Last updated: May 26, 2012 12:11 am

The Art Market: Courting controversy

Chinese customs authorities begin a crackdown while a painting of Jacob Zuma causes a furore in South Africa
Brett Murray's ‘The Spear’

Issue: Above right, ‘The Spear’, tastefully cropped; left, as defaced by protestors in South Africa on Tuesday

A chilling talking point at the Hong Kong art fair last week was the recent crackdown by Chinese customs authorities on under-declaration of the value of artworks shipped to the mainland. Two employees of the China-based Integrated Fine Art Solutions (IFAS) have been arrested; Sotheby’s, Christie’s and other Hong Kong-based auction houses have handed over information to the authorities, which also have the client lists of IFAS and Noah, another shipper.

The IFAS employees, a German, Nils Jennrich, and a Chinese colleague, Lydia Chu, have been held in prison since March 30; there has been some access to Jennrich but the whereabouts of Chu is unknown, according to the firm’s Asia director Torsten Hendricks.

The two are accused of helping buyers avoid $1.6m in duties, for which the penalty could be 10 years or even life imprisonment. Import tariffs on art can be up to 35 per cent, and it is believed that some mainland Chinese collectors, as well as the curator of a leading bank with its own museum, are also being investigated.

The practice of undervaluing imports has been widespread for years, according to a number of dealers at the Hong Kong fair. “Although many of the people in this market can easily pay the taxes, they do not want to be scrutinised about where the money actually came from to buy the things in the first place,” says Brian Wallace of Beijing’s Red Gate Gallery.

What will be the effect on the Hong Kong market? Despite an encouraging start, at the end of ArtHK many dealers said sales were very patchy, with some claiming that the fair is now too big for the size of the local market. Christie’s opens its five-day, 12-session sales season in Hong Kong Saturday, and observers will be watching closely to see if mainland Chinese buying – which has dropped sharply since last year – will be affected by the customs investigation.

. . .

While mainland Chinese buying may be slowing, construction of new museums in the country continues at a frenetic pace. The latest project, which was unveiled last week in Hong Kong, is for a $279m art space in Yinchuan in north-west China, in the autonomous Ningxia Hui region. The Yellow River Arts Centre, housed in a futuristic-looking building designed by Foster and Partners with the WAA studio, will open in spring 2014. It is part of a larger, $4.76bn development driven by the Ningxia Minsheng Real Estate Company and partly publicly funded.

The museum will show an existing collection of Qing period paintings, alongside commissioned work by international contemporary artists. And commissioning has already started on a sculpture park, in collaboration with Britain’s Cass Sculpture Foundation, featuring Tony Cragg, Idris Khan and Bharti Kher among others. Yinchuan has a large Muslim population – over 25 per cent – and Liu Wenjin of Minsheng, who founded the project, said the arts centre “would become a window on China and on the Muslim world, to present itself as a diversified nation”.

. . .

Goodman Gallery, South Africa’s leading contemporary art gallery, established in 1966, has always been politically engaged and defended freedom of speech, even during the apartheid period. Now it has been temporarily closed after numerous threats and attempted defacements of an artwork, and is being taken to court by the ruling African National Congress (ANC) and president Jacob Zuma because of a work of art in its current show by Brett Murray. At issue is “The Spear”, showing Lenin, but with Zuma’s face, and with his penis visible. The ANC demanded its removal; Goodman refused, which provoked the attacks and landed the gallery in court. “We live in a democratic country with freedom of speech, not a dictatorship,” says director Liza Essers, who says her life has been threatened over the controversy. But, she says, “we support our artists’ freedom of speech and expression, which is guaranteed by our constitution.”

. . .

Unconstitutional. That’s what a federal judge has ruled about California’s Resale Royalty Act, which in theory gives an artist five per cent of the resale price of a work of art when it is sold in California or by a resident of the state. California is the only state to have the law, which was enacted in 1977 but in practice is widely flouted.

Artists Chuck Close and Laddie John Dill, and the estates of Robert Graham and Sam Francis, had brought a class-action suit against Sotheby’s and Christie’s, claiming the auction houses had got out of paying the royalties by concealing the identities and residencies of Californian vendors. But Sotheby’s and Christie’s argued that the law is unconstitutional and violates the Interstate Commerce Clause, and the judge agreed. While an appeal is pending, this ruling must be a blow to the campaign, spearheaded by artist Frank Stella, to bring a nationwide resale right for visual artists to the US.

. . .

Insight into the new breed of buyer in the art market comes in the following anecdote. Apparently the mainland Chinese buyer of Michelangelo’s drawing of a “Male Nude” (1504-1505) at Christie’s in London last year enquired, after bidding and winning the sheet for £3.2m, and before hanging up, “Do you have anything else by Michelangelo in the sale? No? Then what about a painting by Leonardo?” No doubt her interlocutor assured her that in the event of a Leonardo painting coming up for sale, she would be kept informed.

Georgina Adam is editor-at-large of The Art Newspaper

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