James Palmer, a self-styled “art detective,” is Mondex’s founder. Palmer finds potential cases of looted art and then hunts down relatives who may have a claim. Mondex handles the litigation in exchange for costs and a sizable cut of any proceeds. In the art world, opinions on Palmer vary. He has been portrayed as a shakedown artist, “an art world ambulance chaser” who manipulates the media with faulty research to call attention to cases that ultimately benefit his company more than the families of the original victims. Others see Palmer as a driven advocate who plays an important role in righting past wrongs.
For Palmer and the Nahmads, there was much at stake. Modigliani’s paintings have been known to fetch as much as $170 million. The portrait of the little man with a cane could be worth $25 million.
Palmer found a living heir, Oscar Stettiner’s reclusive and ailing French grandson. He and his team of lawyers then filed a case in federal court in New York in 2011. It was withdrawn for improper venue. They filed again. The case moved to New York State supreme court, where the Nahmads challenged it on procedural grounds. Location was key. Unlike many places in the world, the U.S. judicial system allows plaintiffs discovery. If the plaintiffs can convince a judge that their complaint has merit, they are allowed to request evidence from the other side. The Nahmads challenged the case on venue and argued they were not even the right defendant. They claimed they didn’t own the painting; International Art Center, a Panamanian company, did.
The Mossfon files indicated that the Nahmads had actively controlled International Art Center for more than twenty years. In 2008, Joe transferred the hundred shares in the company to Ezra and David. After Joe died four years later, Forbes estimated the surviving brothers were worth a combined $3.3 billion. Despite Ezra being the older of the two, David, who is also a championship backgammon player, took control of the business. In 2014, David became the exclusive shareholder of International Art Center.
Palmer and the New York court were not aware of these details.
The Nahmads succeeded in dragging out the case on procedural grounds for more than three years. In April 2017, Judge Eileen Bransten ruled that International Art Center did not insulate the Nahmads from liability over the painting. With the publication of the Panama Papers, Mondex could prove the company and the Nahmads were one and the same. The case could continue.
“IAC did not have a corporate identity independent of its individual owner,” Judge Bransten ruled.
* * *
BY THE TIME the final gavel fell at Christie’s on November 10, 1997, the modern art business had changed forever. The Ganz Collection, painstakingly assembled over a lifetime of judicious purchases, had fetched record sums in one blowout sale. After that high-wattage night in New York, prices in the art world soared as the megawealthy embraced a newly lucrative investment. Hidden in the background, making it all possible, was a Mossfon company.
Victor and Sally Ganz, a husband and wife who owned a costume jewelry business, had been collecting paintings for fifty years. The couple were passionate art lovers of the old school. The paintings they bought became cherished family members, hanging on the walls of their home. They championed Frank Stella and were patrons and friends of Jasper Johns, Robert Rauschenberg, and Eva Hesse. When they had a little extra money to spare, they splurged and bought a Picasso. Over five decades, they spent roughly $2 million assembling their collection.
After the couple died, their children, faced with a hefty inheritance tax, opted to sell. The prospect of the auction generated excitement for months, starting with the auction houses eager to get the commission. Competition for the Ganz Collection was fierce but Christie’s prevailed. Art insiders assumed that Christie’s had set a sales price for the Ganz children, a base amount they were guaranteed to earn regardless of the auction’s outcome. What Christie’s had offered and how it was done remained a mystery, obscured by Mossfon and the secrecy world.
The real story began with a Mossfon company, Simsbury International Corp., incorporated in Niue in April 1997, less than three months after Sally Ganz died. The company’s purpose and activities were well insulated. Simsbury was owned through bearer shares. Mossfon’s nominees served as directors.
A few weeks after its creation, in a private transaction, Simsbury purchased the most valuable of the Ganz paintings from Spink and Son, a London auction house then owned by Christie’s. Simsbury paid the staggering sum of $168 million, a huge gamble, but not by the auction house. The money appears to have been fronted by Christie’s largest shareholder at the time, Joseph Charles Lewis, a billionaire British currency trader. Lewis had power of attorney over Simsbury’s bank account, which was held in Safra’s Republic National Bank of New York. Presumably the money made it to the Ganz heirs.
