Last October, the International Consortium of Investigative Journalists (ICIJ) leaked a trove of nearly 12 million documents exposing a vast global network of offshore dealings involving high-profile individuals. Among the earliest revelations of the so-called “Pandora Papers” were the offshore transactions of the late antiquities dealer Douglas Latchford, who was charged with trafficking in stolen and looted Cambodian objects in 2019.
But the art industry’s embroilment in this furtive financial system doesn’t stop there. Perhaps unsurprisingly, the offshore world is “awash” in art, according to the latest findings of the investigation, published this week. ICIJ uncovered more than 1,600 works by 400 artists traded secretly through shell companies in tax havens around the world, including pieces by Banksy, Pablo Picasso, and Andy Warhol.
And while some are on display in homes or exhibition spaces, others are locked away in freeports, notoriously tax-free warehouses where the rich are known to stash their assets far from public view.
“In a way, we could consider those artworks to be somehow ‘lost art,’ as they will potentially never see the light of the day,” Maria Nizzero, a researcher at the Centre for Financial Crime and Security Studies in London, told ICIJ.
One of the most egregious examples identified by ICIJ involves “more than a dozen” works by Banksy, the anonymous British graffiti artist, acquired by London-based financier Maurizio Fabris via an offshore trust in New Zealand since 2009. Known for his surreptitious stenciled murals and tongue-in-cheek critiques of capitalism and the commercial art world, the artist and prankster may be indirectly complicit in the very systems he seeks to condemn, the new report says.
“It’s terribly ironic,” John Zarobell, an associate professor in the International Studies department at San Francisco University, told ICIJ. Banksy’s work “attacks not only authority but the political and economic structures that undergird the art world,” he acknowledged. “But when you become a famous artist, like Banksy has, your work gains lots of value, and then it can become a tool in these kinds of schemes by the ultra wealthy, in order to hide their wealth.”
Through offshore trusts, Fabris purchased works including a copper version of Banksy’s iconic “Girl with a Balloon” (2006) depicting one of the artist’s most recognizable motifs made more famous after one rendition self-destructed during a Sotheby’s auction in 2018. Also in Fabris’s collection were two editions of “Rude Copper” (2002), a painting of a police officer holding up a middle finger, and one of “Flower Thrower” (2005), Banksy’s stencil of a masked Palestinian man hurling a bouquet that first appeared as a mural in Jerusalem.
Fabris acquired the pieces through the Heritage International Trust in New Zealand, which he established in 2008 with the help of the Singapore-based financial service provider Asiaciti. Such vehicles are frequently used to “protect assets or reduce taxes by transferring legal ownership of the assets — stocks, cash, real estate — to another party,” ICIJ writes, adding that New Zealand offered anonymity and tax exemptions for foreign trusts at the time.
The Pandora Papers report says Fabris signed a contract with Asiaciti that allowed him to display the art in his homes in Milan, London, and Ibiza, as well as the Italian Alpine resort of Courmayeur. This is despite the fact that the offshore trust system through which he acquired the works may “reinforce the illusion that the art belongs to someone else,” ICIJ says, potentially allowing a collector to avoid or defer taxes on those assets. (A legal representative for Fabris told the ICIJ that “he declared all his offshore holdings to the British authorities and paid taxes in the UK, where he resides.”)
In 2017, Fabris and two co-founders of his brokerage firm Enigma Securities were found guilty of evading approximately $6.6 million in Italian taxes and collaborating with an international criminal network in a case unrelated to his offshore activities. Shortly after Fabris was charged, Asiaciti transferred ownership of a dozen artworks back to him. He sold three of his Banksy pieces to a London gallery managed by the artist’s former agent and wound down his shell operations.
Moving assets offshore is not intrinsically unlawful, but such arrangements shed light on how the wealthy move money under the radar and may sometimes use them to cover up their tracks in criminal activity. In the case of Douglas Latchford, for instance, the dealer used offshore accounts to shift ownership of assets that were illegally plundered or acquired under uncertain circumstances. Shortly after the Pandora Papers leak, the Denver Art Museum pledged to return to Cambodia four stolen ancient artifacts that once belonged to the dealer.
The US boasts a $21 billion art trade but few regulations, ICIJ says, citing a 2020 Senate subcommittee report that said the industry is “an environment ripe for laundering money and evading sanctions.”
A Treasury Department report released this morning, February 4, conducted independently from the Pandora Papers and ICIJ, did not recommend immediate government intervention to impose further regulations on the art market. But officials flagged “larger underlying issues at play, like the abuse of shell companies or the participation of complicit professionals,” that should be prioritized.
“While these abuses may not rise to a critical national-security-level threat or vulnerability, there is evidence to suggest that criminal actors sometimes purchase high-value art with illicit proceeds generated from a predicate crime and then hold that art as a way to launder such proceeds,” the report says.
