$2 Billion Missing in U.S.-U.K. Art and Antiquities Trade. Trade Based Money Laundering or Some Other Explanation?

It stands to reason that the declared export price of goods should match the declared import price of the same goods. So questions certainly arise when customs values reported by an exporting country do not add up to the customs values for the exact goods published by the importing nation. And that is what is happening with the United Kingdom and the United States in the art and antiquities trade.

The trade in works of art, collectors pieces, and antiques exported from the U.K and imported into the U.S. demands scrutiny. These cultural goods are classified by Harmonized Tariff Schedule (HTS) commodity code 97, which specifically covers paintings, drawings, engravings, prints, lithographs, sculptures, statuary, and stamps. HTS 97 also includes collectors' pieces and collections of zoological, botanical, mineralogical, anatomical, historical, archaeological, and paleontological materials. Numismatics are covered as well, and so too are antiques over 100 years old.

The U.K. was the number one source of archaeological, historical, and ethnological material imported into the United States in 2013 (HTS 9705.00.0070 goods). In the broader art and antiquities markets, the U.K. ranked number two--second only to France--in the value of all HTS 97 goods imported by the U.S. last year.

According to data generated by HM Revenue and Customs, the U.K. reported a declared value of exports to the U.S. in 2013 of £2,202,630,107 worth of HTS 97 art, collectors pieces, and antiques. That total translates to $3,700,640,000 as measured by the currency exchange rate effective on April 22, 2014.

In contrast, the 2013 data compiled from the U.S. International Trade Commission show that America imported from the U.K. only $1,675,476,108 worth of HTS 97 goods. The difference between the total declared value of HTS 97 goods exported from the U.K., and the total declared value of HTS 97 goods imported for consumption into the U.S. during 2013 amounts to $2,025,163,892.*

Because the published values do not match by over $2 billion, they should be analyzed carefully by trade experts to find out why this money is missing from the trade data. Commercial lawyers and customs attorneys, for example, should examine how the value differences can be justified, if at all, by changing currency valuations or other relevant factors.

[UPDATE May 5, 2014: The trade data for a five year period, from 2009-2013, is examined in CHL's post here.]

The data need to be studied by law enforcement too, particularly since customs values for U.S. imports are not determined by government record keepers; they are amounts supplied by importers, which are then written on customs entry forms. As U.S. Immigration and Customs Enforcement correctly observes, "Global trade is frequently used by criminal organizations to move value around the world through the complex and sometimes confusing documentation that is frequently associated with legitimate trade transactions."

Customs authorities particularly should probe whether there may be evidence of trade based money laundering (TBML). TBML permits criminal networks to earn and transfer money by hiding and remitting profits within the stream of the legal marketplace. One TBML technique is to import goods into the U.S. at an undervalued amount.

The $2 billion difference between HTS 97 goods exported from the U.K. and imported into the U.S. warrants scrutiny on both sides of the Atlantic, particularly because the legitimate--but opaque--art and antiquities markets are susceptible to terrorist financing risks, money laundering, and black market operations. The preservation of both cultural heritage and the legal marketplace demands that answers be found to explain the $2 billion missing from the U.S.-U.K. art and antiquities trade.

*Trade data for HTS 97 goods is examined over a five year period in a blog post dated May 5, 2014. The 2013 U.S. data used for the five year comparison looks at general import values rather than values for imports for consumption, which is used in this blog post.  Also, the currency conversion rates used in the five year data in the May 5 blog post are all from December 31 for each year, respectively, from 2009 through 2013. The currency conversion rate used to convert GBP to USD in the April 22, 2014 blog post here is the rate published on April 22, 2014. This information accounts for any differences in values reported here versus the values reported in the May 5 blog post.

Photo credit: Darren Deans

By Rick St. Hilaire Text copyrighted 2010-2014 by Ricardo A. St. Hilaire, Attorney & Counselor at Law, PLLC. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post is prohibited.

LCCHP to Host Egypt: Night at the Museum on May 7

On May 7, the Lawyers' Committee for Cultural Heritage Preservation (LCCHP) will be hosting Egypt: A Night at the University of Pennsylvania Museum of Archaeology and Anthropology.

Egypt has recently drawn attention for the destruction of cultural heritage by the looting and destruction of museums and archaeological sites throughout the country. This spring, Egypt formally requested the U.S. to place import restrictions on endangered archaeological materials originating from within its borders.

Please join LCCHP and our members to learn more about these issues during a private tour of the Egyptian Wing of the University of Pennsylvania Museum of Archaeology and Anthropology (the Penn Museum houses one of the largest collections of Egyptian and Nubian material in the United States) followed by a happy hour near the museum.

