Column, GIFT: Ethical Corp
Auction houses are not doing enough to avoid selling stolen goods, argues Chandran Nair.

Chinese art collector Cai Mingchao shook the auction world when he successfully bid $40m for two looted bronze relics, but refused to pay.

Cai won an auction for the two bronzes – depicting the heads of a rat and a rabbit – at Christie’s in Paris, in February.

The sculptures were stolen from China’s Manchurian Qing Dynasty in the 19th century, and were put up for sale by the former business partner of the late French fashion designer Yves Saint Laurent.

The Chinese government had tried to block the sale, but failed. Cai then stepped in to secure the sculptures, without ever intending to follow through with payment.

Chinese art and antiquities are big business for the auction industry. Last month Christie’s sold $137m worth of mainly Chinese imperial art and ceramics at its Spring sales in Hong Kong.

But many, like Cai, are concerned about the origins of these auction lots. China has even set up a National Treasure Fund, which Cai advises, to buy back looted and stolen Chinese relics.

The fact the fund exists points to the moral dilemmas at the heart of the auction industry, which has been overlooked for too long in conversations about ethical business.

Dubious origins

The saga of the bronze rat and rabbit heads dates back nearly 150 years to when French and British forces looted them from the Old Summer Palace (Yuanmingyuan) northwest of Beijing, during the Second Opium War in 1860.

Despite relatively wide media coverage on the unusual incident, the noticeably absent question was: What are the ethical and socially responsible standards to which the industry should be held?

In response to China’s demands to have the relics returned, the current owner, Yves Saint Laurent’s former business partner Pierre Bergé, declared: “I acquired them and I am completely protected by the law, so what the Chinese are saying is a bit ridiculous."

In light of such an ambiguous definition of “acquisition”, all parties involved in the exchange of antiquities – buyers, sellers and auction houses – need to scrutinize the manner in which this business is done and the assurances they provide, or fail to provide, regarding potentially looted goods.

Historical examples show that the auction industry is riddled with goods that have been acquired by illicit and criminal means.

In 2003 it was discovered that both Christie’s and Sotheby’s had included more than 700 antiques in 34 catalogues on Indian and South East Asian art which came from the then arrested Vaman Ghiya, one of the largest smugglers of stolen relics in India.

Did anyone at either auction house do the minimum level of forensic due diligence one would expect?

Why are we not holding these companies to a higher standard of vetting their suppliers?

Is it acceptable that traders in stolen goods can profit in what many consider a respectable industry?

Do we as a society accept that stolen goods with spurious claims to legal ownership can be made freely available on the auction market to the highest bidder?

Under the radar

Corporate responsibility has to date been generally limited to scrutiny of companies with obvious impacts such as pollution or labour abuses.

However, ethical considerations cut across almost all industries and attention should be paid to the core businesses of many which may have been under the radar for too long.

Neither of the websites for Christie’s or Sotheby’s contains any information on codes of conduct or operating procedures regarding verifying ownership of goods.

Sotheby’s stated Code of Business Conduct and Ethics, on its website, makes no mention of responsible procurement standards.

Auction houses sell goods of legal tender. But as investigative journalists such as Peter Watson have noted, the flow of auctioned goods can be carefully orchestrated by a clandestine procurement and supply network designed to make ownership claims difficult to verify.

Shipped from Asia, Africa and elsewhere to Europe, acquired by new owners and eventually attached to legitimate addresses by the time they end up in museums, these goods may well later be put on auction to the highest bidders.

To align the auction industry with the same degree of social responsibility as others, more stringent regulations and codes of conduct are needed.

Buyers must also be cautious to avoid investing in artefacts which, being of dubious origin, only serve to promote financial incentives for drivers of the black market for such goods.

As they say, when the buying stops, the looting stops. It is time auction houses delve into their supply chains to make sure that they are not running markets for stolen goods.

It is time that a basic level of responsibility which in principle can be universally agreed, that theft is wrong, be extended to the high profile industry of antique auctioneering.

Chandran Nair is founder and chief executive of Global Institute for Tomorrow.