Notoriously publicity shy, Lewis owns more than two hundred companies in fifteen countries. His business interests have included, at one time or another, football clubs, restaurant chains, and oil companies. He held multiple companies through Mossfon, including the Bahamas-registered Aviva Holdings Limited, which shares the name of his gigantic yacht, on which he sails the world conducting business surrounded by a collection of paintings by the likes of Picasso, Paul Cézanne, and Gustav Klimt.
The auction documents found in the Mossfon files indicate that if the listed Ganz paintings sold for more than $168 million, Simsbury and Spink would split the difference. It was a calculated risk by Lewis but one that could pay off in multiple ways. In addition to earning money if the sales price was higher, the much-sought-after auction would raise Christie’s share price. Under the terms of the deal, Lewis was forbidden from bidding on the paintings himself, although that provision was largely unenforceable, since a buyer could hide behind a proxy and an anonymous offshore company.
In the weeks before the auction, twenty-five thousand spectators filed through Christie’s for a once-in-a-lifetime glimpse of the masterpieces on offer. Among the paintings for sale were four of a series of fifteen paintings by Picasso called Women of Algiers. A high-powered subsection of cultural New York, including the cosmetics tycoon Leonard Lauder, the developer Mortimer Zuckerman, and the father of Microsoft, founder Bill Gates, braved a cold Monday to attend. The Nahmads were also present, of course.
Those who closely read the finely bound Ganz auction catalog might have seen an innocuous statement buried among the fine print. It read: “Christie’s has a direct financial interest in all property in this sale.”
The statement raised more questions than it answered. The nature of that interest was not revealed. It is impossible to say whether the knowledge that Lewis already owned the paintings, and not the Ganz family, would have dampened enthusiasm for the auction.
When it came time for the bidding on the most magnificent of the Women of Algiers series, Version O, the crowd audibly gasped as the numbers soared. When the final hammer dropped, the painting had sold for a record $31.9 million. The buyer was a London dealer, reportedly acting on behalf of a wealthy Middle Eastern client. When Victor and Sally Ganz had purchased the painting forty years earlier, they had paid $7,000.
That night David Nahmad bought Version H of the Women of Algiers series.
Total sales from the auction topped $206.5 million.
* * *
IN 2004, AGENTS acting on behalf of a New York art dealer contracted with Mossfon to perform an “urgent” corporate search in Panama’s public registry on Wilton Trading S.A., a company not registered by the firm. They asked for a complete history, particularly for the period between 1985 and 1993. Mossfon did the work in a day and charged $110. The firm never concerned itself with the actual name of the requestor, Ezra Chowaiki, or why he wanted the information.
Chowaiki was trying to get to the bottom of how eighty-three paintings worth around $3 billion had gone missing. He had a financial stake in their recovery. What Chowaiki did not know when his agents approached the Panamanians was that some of the answers he sought existed in the company files of another Mossfon customer.
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br /> According to the information Mossfon uncovered for Chowaiki, Wilton Trading was created in 1981 but did not have directors until sixteen years later. Its most momentous act occurred without directors, four years after its creation. This part was not in the Panamanian registry. In 1985, the Greek shipping tycoon Basil Goulandris allegedly sold his entire collection of eighty-three masterpieces—which included works by Renoir, Van Gogh, Matisse, and Picasso—to Wilton for the ridiculously low sum of $31.7 million. The magnate’s nephew, Peter J. Goulandris, says his uncle sold the works because he was experiencing a cash crunch. The owner of Wilton was Peter’s mother, Maria Goulandris, Basil’s sister-in-law, now deceased.
The reason for the sale makes little sense since just a few of the paintings, rather than all eighty-three, could have conceivably fetched a similar sum. There has never been any proof offered that money changed hands. Chowaiki questioned whether in fact the sale ever occurred.
