Arkady (pictured below) and Boris Rotenberg, two Russian billionaire brothers associated with Russian President Vladimir Putin, have been accused by US authorities of a money laundering scheme involving high-value works of art, reports Forbes. Arkady in particular is known for his association with Putin, and the two were actually pictured practicing judo together.
Arkady’s son Igor Rotenberg is also included in the charges in the recent US Senate subcommittee investigative report led by Senators Rob Portman and Tom Carper. The report alleges purchases of “high-value art” through front companies dating back to the Rotenbergs, and this acted as a way to circumvent economic sanctions imposed by the United States. Arkady and Boris faced US sanctions in 2014 and then bought $ 18 million worth of art in the months that followed, along with an additional $ 73 million in other deals, all of which were banned by these penalties. By carrying out these transactions through various shell companies and other intermediaries, the report says, these sanctions could have been ignored by the brothers.
In a press release, Senator Portman says that arrangements like those alleged in this report are unacceptable:
“We cannot let this continue. The art industry currently operates under a veil of secrecy allowing art advisers to represent both sellers and buyers by hiding the identity of both parties and, as we do. ‘We found the source of the funds. This creates an environment conducive to money laundering and circumvention of sanctions. “
The report also blames the auction houses that allowed the Rotenbergs to do their discounted art sales through a “Moscow-based art advisor” named Gregory Baltser:
“Despite having [anti money laundering] and sanctions policies, the auction houses did not ask Mr Baltser basic questions, including who he had bought artwork for. This allowed Mr Baltser to continue buying works of art despite the imposition of sanctions by the United States on the Rotenbergs, completely undermining any action taken by auction houses to block transactions by those sanctioned. “
It is not known what additional action, if any, will be taken by the Senate or other authorities as a result of the report. The Rotenbergs have not commented publicly on the allegations, but in a letter to the subcommittee, Baltser denied having any involvement with Boris or Arkady Rotenberg. Despite this, at least three major auction houses – Phillips, Christie’s and Sotheby’s – have pledged not to do business with Baltser in the future as a result of the report.