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Saturday 1 June 2019

Not for show

  • It’s the dirty business of art – a treasure trove of works, from ancient sarcophagi to Picasso paintings, stored in vaults by the super-rich
  • They are held in secret, morally questionable ‘freeports’ – container spaces that offer tax-free storage
  • The director of the Louvre recently called them the greatest museum no one can see

By Catherine Nixey

As art collections go, this is awesome. It is said to contain the world’s largest number of Picassos – around a thousand, rumour has it. Until recently it also held some astonishing antiquities. Rare and priceless Etruscan sarcophagi. Fragments of frescoes from Pompeii. Not to mention, at various times, oddments by Andy Warhol, Modigliani and Joan Miró, among others. It is one of the most sensational assemblies of art you will ever see.

Or rather – that you will never see. This is not the Louvre, or one of the Guggenheim museums. It is an unassuming, even ugly set of warehouses that squat, unnoticed by most, in Geneva. It is called the Geneva Freeport, and many suspect that the ‘Salvator Mundi’ has spent time there. It is not the only place like this. Freeports – and their populations of Picassos – have proliferated in recent years.

A version of ‘Salvator Mundi’ from Leonardo da Vinci’s workshop. The master’s own painting, sold in 2017, is thought by some to be in a freeport

Freeports and art storage facilities can and do serve a legitimate purpose. Most museums and galleries are icebergs of art: what you see on the surface is a tiny fraction of what lies beneath. The British Museum, for example, has seven million objects, including thousands upon thousands of hand axes. It would be neither useful nor possible nor (pace Stone Age enthusiasts) particularly interesting to put all of these on display so they have to go into storage. Some museums, like the BM, have their own storage. Others buy it in. In large quantities. One art insider estimates that, at any one time, 80 per cent of the world’s entire art is in boxes somewhere or other.

Now the mood is turning against these places. The French senator Nathalie Goulet recently described Geneva as a home for “the most unlikely of goods with the most questionable of origins” and “a Bermuda Triangle for taxation”. German MEP Wolf Klinz has urged European Commission president Jean-Claude Juncker to clamp down on them, saying that the freeport in Luxembourg has been “alleged to be a fertile ground for money laundering and tax evasion”. An EU tax committee even commissioned a report – which in the EU passes as a sign of genuine ferocity.

You can see why the EU is interested in freeports. The name might sound easy-going – free trade, free love, freeport – but these places are nothing of the kind. These tax-free containers were invented in the 19th century to store grain, tea and the like – and continue to be essential for companies that assemble component parts from multiple origins. Such tax-free holding warehouses allow tax to be paid only on the final product, not every intermediate stage.

The Geneva freeport is a Bond baddie’s idea of a warehouse

How the art world uses them, however, is rather different. These places allow people to buy art and – so long as they never take the artwork out of the port – never pay tax on it.

Their stock in trade is tax avoidance and, in the current climate, they are becoming hugely popular. As John Zarobell, professor in the department of international studies at the University of San Francisco, puts it, the super-rich sit “like the dragon in the tale on its pile of treasure. They have ridiculous amounts of money and they are less and less willing to share it with the governments of the countries they live in.”

Freeports tend to have the architecture and aura of a Bond baddie’s lair – and you are about as welcome in one. Luxembourg’s freeport, Le Freeport, is typical. In the underbelly of Luxembourg airport, past the crates and concrete, forklift trucks and baggage, squats a sinister-looking concrete bunker, frilled with razor wire. The blank-walled building is largely windowless, although not unseeing – the eyes of some 300 security cameras blink at visitors.

For those with no artworks inside, freeports are not welcoming places

The defences around this €55 million bunker make the airport’s own security systems seem amateur. Take its fingerprint scanner. So what, you might think; your iPhone has one too. Le Freeport’s scanner has a charming added touch: it requires not merely the right fingerprint but the blood to be pumping behind it. Turn up with a correct but severed finger and it won’t let you in.

Most people aren’t welcome here. Walk up to a freeport and ask to see the art in it and you won’t get far. Ask those who have been inside these places – curators and dealers and insurers – to tell what they contain and you get silence. Ask those who run them to tell you what they have inside and their answer will be an emphatic “no”. The first rule of freeports is you don’t talk about freeports.

Unless you are made to by the police. When an Italian art crime investigation department entered the Geneva freeport in 2016 they found two life-size Etruscan sarcophagi – rare and exceptional, their millennia-old faces as vivid as if they had been sculpted yesterday. That was when the Pompeian frescoes were located too, and all the rest. Enough exceptional antiquities and artworks were discovered for the haul to be described in news reports as a “trove”.

