The Intelligent Quarterly from the publishers of The Insurance Insider

Autumn 2017

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Plundering for profit

Tony Baumgartner and Owen B Carragher Jr

Sadly the looting of and trafficking in antiquities is not just the stuff of popular Hollywood fiction such as Indiana Jones and Lara Croft.

In the real world the so-called Islamic State of Iraq and Syria (Isis) is plundering for profit and using looted antiquities to fund its domestic and international activity and terrorism.

The G7 group of nations' Financial Action Task Force, a Paris-based governmental body, estimates that Isis has raised tens of millions of pounds from stolen antiquities in the past few years alone.

In July Clyde & Co ran a seminar which examined how terrorism was being funded through looted antiquities, in an event that brought together two of the world's leading experts in the field: Matthew Bogdanos, Assistant District Attorney of New York and a colonel in the US Marine Corps, and Amr Al Azm, associate professor of history and anthropology at Shawnee State University in Ohio.

Professor Al Azm vividly discussed how Isis has systematically overseen the widespread looting of Syria's six Unesco world heritage sites since 2014. He spoke of the sinister trade that has built around the transportation and sale of stolen Middle Eastern antiquities, which involves a complex web of smugglers, middle men and often unwitting art experts and collectors.

When Isis fighters are filmed destroying some of the world's ancient and historical religious buildings and relics, they claim to be doing so for ideological reasons, but the truth is often that they are doing it purely for profit or for the purposes of propaganda.

A well-trodden path

According to Colonel Bogdanos, plundered antiquities tend to take a well-used path from theft to sale on the international market. However, to aid in their false legitimisation some items may take many years before coming onto the market.

Colonel Bogdanos reported that there are five key nodes of trafficking:

Theft and excavation: antiquities are looted either from the ground from known historical ruins, or from museums

Transportation: the items, some of which are up to 10,000 years old, then start their journey out of the Isis stronghold, usually by taxi or lorry (often with shipments of arms) into Turkey or Lebanon

Initial sale: once over the border they are taken to a network of local dealers and tourist shops who purchase the goods

Into Europe and the US: the goods are then covertly smuggled to Europe or the US, where they are taken to art experts and professors to insert into legitimate channels

Sold to international dealers: once a provenance has been fabricated for an item it then often finds its way to an auction house or dealer for promotion to their specialised client base.

Legal and moral obligations

Colonel Bogdanos and Professor Al Azm both emphasised the part that the insurance industry can play in helping to identify stolen pieces and deter future plundering.

In particular, insurers have a role in checking their insureds have sufficient and documented due diligence procedures before cover is in place or engaged.

And apart from the moral obligation to help try to end the illicit tracking of antiquities, there may also be a legal obligation to report suspected loot under the UK's Proceeds of Crime Act 2002 (POCA). Failure to do so could result in criminal proceedings.

POCA creates a number of offences relating to "criminal property", each of which can cover stolen antiquities. In short, sections 327 to 329 of POCA create offences of concealing, disguising, converting, transferring or removing criminal property from England and Wales; entering into or becoming concerned in an arrangement which facilitates another person's acquisition, retention, use or control of criminal property; and acquiring, using or possessing criminal property.

Those offences can be committed by knowing or suspecting property is "criminal property". In order to hold the relevant suspicion, all a defendant must think is that there is a possibility, which is more than fanciful, that the relevant facts exist. POCA does not require the suspicion to be clear or firmly grounded and targeted on specific facts, or even based upon reasonable grounds.

Red flag questions

Dealers, auction houses and collectors, together with the insurance industry, each have a role to play in identifying looted antiquities and helping to prevent their ongoing sale.

Due diligence "red flag" indicators have been highlighted, which could raise suspicion that the antiquity might be looted, as follows.

Does the piece have a documented provenance? If not, is there any other way of establishing the history of the piece? For example, is there an historical photograph of the piece? How old is the photo? As a general rule, the higher the value of the item, the more likely it is to have been photographed at some stage in its collection life - so if the earliest photo is relatively new then this is a potential red flag.

Is its provenance documentation pre-1970? If yes, check the documentation thoroughly for authenticity. Prior to the 1970 Unesco Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, there was no set of uniform international rules dealing with the recovery and return of illegally exported or stolen cultural property, and so documented provenance post-1970 is more likely.

Has it crossed any international borders? Lawfully exported valuable antiquities cannot miraculously appear in another country; they must have proper customs declarations and, possibly, export permits to be taken across international borders legally.

Has the piece been insured before? If yes, where is the paperwork?

How did it get into the hands of the present owner? Has it been named in a catalogue and its provenance documented before - and does the provenance pass the "sniff test"? Something catalogued as "From a 19th century French collection" is unlikely to provide proper provenance on its own. What condition is it in? If a statue has cuts below the shoulders and hips - or has nicks on it consistent with a power tool - then there's a good chance it's stolen.

What's the item's country of origin - and the date it appeared on the market? If it corresponds with war or conflict, then there's also a good chance of it being looted.

In addition to considering these red flag questions, items should be checked under a UV light, as increasingly SmartWater is being used (by people on the ground trying to save antiquities) to mark items with a green dye that is revealed only when under UV light.

Those involved in transacting antiquities (including insurance brokers and underwriters) should also be aware of the relevant country patrimony law dates, which are conveniently listed on the Unesco website. Pieces appearing on the market for the very first time after the relevant patrimony law date should sound the alarm bell.

What more can be done?

Brokers should confirm that there is full provenance documentation for pieces which are proposed for cover under an insurance policy.

Pieces for which such documentation cannot be produced should be carefully scrutinised by both brokers and underwriters before being underwritten for cover.

Underwriters should make it plain to both brokers and insured that the policy does not cover looted or stolen antiquities. This is best done through a clearly worded exclusion clause.

Looting antiquities is a lucrative business, so it's not likely to be stopped until there is international and local cooperation between those trying to stop it at source and those at the other end of the shipping chain.

The insurance industry has its part to play by making sure looted antiquities are not covered by insurance policies, thereby removing a vital link in the chain that often underpins the dealing process.

It can do so by asking the right questions, and knowing what to do if an item is suspected loot.

Tony Baumgartner is a partner in the London office of Clyde & Co

Owen B Carragher Jr is a partner in the New York office of Clyde & Co

This article was published as part of issue Autumn 2017

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