When:              Wednesday, May 7^th  

                        Private tour from 6:30 – 7:30 pm
                        Reception from 7:30 – 9:00 pm

Where:             Univ. of Pennsylvania Museum of Archaeology and Anthropology
                       3260 South Street, Philadelphia, PA 19104

Admission:        LCCHP members: $17
                        Non-LCCHP members: $22
                        University of Pennsylvania students and faculty: $5

Join LCCHP at www.culturalheritagelaw.org to receive LCCHP members’ rates for the event. Purchase your tickets here or visit the LCCHP website at www.culturalheritagelaw.org.

Contact Leila Amineddoleh, at director@culturalheritagelaw.org, or see the flyer (Egypt at Penn Museum) for additional details.

Photo credit: Lucretious

By Rick St. Hilaire Text copyrighted 2010-2014 by Ricardo A. St. Hilaire, Attorney & Counselor at Law, PLLC. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post is prohibited. CONTACT INFORMATION: www.culturalheritagelawyer.com

Egypt Officially Asks U.S. for MoU to Protect Cultural Heritage

The Cultural Property Advisory Committee (CPAC) is scheduled to take up Egypt's formal request to have American import protections placed on endangered archaeological material originating from that country. The Federal Register today pre-published a notice announcing that CPAC will begin a review of Egypt's proposed Memorandum of Understanding (MoU) on June 2.

Temple of Isis at Philae in Egypt.

CHL has been calling for greater protection of archaeological sites, religious structures, and monuments since 2011 because of increasing perils to cultural heritage in Egypt. These threats have been chronicled in several CHL blog posts including here and here.

The International Council of Museums itself alerted the world to this swelling problem in 2012 by publishing the Emergency Red List of Egyptian Cultural Objects at Risk.

To submit comments concerning the proposed MoU, go to the Federal eRulemaking Portal and enter Docket No. DOS-2014-0008. Comments must be sent to CPAC by May 14. They must relate to the "four determinations" laid out by the Convention on Cultural Property Implementation Act (CPIA). These include:

(A) [whether] the cultural patrimony of the State Party is in jeopardy from the pillage of archaeological or ethnological materials of the State Party; 

(B) [whether] the State Party has taken measures consistent with the Convention to protect its cultural patrimony; 

(C) [whether] --(i) the application of the import restrictions . . . with respect to archaeological or ethnological material of the State Party, if applied in concert with similar restrictions implemented, or to be implemented within a reasonable period of time, by those nations (whether or not State Parties [to the 1970 UNESCO Convention]) individually having a significant import trade in such material, would be of substantial benefit in deterring a serious situation of pillage, and (ii) remedies less drastic than the application of the restrictions set forth in such section are not available; and 

(D) [whether] the application of the import restrictions . . . in the particular circumstances is consistent with the general interest of the international community in the interchange of cultural property among nations for scientific, cultural, and educational purposes.

Photo credit: Martyn E. Jones

By Rick St. Hilaire Text copyrighted 2010-2014 by Ricardo A. St. Hilaire, Attorney & Counselor at Law, PLLC. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post is prohibited. CONTACT INFORMATION: www.culturalheritagelawyer.com

True Grit: Monica Hanna Defends Heritage in Egypt, Receives SAFE's Prize

(C) SAFE. Used with permission.

Khaemwaset was a royal prince who lived during the 13th century B.C. He became the first Egyptologist and was greatly revered in his time for conserving Egypt's monuments.

Now a 21st century Egyptologist has been honored for preserving the past. She is archaeologist Dr. Monica Hanna, who actively searches the desert sands and the Nile banks to defend Egypt's rich heritage against looters and vandals.

Saving Antiquities for Everyone (SAFE) presented the Beacon Award to Dr. Hanna Thursday night, calling her "an outstanding archaeologist and social media advocate whose work has raised public awareness about the illicit antiquities trade and the fight to protect cultural heritage." SAFE's distinguished prize has been presented since 2006 to recognize individuals who bring attention to the global crime of heritage trafficking.

Dr. Hanna has replaced Khaemwaset's chariot, papyrus roll, and royal title with a car, a Twitter account, and true grit. She uses modern-day tools along with old-fashioned courage to travel to heritage sites under attack and tweet for help. Dr. Hanna now has close to 30,000 followers on Twitter's social networking site. The internet-savvy archaeologist also the founded the online community known as Egypt’s Heritage Task Force. 

