the Art Loss Register search
certificate states that all relevant information on provenance,
the circumstances of purchase etc, must be given to the Art Loss
Register in order that a Search Certificate is valid. This is
to prevent a search being undertaken by member of the trade who
suspects that an item is stolen but does not give the reasons
for their suspicions to the database.
If the item is not then on the database a search
certificate may be used by a dishonest member of the Art Trade
as an umbrella. It is therefore probably fair to say that a search
of the Art Loss Register database is a necessary part of due diligence
but not necessarily sufficient. In certain cases no other research
can be undertaken, but in some cases a search of the database
is not considered by the Art Loss Register to be anything like
sufficient and we would propose to the trade that further research
should be undertaken.
Since many police forces have not made all their
data available for searching, there will be occasions in which
a stolen item may be given clearance.
7. What is the balance to be struck between
"recovery of goods" and "apprehension of criminals"?
Although police responsibility include the recovery
of stolen goods, police priorities will probably always be the
apprehension of criminals and the recovery of goods will usually
be important in terms of evidence for trial rather than the highest
priority in itself. It is therefore often helpful to the police
for the Art Loss Register to concentrate on the recovery of stolen
property since this may also lead to further intelligence for
the police which may lead to arrests, convictions and thereby
deterrents. The allocation of effort between the Art Loss Register
and the police seems to work well and often takes place routinely
with those police forces who in public emphasise that they do
not see a particular role for a private database company.
The recovery of stolen property is important
not only to victims, for whom they may be financially, emotionally
or culturally important, but also as a further deterrent to crime,
the great majority of which is financially motivated. Furthermore
the recovery of stolen property removes an instrument which is
being increasingly used by terrorists and drug criminals to move
value around the world when money laundering regulations have
made it increasingly difficult for them to do this with cash.
8. How does the UK effort relate to systems
in other countries?
No doubt the Home Office or police would wish
to comment on the relationship of the police efforts to those
overseas but as far as the Art Loss Register is concerned our
database is highly international with offices in the USA and Germany
and loggings and searches are conducted for over 50 countries
with the staff travelling to 20 or 30 countries each year. Often
this ability is much appreciated by the police who cannot do so
themselves without a long and bureaucratic process and their overseas
travel budgets are very limited.
The UK is the world leader in terms of expertise
in stolen art in the private sector.
9. What progress has been made towards a
comprehensive national database since the Committee's, and ITAP's,
recommendations in 2000 (not to mention ITAP's firm demarche in
2002)?
The Art Loss Register's operations continue
to develop as the central and internationally recognised database
for the insurance industry, art trade and many police forces,
even though it is not a comprehensive UK national database.
The Art Loss Register were represented on the
Home Office Working Party and undertook extensive writing of draft
protocols, operational procedures, addressed public policy issues
etc . Because the final report by PITO was restricted, we have
not been able to comment on its recommendations officially. However
we understand that there was some police reluctance to be involved
in a public private sector partnership.
We have not been given the reasons for this
but if there are good reasons they have certainly been overcome
in relation to many other similar operation as outlined in question
10 below. Furthermore there are government agencies which rely
on private contractors and partnerships in areas of much greater
national and international security importance than a database
of stolen art open to searching by the art trade.
10. What are the implications for the private
sector operations of developments in this direction; what models
are you aware of for public-sector developments in this direction?
The private sector is effectively providing
a substantial measure of the due diligence required in terms of
the number of items that should be searched, the audit trail,
the follow up to matches and other assistance.
If the Government tried to develop its own service
with no reference to the private sector then there would effectively
be a competitive position in which the Government would be in
a difficult position. It would have to justify both legally, financially
and operationally why this should be a government service rather
than one run by the private sector or in partnership.
There are a number of very close parallels where
the government and private sector are co-operating to provide
database services in relation to due diligence.
(a) Stolen Vehicles
The Government, through the DVLA makes available
data on stolen vehicles to database companies who provide a searching
service for those purchasing or financing second hand vehicles.
This system works well with the private motor trade or finance
houses being charged for searches and this searching is one of
the reasons that the recovery of stolen motor vehicles is approximately
70% (albeit many of them damaged) as compared to the art trade
recovery of stolen property which is probably under 5% overall
even if somewhat higher for high value pictures.
