According to a Senate investigation report released on Wednesday, in the months after the US imposed sanctions on Russian construction billionaire brothers Arkady and Boris Rotenberg, both of them illegally spent more than $ 18 million on art in the US. Explaining the art market in “the largest and unregulated industry in the United States,” the report found that the inherent secrecy in trade allowed the brothers to overcome government financial restrictions.
He also recommended a number of steps to increase transparency and tighten supervision of the art market, including amending the Bank Secrecy Act to be applied to businesses that handle high-value arts, and providing official guidelines for auction houses and art dealers.
It is illegal for US-based companies to conduct financial exchanges with people or organizations that are subject to sanctions by the government. Art traders, however, are not required to know the identity of the buyer of the work, so blue-chip sales are often handled through intermediaries, as is the case with Rotenberg’s brother. The duo hired Moscow-based art advisor Gregory Baltser to buy works through his private company Baltzer, with funds tracked directly to shell companies linked to the brothers, according to the report. From May to November 2014, they spent more than $ 18 million on art – including at least $ 6.8 million spent on nine works at Sotheby’s New York Impressionists and sales of Modern art days, including paintings by Marc Chagall and Georges Braque, and $ Another 7.5 million was paid for the 1961 Rene Magritte painting Chest, purchased through a US private dealer.
The Rotenbergs relationship with Baltser continued for years, and in 2019 both Sotheby and Christie competed for the opportunity Bridge II by Lyonel Feininger – a painting claimed by Baltser to be owned by a company incorporated in the Marshall Islands, although Senate investigators state that it may be owned by Rotenbergs. Sotheby’s won a consignment and estimated the painting would produce $ 5 million, but was eventually withdrawn from the auction due to a lack of potential bidders.
When contacted for a statement about his involvement with Rotenberg’s brother, the auction house said: “Sotheby’s policy of anti-money laundering and the US sanctions policy is very serious and voluntary to participate in the investigation of the Senate subcommittee.”
In total, the report alleges that the brothers spent or moved about $ 91 million after the imposition of sanctions, $ 18.4 million of which involved art and antiques. This duo is said to be a member of Putin’s inner circle, and 150 page report including images of Arkady Rotenberg practicing judo with the Russian president.
“It is very worrying and totally unacceptable that common sense regulations designed to prevent money laundering and terrorism financing do not apply if someone buys millions of dollars worth of art,” said Senator Tom Carper of Delaware, who led the joint investigation. with Senator Rob Portman from Ohio, in a statement issued with report release. “As a result, wealthy criminals, terrorists and Russian oligarchs such as Rotenberg can use the unregulated art industry, as well as real estate and other investments, to hide assets, launder funds, and avoid sanctions. Unfortunately, our failure to close this clear gap makes US sanctions – an important national security tool – far more effective than they should be. “
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