Under police protection: a stolen archaeological artefact recovered in Rome

Most experts think that there is almost certainly a lot more looted art in the world’s freeports. Not to mention art that is aiding tax avoidance and tax evasion; art that has been illegally trafficked from countries such as Syria; and that is being used to launder money. Defenders of freeports will say that this doesn’t happen. However, ask Zarobell if freeports are used for laundering and he considers the question so obvious that he bursts out laughing. “Absolutely no doubt about it,” he says.

Dr Thomas Christ, from the Basel Institute on Governance, a Swiss organisation that works internationally to prevent corruption, agrees. “Money laundering is always a game of hiding traces,” he says. Freeports help that marvellously.

Boxes go in. Boxes come out. In some freeports the authorities know what is in the boxes. In others they do not. Moreover, the owners of these boxes can change while they are in there, as freeports also act as trading platforms.

A work goes in belonging to one dealer. Inside and unseen, the art is sold to another. Then another. Used unscrupulously, freeports can be like the old three-cup scam, where you hide a pea under pots then shuffle them about. Except the pea is some of the finest art in the world. Where has it gone? Nobody knows. As Goulet has written, they “act as shelters to these goods – and it must be repeated incessantly – from around the world, which are nearly all obviously ill-gotten”.

UHNWIs – or their proxies – get stuck into the art market at Sotheby’s

Yet they proliferate. This is boom time in art. Partly this is for complicated investment reasons, and partly it is down to something very simple: this is also boom time in rich people. According to a report by Wealth-X, a company that provides data on the deepest pockets in the world, the supply of ultra-high earners grew by 12.9 per cent in 2017 alone. The group of individuals known as UHNWIs – “ultra-high net worth individuals” – like to buy art. It is not just that it can be a good investment (often it is not). It is also an ego trip – it is infinitely cooler to have a Picasso than shares in zinc. But once they have that Picasso, they are reluctant to pay tax on it. So while UHNWIs use offshore schemes for intangibles such as money; increasingly, they use freeports for their tangibles – wine, jewellery, cars and art.

The artworks in these places are almost never touched or seen. Some freeports offer viewing rooms. You sit in these strange, luxurious but functional places while your piece is brought to you. Then you and your artwork (along with coffee and biscuits, should you want refreshments) commune, alone together. When you have had your fill, the piece is taken back to its box and you go home. The overall ambience is like a brothel, but for art.

Occasionally, artworks are allowed out of their boxes – but only occasionally

Most of the time, most of this art stays in boxes in locked, darkened, climate-controlled rooms. Seen by no one. Admired by no one. Philosophically, freeports offer the art equivalent of the tree-falling-in-a-forest problem. If an artwork sits in a box and there is no one there to see it, is it even an artwork any more? Zarobell is in no doubt. Freeports, he says, “represent an art market that has shifted from collection for pleasure to collection for investment”.

For this reason, freeports have been described as “not really moral”. The president-director of the Louvre, Jean-Luc Martinez, recently called freeports the greatest museum that no one can see. “Works of art are created to be viewed,” he said. Once upon a time that may have been true. Art was for looking at. However, the millions of boxes stacking up in the world’s freeports hint that its role has changed. The point of these artworks is far away from visual pleasure. These are banknotes in frames. And inside the darkness of the freeports their value slowly rises.

Photography by Getty Images and Eyevine

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Further reading

“When the word ‘priceless’ crops up, the haggling has only just begun.” So wrote the critic Robert Hughes in 1984 in this superb essay, On Art and Money, that takes aim at how money has seeped into the art world. Hughes’s numbers look almost innocently dated today (“Dealers tell us that the day of the ten-million-dollar painting is at hand,” he says at one point), but his arguments and writing remain wonderful.

For a more modern look at the art world try The Dark Side of the Boom by the former art market editor of the Art Newspaper, Georgina Adam. Given that the art market has been described as the “greatest unregulated market in the world” after drugs and prostitution, there is a lot of darkness for her to probe.

If you want to know who has the money to buy these paintings in the first place, try Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland, which offers a peep into the unappealing world of the UHNWIs.

If you’re wondering whether you should care whether you can see every single scratch Picasso ever made on canvas, read the academic John Carey’s book What Good are the Arts? It won’t change the fact that much great art is still locked in boxes. But it might help you to feel better about it.