FILE
- In this Sept. 15, 2016, file photo, Russian President Vladimir Putin,
right, joins businessman and billionaire Arkady Rotenberg, during to a
visit to the construction site of the Kerch Strait bridge in Kerch,
Crimea. Investigators traced $18 million in art buys to shell companies
linked to Arkady Rotenberg and his brother Boris, who are close Putin
associates who American officials say benefited financially from the
Crimean annexation. (Alexei Druzhinin/Sputnik, Kremlin, File Pool Photo
via AP)
NEW
YORK (AP) — Russian oligarchs have skirted U.S. sanctions through murky
high-end art deals, according to a congressional report released
Wednesday that urged lawmakers to rein in an unregulated industry
favored by money launderers.
The secrecy of the
art world — in which buyers often remain anonymous — gave billionaire
friends of President Vladimir Putin access to the American economy even
after the United States sanctioned them following Russia’s 2014
annexation of Crimea, the report found.
Investigators
traced $18 million in art buys to shell companies linked to Arkady and
Boris Rotenberg, close Putin associates who American officials say
benefited financially from the Crimean annexation.
The Senate’s
Permanent Subcommittee on Investigations highlighted loopholes that
exempt even the most lucrative art sales from financial safeguards aimed
at stopping money laundering.
Major
U.S. auction houses acknowledged never asking for the true identity of
the buyer, the report found, dealing with an intermediary for the sales
in question “even when it was well-known that the ultimate owner was
someone else.”
In
all, the shell companies linked to the oligarchs moved at least $91
million through the U.S. financial system after the sanctions were
imposed, the report found.
“It
is alarming and completely unacceptable that common sense regulations
designed to prevent money laundering and the financing of terrorism do
not apply if someone is purchasing a multimillion-dollar piece of art,”
said U.S. Sen. Tom Carper, of Delaware, the subcommittee’s top Democrat.
U.S.
Sen. Rob Portman, Republican of Ohio, said he supports legislation to
lift the “curtain of secrecy” that has made the art industry a preferred
vehicle of money launderers.
The
Rotenbergs could not be reached for comment. They have been the subject
of U.S. sanctions since March 2014, singled out for their close ties to
Putin. Arkady Rotenberg is a childhood friend
and former judo sparring partner of Putin. His companies won billions
in road contracts in Sochi, the host of the 2014 Winter Games.
Global
art sales reached about $64 billion last year, with the United States
accounting for nearly half the market. The industry remains unregulated
in the U.S., however, attracting the likes of racketeers and money
launderers.
Any
reforms to the notoriously opaque art world will face vigorous
opposition from well-heeled collectors “who don’t want anybody to know
what they have,” said Robert Wittman, a former FBI agent who founded the
bureau’s Art Crime Team.
U.S. art sales would
plummet, Wittman said, if Congress followed the subcommittee’s
recommendation to extend the Bank Secrecy Act to businesses brokering
high-value art transactions.
The
report points to new anti-money laundering rules the European Union
adopted recently for expensive art deals, including verifying the
identity of the buyer and seller of the art. That directive followed the
release of the so-called Panama Papers,
a collection of more than 11 million secret financial documents that
illustrated how some of the world’s richest people hide their money.
The
congressional report released Wednesday cited an email chain contained
in the Panama Papers that listed nine shell companies in the British
Virgin Islands linked to the Rotenbergs.
It
said the Rotenbergs’ art deals in the U.S. were facilitated by Gregory
Baltser, an American citizen and art advisor based in Moscow who has “no
plans to return to the United States.”
Baltser’s attorney sent the congressional subcommittee a letter denying allegations that he did business with the Rotenbergs.