Prior to receiving the Beacon Award, Dr. Hanna addressed an auditorium of engaged listeners about "Saving Ancient Egypt, One Tweet at a Time." She passionately described the destruction affecting Egypt's heritage since the Arab Spring, and her photographs of armed looters and dynamited sites belied the fact that her daily work remains fraught with danger as she confront criminals, government officials, and civil unrest. She has even been shot at.

Dr. Hanna's determination has paid off, nevertheless. With modesty and enthusiasm, the Egyptologist explained how she rallied her countrymen to clear trash from an archaeological site, inspired local protests against unplanned urban expansion, and gathered help to clean up the mess left behind by thieves and vandals who stole practically everything from the Malawi museum and burning and destroying whatever they could not haul off.

Those in attendance at last week's ceremony in New York learned about three significant perils to cultural heritage in Egypt as Dr. Hanna recited many incidents of looting, land grabbing, and smuggling that have occurred since 2011.

Dr. Monica Hanna's slide showing a large looter's pit
near the Black Pyramid at Dashur, Egypt.

Explaining that there is "looting with machine guns," the archaeologist described plundering that has taken place at Abusir, Dashur, Memphis, and several other historic locations throughout the country.

Dr. Hanna chronicled artifact thefts near the Black Pyramid, facilitated by diggers who greatly expanded the number of illegal looter's pits during the first 30 days after the revolution.

The area of Dashur--a royal necropolis that is home to the Black Pyramid, the Red Pyramid, the Bent Pyramid, and many other important monuments--witnessed an astounding 300% increase in thieves' holes. Dr. Hanna presented satellite images of the pockmarked landscape, which has swelled across the archaeologically rich desert in recent years.

The Egyptologist lamented about the destruction caused by bulldozers that "rummage like cats in a trash bin," irretrievably shredding archaeological material. Blasting too has wiped out evidence of the past, documented by photographs depicting the devastating aftermath caused by freshly exploded dynamite.

Dr. Hanna pointed out the differences between the "organized mafia" and the local villagers who steal antiquities. Organized criminals use four wheel drive vehicles, bulldozers, and weapons smuggled from Libya. They hire locals to dig and give them lunch boxes. More importantly, they often target specific objects of interest like those from the Amarna period, the New Kingdom, and the Old Kingdom. The looting demonstrates that "they have archaeological knowledge," Dr. Hanna warily observed. Local villagers and families, by contrast, use simple rope and shovels.

Decrying unplanned urban expansion, Dr. Hanna described this growing harm with slides depicting a new parking lot built over an old temple site and a soccer field pitched atop an ancient 26th Dynasty burial. Land grabbers and the "land mafia," meanwhile, have wrested control of heritage locations by "hacking out" traces of archaeology and by building modern cemeteries to claim dominion, she said.

Dr. Hanna spoke about "clear channels for smuggling" that menace the country as Egypt continues to be stripped of artifacts that are illegally sold abroad. Antiquities trafficked from the Sinai Peninsula to Gaza eventually fly from Israel to European markets, the Egyptologist disclosed. Artifacts also find their way from the Gulf of Suez seaport of Ein El Sokhna to Dubai, Doha, and other destinations.

Amid the descriptions of endangered cultural heritage, Dr. Hanna expressed concern for the welfare and education of the children of Egypt. Illegal digging, for example, has caused deaths. At Abusir el-Malaq, a site where thieves have created heaps of human bones and fragmented mummies, Dr. Hanna gave an account of how approximately 20 children were killed while unearthing artifacts.

She highlighted that Egypt's children would not have a vested interest in protecting local culture if they failed to embrace the heritage as their own. One teenage boy, whom Dr. Hanna spotted running away from the ransacked Malawi museum, told her it was okay to attack the artifacts because the museum belonged to the government. She implored that a "mistake we need to address is that belief that heritage belongs to the government and not to the people." Dr. Hanna expressed appreciation to the other young people who arrived to help save what was left of the Malawi museum's collection.

Dr. Hanna concluded her remarks to the SAFE audience by offering several suggestions about how Americans could help. She encouraged support for academics who publish scholarly articles documenting archaeological site looting. She emphasized that the illegal sale of artifacts must be reported to authorities. She also expressed strong support for the adoption of import barriers to block pillaged and smuggled Egyptian artifacts from entering the United States.

There will be more heritage to protect as the resilient Dr. Hanna returns home to Egypt. To track her ongoing preservation efforts and to learn more about cultural heritage under threat, readers can follow the modern-day Khaemwaset's Twitter feed here.

