Hot Art (18 page)

In Brighton, Paul had spent time studying auction house catalogues—one of the ways he learned about the value of objects—and realized he could circumnavigate around the dealers in the Lanes and reap higher profits by selling direct, wholesale, to the main suppliers.

Auction houses, Paul discovered, had created a system where everyone who needed to make money from the art world was forced to use them. “If you're a dealer or a thief, where else would you go to find those clients?” he asked, sounding ever the small-business owner. “It has been this way since those auction houses started, hundreds of years ago.”

Sotheby's (at the time called Baker's) held its first auction— a collection of old books—on March 11, 1744, during the reign of King George
II
. James Christie opened his auction house twenty-two years later, in 1766. Bonhams followed in 1793. In 1796 Harry Phillips defected from his mentor, James Christie, and opened his own house. These four establishments remain the reigning auction houses of the world, and have expanded. For the first 150 years the houses traded mostly in rare editions of books, prints, and coins; after Napoleon died in exile, his collection of books was auctioned at Sotheby's. It wasn't until the early 1900s that sales of paintings caught on and became the houses' main source of revenue.

That happened because Christie's and Sotheby's developed a strategy to convince the middle class to buy what most had thought they could never afford: something special to decorate the mantel. They brought art to the masses. The houses recognized in the 1950s what Paul would discover a couple of decades later: that art was a product, and that as a product its value could be artificially pushed higher by increasing demand. To do this the consumer must be convinced to buy the product—art, like many other economies, was a confidence game.

Bonnie Burnham's 1975
The Art Crisis
recounts how, in 1959, Stanley Clark accepted a job at Sotheby's. An outsider to the art world, Clark came to it with a fresh perspective. He crunched the numbers and figured out that people were buying objects that cost less than £100. So Clark decided that Sotheby's should focus on this market, and his reasoning was simple: business didn't need to just be about the big-ticket items. There was money to be made in the small stuff. Million-dollar profits in a single evening were tempting, but the auction house could rake in even more by focussing on the lower end of the market. Paul figured out that every house on the planet had a prize, and Clark figured out that all those home owners could be persuaded that they deserved a prize.

“Most people back then had never heard of Sotheby's,” Clark told Burnham. Before Sotheby's, he had worked at the
Daily Telegraph
. He used his knowledge of the media to his advantage, and convinced the daily newspapers that auctions should be featured in the news—that, in fact, what was happening at the auction house was news. In return, Sotheby's began advertising free consultation services, which worked well when stories appeared about found treasures.

For example: “A poverty-stricken old woman living on her small pension came in with a shoebox full of glass beads, begging that Sotheby's give her two pounds for them. In the bottom of the box the Sotheby's expert found an ivory Saxon reliquary, missing 400 years, which a British institution was delighted to buy for 40,000 pounds.” Burnham found dozens of examples of these “articles” in her research for
The Art
Crisis
. The marketing worked, and Londoners started hauling their junk to Sotheby's, with the hopes of a lucky find. It was the original
Antiques Roadshow,
and the campaign had the added benefit of giving antique and art dealers a fast-moving business: everyone was a winner.

So while Paul was growing up in the wrong part of Brighton, Sotheby's was developing the market he would reap. By the 1980s, that market experienced its first boom. Some paintings were selling for thousands of dollars, others for hundreds of thousands. And now, a few sold for millions.

Clark's theory had been dead on—the business was exploding. Added to that, the value of art and antiques kept rising. There were few if any checks and balances in the auction system, though, and Paul exploited every opportunity. He said that auction houses turned out to be just as irresponsible and greedy as the dealers in Brighton. “If a junkie showed up at an auction house desk with a dozen hypodermic needles sticking out of his arm but he had a great painting under his arm, it wouldn't matter. They'd take the painting. Back then you could take a painting to any of the larger auction houses and sell it to them on the spot,” Paul told me.

From time to time, he also used smaller auction houses. They had even fewer checks and balances and were totally beneath the radar of London police. “If I didn't feel confident going to a larger house I'd use a regional house. I could go there with a $10,000 painting. Name? M. Mouse. Address? Disney World, Florida. If the police got involved, well, the name is M. Mouse. Sometimes they didn't ask for a name.”

Paul was now building an efficient network for his stolen paintings. And there wasn't a system in place to stop him. In the early 1980s, the closest thing to a global master list of stolen art was Interpol's database, but it wasn't set up to be used by the international art community; it was for police forces. Without a list of stolen artwork to check against, those big auction houses had no way to protect against absorbing stolen art. In New York, the International Foundation for Art Research had started a list in 1976, courtesy of Bonnie Burnham, but its database was obsolete: paper files, plus a “Stolen Art Alert” newsletter published every once in a while for anyone interested. There were dozens of other lists: looted work in France, in Germany, and in Poland. Italy had one, and so did Egypt. But there was no list to rule them all. “Without a list, I could do what I wanted. I could sell stolen paintings straight into the auction house system. There were no defences,” said Paul.

IN 1986, JULIAN RADCLIFFE
met with Marcus Linell, the director of Sotheby's in London. Radcliffe wasn't from law enforcement or the art establishment. He came from the world of big insurance. He'd graduated from Oxford in international relations and then spent time in Northern Ireland and Beirut, collecting information for
MI
5 and
MI
6, although he was not an official agent. He spent a summer working for Lloyd's of London, one of the largest insurance companies in the world, where he quickly moved into risk management. He began consulting globally on kidnappings and terrorism, and in 1975 he was a founding member of a small company called Control Risks, which advises multinationals with staff and operations in danger zones. One of the patterns he gleaned was that crime was becoming more organized, moving into wider geographical circles, larger than any one government's control. Control Risks grew to become a major international company with thirty-four offices on five continents, helping companies succeed in “hostile business environments.” When Iraq was invaded in 2003, the British government awarded Control Risks a contract to provide security for its diplomats and employees.

