Bloomberg Businessweek - USA (2019-05-27)

Seated Man

With a Cane

62

PHOTO:

THE

HISTORY

COLLECTION/ALAMY.

DATA:

FREE

PORTS,

NATIONAL

CUSTOMS

AUTHORITIES

MajorFreePorts,SquareFootage

THEOLDESTISLARGERTHANNINE

footballfieldsandwasusedtodistrib-

uteRedCrossparcelstoprisonersof

waracrossEuropeduringWorldWarII.

Thenewestdemandsa retinascanfor

entry.Thesearefreeports:tax-free,

high-techstoragefacilitieswheretop

artcollectors andnervous tycoons

canparktheirvaluablesfordecades.

Artist Hito Steyerl hascalledthem

“secretmuseums.”

Somefreeportsarelocatednear

Genevaandtheotherhistoricplay-

groundsofmoniedEurope.Somehave

sprungupinSingaporeandotherAsian

hubs,toservemorerecentlymintedfor-

tunes.TheU.S.is a relativelatecomerto

thegame,buttherearenowfreeports

inManhattanandoutsideWilmington,

Del.Freeportsareessentiallyminiature

tax-freezonesofferingclientsa legal

waytoavoidpayingduplicateimport

duties.Totakea hypotheticalexample,

a wealthycollectorwhoownsa $20mil-

lion Magritte might use the free port in

Luxembourgtoavoidpayinghundreds

ofthousandsofdollarsinimportduties

whileshedecideswhethertohangthe

paintinginherchaletintheSwissAlps

orherManhattanbrownstone.

FreeportsinSwitzerlandseta stor-

agelimitof 12 monthsforSwissciti-

zens,butanyoneelsecanusethemto

stashvaluablesindefinitely.Freeports

inothercountriesaresimilarlygener-

ouswithtimelimits.Andthat’swhere

problems begin.

Most free ports stipulate that all

items entering and exiting be meticu-

lously registered. But at the same time,

most allow owners to be identified not

by their real name but as a corporate

entity, which simply requires them to

set up a shell company. And because

taxes aren’t typically levied on sales

that take place within a free port, own-

ers can potentially partake in the anon-

ymous buying and selling of artworks

worth tens of millions of dollars. There’s

little ability to trace the transactions.

Geneva Free Ports Ltd. is the biggest

of them all, a 559,000-square-foot behe-

moth that’s been the site of controversy.

In 2010 criminals pillaged sites in Libya,

Syria, and Yemen and—via Qatar and the

United Arab Emirates—smuggled nine

artifacts into the facility. It wasn’t until

six years later that Swiss prosecutors

seized the pieces after customs checks

raised suspicions. The antiquities

included the head of a stone statue of

Aphrodite dating to the heyday of the

Greekempireinwhatis nowLibya.

In 2016 a Modiglianipaintingworth

about$25million, Seated Man With a

Cane, allegedly stolen by the Nazis and

auctioned off in 1944, was discovered at

the facility. Its ownership by New York

art dealers was challenged by the heirs

of its original owner, Paris-based art

dealer Oscar Stettiner. That prompted

Geneva prosecutors to briefly order the

canvas to be sequestered before return-

ing it to the dealers.

The scandals led Geneva Free Ports

to tighten its regulations. A warning on

its website now tells prospective cus-

tomers to seek preapproval for any

archaeological object they plan to store

there. Even so, Geneva Free Ports exec-

utives said the Modigliani case illus-

trates how a lack of rules requiring

the disclosure of beneficial ownership

“instills distrust.”

The dispute about the painting

came to light only because it was listed

in the millions of pages of documents

leaked as part of the Panama Papers,

which exposed how the rich use—you

guessed it—shell companies to hide

their wealth. <BW> �Hugo Miller

SECRET MUSEUMS

Tax-freestoragefacilitiescanholdart

outofsightfordecades

$25m

Value of one Modigliani

stored in a free port

Geneva

Singapore

Luxembourg

New York

Delaware

559k

269

237

110

36

Bloomberg Businessweek

WHERE THE MONEY IS

May 27, 2019