Art Market

Despite sanctions, Russian billionaires with ties to Vladimir Putin spent millions on art in the United States.

Wallace Ludel
Jul 30, 2020 5:03PM, via United States Senate

Russian President Vladimir Putin (at left) shakes hands with billionaire and businessman Arkady Rotenberg (at right) as his brother, Boris Rotenberg (at center) looks on. Photo by Mikhail Svetlov/Getty Images.

According to the findings of a United States Senate investigation released Wednesday, shortly after the U.S. imposed sanctions on Russian construction billionaires Arkady and Boris Rotenberg, the duo illegally spent over $18 million on art in the U.S. At least $14 million in sales came from 11 works of art, including paintings by René Magritte, Marc Chagall, and Georges Braque that were purchased only two months after the sanctions were imposed.

The first 10 works were purchased at a Sotheby’s sale in New York, while Magritte’s 1961 painting Chest was purchased from a private dealer in the U.S. It is illegal for a U.S.-based company to have any financial exchanges with sanctioned individuals, so those caught dealing with the Rotenbergs could face massive fines or jail time. Art dealers however, are not required by U.S. law to know the identity of the purchaser, and blue-chip sales of these magnitudes are often transacted through an intermediary, as was the case here.

In total, the report alleges the brothers spent or moved around $91 million in U.S. dollars following the sanctions, $18.4 million of which was in art and antiques. The brothers are said to be members of Putin’s inner circle, and the Senate’s 150-page report, which declares the U.S. art market to be “the largest, legal unregulated industry in the United States,” even includes an image of Arkady practicing judo with the Russian president.

Senator Tom Carper of Delaware, who led the report along with Senator Rob Portman of Ohio, said on the occasion of the report’s release:

It is alarming and completely unacceptable that common sense regulations designed to prevent money laundering and the financing of terrorism do not apply if someone is purchasing a multi-million dollar piece of art. [. . .] As a result, criminals, terrorists and wealthy Russian oligarchs like the Rotenbergs are able to use an unregulated art industry, as well as real estate and other investments, to hide assets, launder funds, and evade sanctions. Unfortunately, our failure to close these obvious loopholes make U.S. sanctions—an important national security tool—far less effective than they could be.

The Rotenberg brothers hired Moscow-based art advisor Gregory Baltser to purchase the artworks through his private firm BALTZER, buying the work with funds traced directly to shell companies linked to the brothers. Their relationship with Baltser continued for years, and despite Senate investigators asserting that it was likely owned by the Rottenbergs, both Sotheby’s and Christie’s competed in 2019 for a chance to consign Bridge II (1915) by Lyonel Feininger—a painting that Baltser told the auction houses was owned by a company incorporated in the Marshall Islands. Sotheby’s won the consignment and estimated the painting at $5 million, but it was withdrawn before the sale due to a lack of bidders.

Further Reading: How Anti-Money Laundering Legislation Could Impact the Art Market

Wallace Ludel
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Jenna Gribbon, Luncheon on the grass, a recurring dream, 2020. Jenna Gribbon, April studio, parting glance, 2021. Jenna Gribbon, Silver Tongue, 2019