When Radcliffe met Linell as a Control Risks consultant, Sotheby's was in the process of expanding its offices all over the world. Linell needed advice about risk management for staff members in exotic locales. During that meeting, the Sotheby's director mentioned to Radcliffe, as an aside, that it would be useful to have a list of stolen artworks to check, one that was comprehensive. At that time, it was extremely difficult to check if an artwork the house was buying was stolen, said the director. The auction house had to contact dozens of organizations and police departments around the world, and even then it often couldn't get a conclusive answer. As auction prices climbed, so did the interest of criminals. It was a conundrum. Couldn't Control Risks do for art what it did for people and businesses?

After the meeting with Linell, Radcliffe couldn't stop thinking about the idea: that the best way to curb international art theft was to create an international list of stolen artwork. Whoever assembled that list would be the master of the art world. It would work like this: every time a painting was stolen, any victim or police officer, from any country, could register the work on the list; once the work was on that list, art dealers, galleries, and auction houses could crosscheck what they were buying or selling. There was a catch, though: the system would work only if everyone in the art market participated—auction houses, dealers, galleries, everyone. Then thieves would no longer be able to use their current business model to launder stolen items back into the system. It was the logical solution—a global solution—and Radcliffe hoped it would be profitable. But where to start? Was there a list to build on?

Yes, there was. Radcliffe found a small organization in New York that had been compiling exactly the kind of list he was looking for—at the International Foundation for Art Research. After penning
The Art Crisis,
Bonnie Burnham had accepted the job of director of
IFAR
, and her first big project was to figure out how much art was being stolen in America. “I started a program at
IFAR
called the Art Theft Archives,” she told me. “We began collecting information and publishing a list of objects stolen. We conducted our museum survey and asked two hundred museums from New York, Chicago, Los Angeles, other big cities, to submit records of losses.” Many of them did. “There was nothing official as a source of information at that time,” she said. “I would say that most institutions did say they had things missing from inventory—mostly smaller and more unobtrusive things.”

According to Burnham, “When we did the survey of dealers, same thing. That survey was sent to about two hundred dealers. We negotiated with them to release this information. Then auction houses began to support our effort. We also went to police sources. I had old connections with Interpol. We went to the New York Police Department, the
FBI
. It was never anything official, because there was no way to get to that level back then.” Burnham left
IFAR
in 1985, but ten years after she'd started to catalogue stolen works, the list held twenty thousand items—a mix of missing paintings, sculptures, antiques, and antiquities.

Radcliffe decided he wanted to use
IFAR
's Art Theft Archives as the foundation for his new company. In New York, he met with the new head of
IFAR
to talk about his new company. He even had a name for it: the Art Loss Register.
IFAR
had been successful in recording the details of losses, but recoveries were slim. Radcliffe told
IFAR
, “There are a few missing pieces to your approach: a commercial understanding of the market, technology, and capital.”

After the meeting in New York, Radcliffe flew back to London and, using his connections and his track record, raised $100,000 from insurance companies and the art trade—the big auction houses—and used it to commission a feasibility study. The question Radcliffe wanted answered: How much would it cost to computerize the
IFAR
list and create a searchable database? The answer came back a year later: about a million dollars in start-up capital to computerize the database, as well as to add a very important component: digital pictures of the artwork. “In that era, the study was groundbreaking,” Radcliffe told me. “Putting photographic images on computers! Remember, this was the late 1980s.”

Armed with the study and
IFAR
's list, Radcliffe went back to the insurance companies and auction houses. If they wanted to close the stolen-art loophole, he told them, they each had to kick in the capital. In exchange, they'd receive shares in the company and a seat on the board. The big boys bit: Sotheby's for 20 per cent; Hogg Robinson, an insurance company, for 13; Lloyd's for 10; Rosenthal, a bank, for 10; and Christie's for 8.
IFAR
also got a piece. Radcliffe set to work. He opened an office in London, bought some hardware, and brought the
IFAR
list to life. In 1991, the Art Loss Register opened for business. Bonnie Burnham remembers looking at the newly launched
ALR
database and thinking, “This is a quantum leap forward from what we were doing.” The price of a search was one pound, and law enforcement could use the service for free. The auction houses started checking their sales catalogues against the register.

The
ALR
yielded immediate results.

One out of every three thousand items searched by Sotheby's and Christie's turned out to be stolen. And this was based only on the initial list, limited to what
IFAR
had managed to piece together. Scotland Yard and the Sussex, Thames Valley, and Gloucester police forces all started using it too, as did a number of other detectives from around the world. The list started growing, first by the hundreds and soon by the thousands. In principle, the
ALR
should have thrived, but it barely survived.

“I thought that no one wanted to sell stolen art,” said Radcliffe. “I was wrong. Income from the insurance industry was right on track, but dealer searches and private searches were way down.” Instead of being celebrated, Radcliffe found himself at the centre of an ideological skirmish among art-world insiders. On one side was the insurance industry, taking huge hits from stolen art. “Insurance was telling the dealers they had to clean up their act, and that they had to pay to clean up,” said Radcliffe. “But dealers were saying, ‘We have a clean act. We don't have to clean up.' I was persuaded that logic would prevail, but a lot of dealers said to me, ‘I've been in business for fifty years, and I've had two stolen items in fifty years. I only buy from people I know. I don't need you, Julian.'”