Despite the alleged transaction, Basil and his wife, Elise, kept the artwork in their possession, even lending works to museums and selling a few paintings to dealers with the provenance listed as if each one still belonged to them. After Basil’s death in 1994, Elise was told about the sale to Wilton and was convinced to go along with it in exchange for a portion of the paintings. She died in 2000 without any offspring. A year later, her niece Aspasia Zaimis sued the executor of Elise’s will for a share of the eighty-three paintings. Chowaiki decided to give financial backing to the legal effort a few years later in exchange for first crack at buying any of the recovered paintings Zaimis chose to sell, according to the Wall Street Journal.
One of Chowaiki’s biggest questions was: Where are the paintings today? He suspected they might be locked away in a freeport somewhere.
Around the same time that his team urgently began investigating Wilton Trading, some of the paintings started to appear for sale. The owner was always listed as an anonymous Mossfon company, usually based in the BVI. Tricornio Holdings sold Pierre Bonnard’s Dans le cabinet de toilette in a Sotheby’s auction in London. Heredia Holdings agreed to sell Marc Chagall’s Les comédiens through Sotheby’s as well. Talara Holdings also put up a Chagall, Le violoniste bleu, for auction. A private sale by Jacob Portfolio Incorporated sent an 1888 depiction of a basket of oranges by Vincent van Gogh to a California direct marketing tycoon for $20 million.
Chowaiki could see the sales. He knew the paintings had belonged to Basil and Elise. He just did not know who was selling them. The Mossfon files identify the owner of all these companies as the Greek socialite Marie “Doda” Voridis, the sister of Basil Goulandris. It would take publication of the Panama Papers before Chowaiki could prove the family connection.
* * *
PAUL GAUGUIN PAINTED Mata Mua, which means “olden times” in Maori, in 1892. The lushly colored oil-on-canvas depicts a landscape enclosed by mountains, where bare-shouldered brown women dance around an enormous blue idol depicting the goddess of the moon. It is “an elegy for a lost Golden Age,” according to the description from Madrid’s Thyssen-Bornemisza Museum, where Mata Mua hangs.
The painting is on loan to the museum from Carmen “Tita” Thyssen-Bornemisza, a Spanish heiress and former beauty queen, whose private art collection contains about seven hundred paintings worth more than half a billion dollars. Her now-deceased husband, Baron Hans Heinrich von Thyssen-Bornemisza, amassed one of the world’s great art collections. He also took advantage of a golden age of tax avoidance and offshore secrecy, a legacy his widow struggled to maintain in a time of leaks and tightening restrictions.
The baron was Dutch-born but from German stock and fortune. His title was Hungarian. He claimed Swiss citizenship but lived in Monaco for tax reasons. While alive, his heart resided in Lugano, where he owned Villa Favorita, an eighteenth-century mansion that housed more than a thousand paintings. Until they were transferred to a family foundation, the baron’s artworks were divided among thirty to forty companies, his wife’s lawyer told the Spanish newspaper El Confidencial.
The offshore structures allowed the baron and his wife to avoid millions of dollars in taxes.
In 1993, after Spain built a museum to house the artwork, the baron sold 775 paintings to the Spanish government, about half his collection. Initially, he dangled the idea of a gift but then charged Spain $350 million for the works, still significantly below market value. The following year, the baroness started collecting herself, masking her purchases through offshore companies as her husband did.
A year after the sale to Spain, the baroness created Nautilus Trustees Limited and Sargasso Trustees Limited. Both were based in the Cook Islands, a remote tax haven in the South Pacific. The companies were owned via bearer shares. Over the next seven years, they bought paintings from Sotheby’s and Christie’s, among others, moving the art all over the world. The corporate structures were deliberately complicated and opaque to shield the paintings from the baron’s quarrelsome family, according to her lawyer. The baron had four children from as many marriages. He also adopted Tita’s illegitimate son, Borja.
In 2002, the baron died. The probate was messy and secret. A year later, the Cook Islands mandated that all bearer shares needed to be held by a registered agent. The lawyers for the baroness searched, but the shares could not be found. In the end, new ones had to be issued. Under the new shareholder arrangement, she split the company with Borja, an arrangement that grew complicated when he announced that his longtime girlfriend was pregnant and the baroness cut off contact with him.