By Rick St. Hilaire Text copyrighted 2010-2014 by Ricardo A. St. Hilaire, Attorney & Counselor at Law, PLLC. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post is prohibited. CONTACT INFORMATION: www.culturalheritagelawyer.com

For Richer or Poorer: Commentary on The Economics of Cultural Property Laws

“The Economics of Cultural Property Laws” presents a controversial study that attempts to wed archaeology--a knowledge-gathering discipline focused on exacting evidence collection, thoughtful research, and a deep concern for heritage preservation--to a production-based enterprise evaluated only by the many spectacular objects it can generate.

The article, which offers more sophistry than careful study, appears in The Indonesian Journal of International & Comparative Law, Volume 1, Issue 1 (January 2014). It has gained notoriety after being published in a Los Angeles Times op-ed piece this week, albeit in an abbreviated fashion and with a muted accentuation on economics. The op-ed is titled "The Archaeology Paradox: More Laws, Less Treasure."

The study's author laments in the LA Times that the world today is "culturally poorer" because major archaeological discoveries are made less often, singularly blaming "rigid cultural property laws" as the apparent reason why there are fewer spectacular excavations.

A careful reading of the underlying Indonesian Journal article suggests an undertone that archaeology is akin to a mining operation whose primary mission is to produce fantastic raw materials for consumption. Indeed, the author openly advocates for what he calls "the [archaeological] source nation's comparative advantage in raw antiquities."

To prove the hypothesis that "[c]ultural property laws ... reduce the source country’s archaeology market and drive up excavation costs," the author employs commercial terms that are ill-suited to the discipline of archaeology. For example, the author writes that "[archaeological] [s]ource nations can maximize their comparative advantage by selling future interests in buried artifacts to archaeologists with the resources to excavate them."

Statements like these cause one to wonder whether the harvesting of consumer-driven heritage is under discussion rather than authentic archaeology. Indeed, the author ultimately--and wrongly--measures the richness of cultural heritage by simply counting the number of sites par excellence that the archaeologist's trowel has excavated, those found on UNESCO's World Heritage List. The other thousands of sites spanning the globe are overlooked, their information about the past evidently discarded as insignificant to the richness of humanity's heritage.

The study should acknowledge that archaeology is not really archaeology when the discipline is transformed into a shovel-ready enterprise that simply waits to employ diggers and equipment for the purpose of generating the choicest inventories. Archaeology's purpose, by contrast, is to "preserve, protect, and interpret the precious record of the human past by employing the highest ethical, professional, and intellectual standards," a goal aptly stated by the Archaeological Institute of America's vision statement.

Do cultural patrimony laws instigate cultural poverty as the study's author suggests? The truth is that cultural poverty begins when non-renewable heritage resources are ripped from the earth without proper scientific documentation and study. We are culturally poorer when knowledge of the past is irretrievably lost because looters and vandals have knowingly or recklessly tampered with the hard evidence preserved beneath the ground. Cultural poverty persists when stolen artifacts are smuggled, fenced, and unlawfully purchased. That is why cultural patrimony laws, which help hold criminals accountable and which aid in separating wrongdoers from their illegal profits, enjoy a highly ranked place in heritage preservation.

Neither the law nor authentic archaeology can divorce themselves from serious cultural heritage protection measures.

Photo credit: Russell Hugo

By Rick St. Hilaire Text copyrighted 2010-2014 by Ricardo A. St. Hilaire, Attorney & Counselor at Law, PLLC. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post is prohibited. CONTACT INFORMATION: www.culturalheritagelawyer.com

"The Law Cited by Plaintiffs Does Not Offer the Remedy They Seek" - Rubin v. Iran

"The court recognizes the tragic circumstances that gave rise to the instant action, but finds that the law cited by plaintiffs does not offer the remedy they seek." With these words, Judge Robert Gettleman ended the Northern District of Illinois case of Jenny Rubin, et al. v. Islamic Republic of Iran, et al. v. The University of Chicago and The Field Museum of Natural History.

The case involves American victims of a Hamas suicide bombing in Jerusalem in 1997. A federal judge in Washington, DC in 2003 awarded the plaintiffs a $71.5 million default judgment against Iran, holding that country to be responsible for the attack. One way the plaintiffs have sought to collect the judgment owed to them is to acquire ancient Iranian artifacts at prominent American Museums, including Chicago's Oriental Institute (OI) and The Field Museum, through attachment. They have been unsuccessful thus far.

Persepolis

OI holds the Persepolis and Chogha Mish Collections, consisting of objects acquired from Iran as part of long-term loans for the purpose of academic study. About 30,000 clay tablets make up the Persepolis Collection, loaned by the National Museum of Iran in 1937. The Chogha Mish Collection is made up of clay seal impressions excavated in the 1960's.