(b) Stolen Plant
There is also the example of The National Plant
& Equipment Register (TER), a private commercial company run
by the same management as that of the Art Loss Register, which
has developed a database of the ownership and of stolen construction
and agricultural plant and equipment. This is financed by the
insurance industry and the construction and agricultural trade
in a similar fashion to that of the Art Loss Register. TER maintains
significant expertise on the numbering systems, identification,
tracing of spare parts, and active recovery efforts on stolen
plant and equipment and have assisted police with over 1300 recoveries
with total values of £8 million. Virtually all the insurers
subscribe and the company operates closely with overseas police
forces. (see TER Review for further details) (not printed)
The Police National Computer has a section of
its stolen property database for plant and equipment but the entry
of data has been undertaken over the years by those who would
have no responsibility for searching it and who lack the necessary
expertise. It fell into disrepute and a report was requested from
TER by the Police Information Technology Organisation (PITO) to
take this data, cleanse it, re-order it and make it available
for searching. During this process it was discovered that only
about 2% of the data had been entered properly and much of the
data was useless. (See Flag 7) (not printed)
TER has worked with PITO which runs the Police
National Computer (PNC) and the individual police forces in the
United Kingdom for over eight years and a protocol is now being
established which will govern the entire relationship between
the police service in the UK and Northern Ireland and TER. This
will include all matters relating to the data quality of police
data held on the PNC.
In Holland the Dutch Police gave up running
their database of stolen art and antiques ( Kunst en Antiek Nationaal
Systeem Art Loss Data ) because it was a relatively low priority
and they found it difficult to get their provincial police forces
to log stolen items with them. The data has been licensed to the
Art Loss Register who now search for the stolen objects and inform
the Dutch police when items are matched, who retain the case (ie
details of owner address etc) themselves.
There would appear to be no significant arguments
against DCMS using the private sector to provide the necessary
database. We understand that the arguments against the involvement
of the private sector have come from the police. Certain overseas
police forces as stated already co-operate closely with the Art
Loss Register behind the scenes but publicly state that they see
little if any role for a private sector company. The private sector
companies have never argued in favour of being given all the case
or sensitive information about the ownership or criminal aspects
of the theft or investigation. The private sector has argued only
in favour of the object data ie the details of what have been
stolen being available in order that the trade could undertake
due diligence.
If the police forces were to provide the due
diligence searching service themselves, they would have to pool
their data internationally which some of them have stated that
they will not do or obtain some form of search engine which would
search all their object data. For a dealer to search one National
database is almost bound to be inadequate because of the easy
movement of stolen objects.
The areas which would have to be addressed in
any Public Private sector Partnership between the police and a
private company would include:
(a) Follow up in the event of a match.
(b) Not approaching individuals who have
had losses, which have been logged with the police but not by
insurers to request fees for advertisements, recoveries or other
services.
(c) The provision of statistical and other
research.
A draft protocol has been already developed
in relation to The Equipment Register.
It is important to note that the police are
already using private companies in support of police operations,
for forensic laboratory work, valuations, fraud investigations
etc.
11. Do the police themselves have the necessary
expertise and resources to implement a specialist database of
this sort?
In general they do not. The Carabinieri in Italy
with several hundred police involved in stolen art and to a lesser
extent the French Police through OCBC, do have expertise and resources
to run major databases but these are not currently open for searching
by the art trade as envisaged for a formal process of due diligence
with audit trails, follow up to recoveries etc.
It would be very difficult for most police forces
(with the possible exception of Italy and France) to recruit and
retain the necessary expertise to run a database for the art trade
to search and enter into competition with the Art Loss Register.
The cost and liability would be considerable.
Most police forces do provide examples of data
on the Internet and this is the easy option but both the police
and the Art Loss Register do not believe that the whole of their
databases should be available on the Internet for searching without
an audit trail or control. This would merely benefit criminals
(See Principles Paper Flag 2) (not printed).
12. Is the issue being addressed as any sort
of priority—what discussions or consultation has there been
since 2000, with the Home Office, DCMS, each other and/or the
police, in terms of moving this project forward?
The Art Loss Register joined the Home Office
working party created in 2000 which put forward concrete proposals
from the private sector to undertake a cost free trial, although
we have heard nothing from the Home Office since their letter
of 23 May 2001 saying that they would write when they had further
progress to report
We understand that some funding may have been
made available to Scotland Yard to develop their current database
and improve their data, and that one suggestion was that this
should be extended to being available to all UK police forces.
Given the points that we have made in answer
to the questions above we doubt that this would be successful,
in terms of providing a due diligence database for the Art Trade.
October 2003
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