At least one of the baron’s companies, Cornelia Company, was registered with Mossfon. In the early 1990s, Cornelia had taken out a short-term loan from Berliner Handels- und Frankfurter, a German private bank, with Mata Mua and The Lock, a painting by the English artist John Constable, as collateral. The loan was released in 1993. After the trust agent who operated the company on behalf of the baron changed registered agents, the company moved away from Mossfon.
Despite being ranked by a Swiss magazine as the seventh-richest woman in Switzerland, with a fortune worth more than a billion dollars, the baroness has complained that all her liquidity is tied up in paintings. In 2012, she decided to sell The Lock. It’s doubtful she would have ever parted with Mata Mua, as it’s one of her favorites and the name of one of her yachts.
The Constable painting fetched $34 million, making it one of the most expensive sales for a painting of its type. It was sold through Omicron Collections Limited, an offshore company in the Cayman Islands controlled by the baroness. Later, her son, Borja, tried to pierce the company’s corporate shell, claiming the baron had given him a Goya and Giaquinto with an estimated value of $9 million, owned by Omicron. Borja lost that battle. The offshore art fortress constructed by the baroness remained intact.
9
THE VIKINGS LOSE THEIR FERRARIS
In March 2009, an Icelandic Sunday talk show invited a French former judge and anticorruption crusader, Eva Joly, on air to discuss the country’s perilous situation. Iceland’s economy had imploded four months earlier, one of the first casualties of the 2008 financial crisis. The nation’s three leading banks had ballooned to ten times the country’s gross domestic product and then popped. The national debt amounted to $403,000 per man, woman, and child in the small island nation. Liquidity dried up. The value of Iceland’s currency, the krona, plummeted. Overnight, Icelanders couldn’t repay their loans. The cost of imports, an island necessity, soared out of reach. Impoverished, bewildered, and angry, Icelanders took to the streets of downtown Reykjavík, looking for someone to blame.
Joly, a Norwegian by birth, had long admired the hardy Icelanders. Despite centuries battling the harsh elements as poor fishermen, they did a far better job of keeping their Viking culture alive than her fellow Norwegians. Joly had returned to Norway herself, having left France after six years of investigating the Elf oil company, which had been at the center of a web of corruption, bribery, and money laundering. After years of trials and investigations, the
French public had grown weary of the scandal and the crusading judge presiding over the cases. Leaving the death threats and bodyguards behind, Joly had taken a job with the Norwegian Agency for International Development as a counselor to its campaign against global corruption.
Joly accepted the invitation, using the program to denounce the illegal activity she assumed had led to Iceland’s financial collapse. Within hours of her interview, hundreds liked a Facebook post asking her to join a government investigation of the crisis. Iceland’s justice minister pulled Joly aside the day after her television appearance and begged for her assistance. Iceland was small enough where one could discover the real truth of what occurred, Joly thought to herself. She agreed to help.
After the attorney general recused himself because his son was a top bank executive, the Icelandic parliament created an office of special prosecutor to hunt for wrongdoing. When the government advertised the prosecutor position, only one person in the entire country of 320,000 stepped forward.
Square-jawed, plainspoken, and stoutly built like an oak, Ólafur Hauksson had served for a decade as the district commissioner of Akranes, a small port town on the country’s west coast, about twelve miles north of Reykjavík. The district commissioner was police chief, customs officer, and tax collector all rolled into one. Even with these responsibilities, Hauksson still found time to fish. He agreed to take the special prosecutor job because the scale of the crisis screamed for a response, he says. Hauksson didn’t know what to expect but figured he’d be back in his old job in about two years.
Eight years later, Hauksson was still special prosecutor. In addition to offering guidance, Joly successfully fought to fund the effort. Hauksson began work in an empty office with a team of four: a law professor, two police investigators, and a lawyer from the Ministry of Justice. At its apex, the staff expanded to include 110 employees and ten contractors. As Joly suspected, the team found widespread wrongdoing by a select group of banking insiders, particularly in the lead-up to the collapse. The special prosecutor investigated two hundred separate cases, bringing thirty to court. In their inquiry, Hauksson and his team searched deep into the secret back alleys of global finance, from Iceland to Luxembourg and beyond. Throughout it all, one company name kept reappearing—Mossack Fonseca.
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