Antique dealer attacks ‘scandalous’ European extradition laws

An antiques dealer has attacked “scandalous” European extradition laws which led to his attempted deportation over claims that he broke a Greek bylaw at his home in London 11 years ago.

Richard Edwards and Jackie Williams
Published: 8:00AM BST 28 Aug 2010

Antiques dealer Malcolm Hay at his home in West London Photo: JULIAN SIMMONDS
Malcolm Hay, who runs a business from his Kensington town house, sold hundreds of broken pottery pieces to a visiting dealer from Athens in 1999.

Eight years later, he was arrested by armed police at City airport in London. He was detained for two days after a European Arrest Warrant was issued claiming the items he sold had been stolen from the Greek state.

Under the warrant, endorsed by the Labour government six years ago as a fast-track process for terrorists, foreign prosecutors do not have to show evidence to the British courts, but simply demand that the person be “surrendered”. In Mr Hay’s case, court papers in Athens show the alleged offence should not come under Greek jurisdiction because it took place in London. Mr Hay, 60, calls the entire affair “a false stitch-up”.

The apparent crime, “illicit appropriation of an antique object”, is not even an offence under British law.

Mr Hay said the British authorities who tried to deport him to face four years in a Greek jail acted like “the Gestapo”. No prima facie evidence of wrongdoing was presented and Mr Hay said: “The English involvement is what I find more upsetting and disgusting. Having been brought up and lived in this country, with all its values, I find it really hard to understand.

“It has allowed Greece to extend their jurisdiction, because they do not need to produce the evidence. That is despite the alleged wrongdoings happening in Britain – even the dealer I sold to says that.”

It was disclosed this week that the number of people in Britain seized under the “no evidence needed” warrant rose by more than 50 per cent last year.

David Blunkett, the former home secretary who introduced the warrant, said he had been “insufficiently sensitive” about how it could be “overused”. Mr Hay showed The Daily Telegraph the invoice of the transaction at the centre of the claims by Greek authorities.

It shows that on July 15, 1999, he sold a female trader from Athens 582 potsherds and other small items for £1,800. He said he bought them at fairs and described the artefacts as “junk”.

But at the same time, Greek police were investigating the female trader, who ran a shop in Athens. She was found to have more than £100,000 worth of unbroken pots and figurines from around 4-6BC, which by national law belonged to the Greek state. She then claimed she bought them from Mr Hay.

After his arrest in 2007 at passport control on the way home from a trip to Zurich, Mr Hay successfully fought extradition after a magistrate ruled that Greek authorities abused the correct processes to accuse him of the crime.

But a trial went ahead in Athens, with the Greek dealer and Mr Hay, represented by a local lawyer, both accused.

The female dealer was cleared. To Mr Hay’s “complete shock”, he was found guilty and jailed for four years. He has appealed against the verdict and is awaiting a hearing later this year. If he loses the appeal, the extradition process will begin again.

August 29th, 2010

Posted In: customs and law enforcement, law enforcement and investigation, legal issues and the law

Anger at customs clampdown

Stricter enforcement of UK bond rules pushes dealers’ credit lines to the limit

By Charlotte Burns | From issue 215, July-August 2010
Published online 5 Aug 10 (market)

Shock in store: more red tape for the trade

LONDON. A customs clampdown on works brought into the UK “in bond” has sent shockwaves through the trade. At the moment, works which enter the UK from outside Europe “in bond” can be taken out of customs warehouses for three months—allowing galleries to mount exhibitions, show works to clients or for specialist conservation—without paying import tax. However, many galleries frequently extend the three-month period by returning the work to the warehouse for 24 hours, before beginning another cycle.

Customs officials have now started sending out instructions which tighten up these procedures, making it much more difficult for galleries to extend the three-month period.

Officially, this is not new legislation. “Customs are not changing the law so much as enforcing it more rigorously,” said one shipper, although “it will reduce galleries’ flexibility”. Now if galleries want to extend the “bond” beyond three months, they must use the “temporary admission” system. It is not a new invention—but it is more expensive. The import tax (VAT) on works of art is currently 5% of the work’s value. Under the temporary admis sion system, galleries must demonstrate that they either have the cash available on deposit, or that the sum is backed by a bank guarantee.

Customs are downplaying the issue. “There is no change in the law…This is merely a clarification following numerous problems that have been found during assurance of customs warehouses,” said Jan Marszewski, press officer for HM Revenue and Customs. “It came about because of disagreements between HMRC’s interpretation and that of the trade of the temporary removals procedure, so we sought clarification from the European Commission.”

Many in the trade, however, disagree. “This is going to affect people quite considerably. It is just another reason for the markets to move elsewhere,” said private dealer Ivor Braka, while old master specialist Luca Baroni said: “It is a further burden on the market—and I am not sure the market needs that.” Iwan Wirth, director of Hauser & Wirth gallery, which has bases in London, New York and Zurich, said: “This seriously weakens London’s position as an international hub. It’s extraordinarily easy to do business in New York, Hong Kong, Singapore or Switzerland, so those places will benefit. It just means there will be less great art in London.”

The amount of money, or number of credit lines, needed to arrange a temporary admission—especially in the middle of a recession—is causing particular anger.

“To take liquidity out of the dealing kitty—which is what bank overdrafts guaranteeing imports would do—is going to reduce the actual turnover of trade in the UK art dealing world. There will be less money available to buy and sell works of art,” said Peter Nagy. Another dealer said the effects could be crippling: “It is a liability that comes off your credit line, so it impacts your overdraft—which means you have less flexibility for the rest of your business.” Another said banks are unlikely to lend so much cash. “For a £20m work, you need a £1m guarantee—which bank is going to lend that? Add to that the bank charges. It’s ridiculous.”

Some galleries already use the temporary admissions system, including Daniel Katz, but the London gallery’s director Stuart Lochhead said: “It is very expensive because you have to put a lot of money aside for anything you want to bring in, and there is a time limit of two years. The system is restrictive for business.”

Auction houses are concerned, too. A Sotheby’s spokesman said: “We are aware of these changes and…are taking advice to minimise the affect on the business.” But dealers say that they are the harder hit: “Auction [houses] have an advantage because they have a completely different capital and sales structure,” said Iwan Wirth. “Private galleries work at a different pace—we deal with museums and private collectors, and it’s a slower process.”

August 6th, 2010

Posted In: customs and law enforcement