“Our clients choose us because we have no priority above their property,” remarks the guide touring Robert Pattinson and John David Washington’s characters through a freeport in Christopher Nolan’s 2020 thriller Tenet. The underground vaults they are walking through are alluringly filled with artworks that give subtle hints at Impressionist and Abstract Expressionist masterpieces. These two characters will subsequently break into this freeport and steal a faked Goya drawing later in the film.
The first freeports emerged in Italy in the eighteenth century, but quickly spread across Europe. Freeports are warehouses usually located in airports or train stations, where high value goods (such as wine, gold bars, or even classic cars) can be stored in the limbo between territorial jurisdictions. Using a freeport means that the owner pays no customs duties, and if the item in question is sold within the freeport, no taxes on the sale either – the same object can therefore be sold over and over again, without even moving location.
What Nolan’s film is alluding to is the long and complex relationship that the freeport has with the field of art and antiquities. The freeport gathered global attention in 2003 during the trial of the antiquities dealer Giacomo Medici. The evidence used in the trial was the result of a joint raid by the Carabinieri and the Swiss police on Medici’s freeport vault. The storeroom was found to be home to 3800 objects and more than 4000 photographs of other antiquities, some with the mud from excavation still on them. It was these photographs that secured Medici a 10-year sentence for trafficking stolen goods. Unsurprisingly, after this high-profile case, the Swiss Parliament cracked down on its freeports and in 2009 they removed Geneva freeport’s status as an extra-territorial zone.
However, this wasn’t the end of the story of Medici and Geneva’s freeport. In 2016, another priceless collection of looted antiquities was discovered in Geneva’s freeport. This time, it was the vault of British antiquities dealer Robin Symes that had attracted the attention of Swiss police. The hoard involved a number of artefacts looted from the ancient Etruscan city of Tarquinia. Once again, the Swiss parliament attempted to use further legislation to limit the opacity of the Geneva freeport’s operations. Any artworks brought into Geneva’s freeport subsequently needed to be recorded in an inventory (alongside information such as description, size, date, country of origin and the name and address of the owner) and a time limit was introduced on the objects in storage. It seemed like Symes and Medici had abruptly halted the art world’s love affair with the freeport – along with the freedom from customs duties and taxations that it provided.
This wasn’t the case. Throughout the 2010’s, the freeport system continued to flourish internationally and in 2012 the Geneva Freeport announced that it was building a new warehouse purely for art storage. Yves Bouvier – a famous art dealer and shipper – followed suit by quickly moving to establish freeports in Singapore and Luxembourg between 2010 and 2014, earning him the nickname the ‘freeport king ’. It seemed like through Bouvier, the relationship between art storage and the freeport was set to flourish once again.
Ironically however, Bouvier himself would further link fraud and the freeport together in the public consciousness. In 2015, he was the target of criminal and civil proceedings in five different jurisdictions (Monaco, Hong Kong, Singapore, the US and Cyprus) for his dealings with the Russian businessman Dmitri Rybolovlev. Bouvier sold Rybolovlev multiple ‘masterpieces’ for his art collection with incredibly high mark ups. One of these paintings was Leonardo da Vinci’s newly attributed masterpiece the Salvator Mundi. Bouvier bought the painting for Rybolovlev at $75 million and sold it to him at $125 million. The cases failed after Rybolovlev was unable to establish that Bouvier had misrepresented his role – Bouvier claimed he had always acted as a dealer and was entitled to charge Rybolovlev any fee they agreed on – he was not simply an agent organising the sale. It was Bouvier, the ‘freeport king’ who called the art world ‘a market with no rules.’
The UK is now after its slice of the pie.
Before 2012 there were 7 freeports in the UK, but they all closed after their legal status expired. Recently, explanations for the UK’s failed freeport programme have centred on tightened EU legislation, such as the EU state aid rules (laid out in article 108 of the Treaty on the Functioning of the European Union) which restricted freeport activity from creating unfair advantages between businesses. Brexit has therefore provided an opportunity for a new freeport system with looser regulations.
Only a few months ago the tendering process opened for the introduction of not one, but ten new freeports in the UK. This is one of the final steps in a process first outlined by the document ‘The Freeports Opportunity’. This paper was penned by the then little-known MP Rishi Sunak in 2016, and it celebrated freeports as a way to “re-connect Britain with its proud maritime history as a trading nation and act as a beacon of British values, signalling the country’s openness to the world” after Brexit. The locations for these freeports were recently announced: East Midlands Airport, Felixstowe and Harwich, the Humber Region, Liverpool City Region, Plymouth, the Solent, Thames and Teeside.
So far, government announcements about freeports have focused on trade, and the opportunities that freeports would present for manufacturing (as parts could be imported, a product made, and the resulting product exported without paying tax on its different components). On one subject they have remained conspicuously silent – there has been no mention of the art market. It seems that the government is keen to avoid bringing up such a contentious topic, particularly after the EU Parliament publicly condemned freeports because of the opportunities they provide for money laundering.
So, what do freeports actually mean for the British art market, and will they present similar possibilities for art-storage and sales to freeports elsewhere in the world?
The current law surrounding the storage of art in British freeports is regulated to some degree. There are two steps to moving goods into the UK: the customs declaration at the port, and duties at the duties border. The customs declaration, which must be completed to move goods into the freeport, requires a simple description of the goods, but not the more complex details that would be required when the artwork passes through the duties border and out of the freeport.
The regulation of the use of freeports by the art trade is also provided by anti money-laundering laws. According to the fifth Anti Money-Laundering Directive, which entered into force on 10 January 2020, freeports are explicitly listed as ‘obliged entities‘ in relation to storing, trading or acting as intermediaries in the trade of works of art where the value of the transaction exceeds EUR 10 000. This requires them to carry out customer due diligence requirements in addition to obligations to report suspicious transactions. The Directive was implemented in the UK through the Money Laundering and Terrorist Financing (Amendment) Regulations 2019. It is intriguing that EU and UK law make provision for the possibility of money laundering through collections of art in freeports – whilst the UK government has failed to draw attention to this aspect of the freeport upon its reintroduction.
The history of the freeport may be littered with instances of money laundering and tax dodging through art storage – but there is no doubt that keeping art in freeports represents a growing market available for the taking. The UK possesses the second largest art market in the world. As such, the government’s failure to draw attention to the possibilities presented by the storage of art in UK freeports is either a tactical silence, or a lack of recognition of the power that the freeport represents.