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Those worthy adversaries, Art and Mammon, have been at it again. The latest scene of their never-ending conflict is Sydney, where this year’s Biennale has been rocked by controversy. The row started when a group of artists wrote an open letter to the event’s organisers asking them to sever funding links with Transfield Holdings, a shareholder in Transfield Services, which runs the Australian government’s offshore immigration detention centres in Nauru and Manus Island.

The centres have been criticised for their treatment of asylum seekers, and the news that one of their number had died in a riot at Manus Island dominated the Australian media for days last month. The artists expressed their disquiet at being funded by an arts organisation whose sponsor, they said, was profiting from the asylum seeker detention policy.

“We want to emphasise that this issue has presented us with an opportunity to become aware of, and to acknowledge, responsibility for our own participation in a chain of connections that links to human suffering,” the letter said, in what was, truth to tell, a rare attack of political conscience in the otherwise opportunistic contemporary art world. Nine artists went on to threaten a boycott of the event.

The ramifications of the protest were speedily and widely felt. Luca Belgiorno-Nettis, executive director of Transfield Holdings, last week resigned as chairman of the Biennale in response to the campaign. The Biennale also cut all ties with Transfield, its founding sponsor, despite its earlier statement of support: “The only certainty is that without our founding partner, the Biennale will no longer exist,” it had previously said.

The Biennale is due to open on March 21 but it is impossible not to detect a subtle yet fundamental shift in the balance of power between the main players. Belgiorno-Nettis, whose father Franco was founding governor of the Biennale in 1973, and whose family has contributed millions of Australian dollars to the event, sounded crestfallen, understandably upset to have been condemned on social media for making money out of “concentration camps”.

The group of artists, meanwhile, is talking the talk: not the fey conversational riffs that normally engage creative types, but the tough talk of hard-nosed business. Their spokeswoman Gabrielle de Vietri said the threatened boycott was a model for future political action.

“When we’re participating in the Biennale, which is sponsored by Transfield Services, we’re actually value adding to that brand – that’s where we had leverage, and that’s where we acted, from that leverage that we had,” she said, in language that would have been hard to imagine from, say, Jackson Pollock. “In future we will enact much more scrutiny when we’re engaging in contracts with companies that engage in unethical practices.”

This is a changed landscape: artists wilfully exploiting their brand value, businesses finding themselves embarrassed by their attempted association with the normally benign world of culture. Does it mark a permanent shift? And is there reason to worry?

There are other examples, around the world, of more attention being paid to the funding of the arts. BP’s sponsorship of some of the UK’s major cultural institutions, such as the Tate galleries and the British Museum, prompts regular interventions from environmental activists. In Qatar, searching questions are asked about the rights of the labourers employed to build the country’s spectacular new museums. Should cultural initiatives be ambushed in these ways?

I am among those who respect the freedom of arts organisations to raise money as they will. It is a mistake to be too sanctimonious about culture. Art is not the same as religion: these are not sacred spaces, reserved for all that is wholesome about humanity. The patrons of art, and artists themselves, often work from the darkest of motives; and an encounter with a work of art itself is not necessarily uplifting, indeed frequently quite the opposite.

Art reflects the world in which it is produced. There is a reason why an Andy Warhol dollar-sign painting is valued more than most renaissance altarpieces. You may not like that reason, but there it is. I see no reason for the guardians of contemporary culture to be perceived to be cleaner-than-clean in their affairs.

On the other hand, what art is primarily concerned with – and without this connection it is nothing – is truth. We may have largely given up on insisting that all art is good for us all the time (the officers whistling Schubert at Auschwitz put paid to that one), and on the indelible link between art and beauty. But truth is still sacrosanct. Bad faith, more than moral laxity or ugliness, is the true enemy of art.

What I would like to see is the debates over funding made more transparent, and the issues surrounding them addressed with more frankness. How enlightened it would be if they took place inside the institutions themselves. If, as the British Museum’s director Neil MacGregor has so eloquently argued, the museum or gallery should be seen as a space in which civic dissent should always be able to find accommodation, then let it host those concerns over its finances within its own walls.

Artists, meanwhile, have every right to protest against the corralling of culture for what they see as misconceived purposes. Indeed, they have a duty to do so. By their very remonstrations, they take part in the wider remit of culture: the passionate and learned inquiry into all aspects of human affairs.

The clear-sighted discussion of ethical dilemmas should be a fundamental ingredient in the programmes of all cultural institutions. They are more accessible than the universities, more open-minded than the churches, more mature than the braying taunts of politicians. They are needed now more than ever.

peter.aspden@ft.com, @peteraspden

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