The Herzfeld Collection, meanwhile, consists of 1200 artifacts purchased by The Field Museum in April 1945 for $7300. The Field Museum sold some of the artifacts to OI in 1945, but later took back a portion. The Rubin plaintiffs have contended that Herzfeld objects found in both the Field Museum's and the OI's collections were stolen from Iran after their excavation, which occurred during the early part of the twentieth century. But The Field Museum continues to assert ownership, and Iran has not made any claim to the collection.

Both the museums and Iran have been fighting the plaintiffs' attachment case. They petitioned the Illinois federal district court for summary judgment in August, arguing that there were no issues of material fact and that they were entitled to have the plaintiffs' case dismissed as a matter of law. Judge Gettleman last week agreed.

The court adopted the defendants' position that the Foreign Sovereign Immunities Act (FSIA) cannot be used to award the artifacts to the plaintiffs. The FSIA is the federal law that protects foreign states from lawsuits, and makes foreign sovereign property located in the United States immune from attachment.

The plaintiffs argued that Section 1610 of the FSIA makes a "commercial activity" exception by declaring that “[a] foreign state shall not be immune from the jurisdiction of courts … in which rights in property taken in violation of international law are in issue and that property … is present in the United States in connection with a commercial activity carried on in the United States by the foreign state … [or an] instrumentality of the foreign state ….”  (emphasis added). The museums argued that their collections were not part of any Iranian commercial activity, and that they were not acting as agents for Iran in any type of commercial activity.

Judge Gettleman concluded, "Because Section 1610 of the FSIA requires the commercial activity to be conducted by the sovereign ... the court finds that the [museum] assets are not subject to attachment under Section 1610 of the FSIA."

Even Congress' amendment to the FSIA, known as the National Defense Authorization Act or 1610(g), does not permit the plaintiffs to seize the asset artifacts, the court ruled. The plaintiffs argued that the amendment permitted execution against all terror states’ assets. The court disagreed and held that "if Section 1610(g) provided a separate basis for attachment that allowed the execution against all terror states’ assets, regardless of whether they are blocked assets, certain subsections of Section 1610 would be unnecessary." "The plain language indicates that Section 1610(g) is not a separate basis of attachment," the court added, explaining that the plaintiffs could not find convincingly argue a brand new exception to the sovereign immunity rule. "The court therefore finds that Section 1610(g) does not provide a new basis for plaintiffs to attach the assets of Iran, and does not subject the collections in question to attachment and execution."

Judge Gettleman additionally ruled that the Terrorism Risk Insurance Act (TRIA) does not permit the plaintiffs to seize the artifacts. TRIA allows a plaintiff to attach the "blocked assets" of a "terrorist party" found liable for an act of terrorism. "Blocked assets" are those “seized or frozen by the United States under ... the Trading with the Enemy Act or under ... the International Emergency Economic Powers Act.” The court's order succinctly explained, "Because the [Persepolis and  Chogha Mish Collections] assets in question are not 'blocked' under TRIA, they are not subject to attachment by the plaintiffs under that statute." 

Regarding the Herzfeld objects, Judge Gettleman relied on the First Circuit Court of Appeals decision in the companion Rubin v. Iran case involving attachment of ancient Iranian artifacts from the Museum of Fine Arts, Boston and the Harvard museums. The First Circuit decision relied on information supplied by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), an agency that interprets administrative regulations applicable to TRIA. Gettleman wrote:

The court finds the reasoning of the First Circuit and the interpretation by OFAC compelling. The language cited by OFAC demonstrates ... that only assets contested by Iran, and not by third parties such as judgment creditors, would remain blocked and therefore subject to attachment. The court therefore holds that Iran itself must contest the ownership of the property in order to render an asset contested, and therefore blocked, under the TRIA. Because Iran has not claimed ownership of the antiquities in the Herzfeld Collection or the OI Collection, those assets are not contested or blocked, and therefore are not subject to attachment under TRIA.

The museums' victory in federal district court certainly will not be the last word. Recall that the case of Jenny Rubin, et al. v. Islamic Republic of Iran was restarted in Illinois in July 2012 after the U.S. Supreme Court declined to hear the Rubin plaintiffs' request to have the nation's highest court review a Seventh Circuit decision that ruled against the plaintiffs. It is expected that the attachment case will continue for several more years.

Photo credit: Mira Pavlakovic

By Rick St. Hilaire Text copyrighted 2010-2014 by Ricardo A. St. Hilaire, Attorney & Counselor at Law, PLLC. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of this post is prohibited. CONTACT INFORMATION: www.culturalheritagelawyer.com