'Art Gate' explained: What FATF report says on 'sale of Padma Bhushan'

A recent report by Financial Action Task Force (FATF) titled, "Money Laundering and Terrorist Financing in the Art and Antiquities Market" has again brought into focus the murky nexus of politics and art. 

According to the report, the trade in art, antiquities, and other cultural objects is a billion-dollar industry.

"The market has attracted criminals, organised crime groups and terrorists who seek to launder proceeds of crime and fund their activities. The use of cash, third-party intermediaries, shell companies and other complex corporate structures in relevant

transactions also represent relevant illicit finance vulnerabilities," the report read.

This FATF report that focuses on money laundering and terrorist financing linked to art, antiquities, and other cultural objects has sighted a special case-study from India.

Union Minister Anurag Thakur took a dig at Congress and demanded that "Priyanka Gandhi came clean on who Mr A was mentioned in the FATF case study?" and came clean on the alleged case of illicit proceeds and use of art. 

What is 'Art-Gate' pointed out in the FATF case study say?

Without naming anyone, the FATF case study on "purchase art with Illicit proceeds and use art of no value to pay kickbacks" sights an example of an Indian bank's managing director and CEO who misused his position to sanction loans of rupee $628 million to business entities incurring losses or with negative credit, deliberately violating existing norms and regulations.

"A money laundering investigation revealed that Mr. A used his influence to sanction the loan to a loss-incurring entity, Company B. Investigations further revealed that Company B diverted the loan to 79 shell companies including Company C, which was controlled and owned by Mr. A and his daughters. Company C received $79 million and used part of the funds to purchase assets including art from famous painters and influential people."

The report suggests that Mr A invested a significant amount of proceeds in buying art of famous artists and investigations showed that he had purchased around 44 paintings.

The report further adds that Mr A from India also received awards and accolades from several organisations in "inappropriate ways." 

Investigation showed that in order to pay kickbacks for receiving awards, Mr A purchased mediocre art from politicians and in turn paid huge kickbacks through banking channels, projecting them as genuine pieces of art.

Why is this FATF report gaining political traction in India?

According to the case study, Mr A purchased a piece of art from the close relative of a member of the ruling political party at that time for $264 000. 

"However, the investigation revealed that this was an over-valuation, and that that the price paid was not for art, but rather was a bribe to influence the awarding of the prestigious Indian award ‘Padma Bhushan’ for himself. The trial is ongoing and Mr. A has been in judicial custody since March 2020."

Anurag Thakur attacked the Congress on Tuesday and said that new models of Congress corruption are coming to the surface. He said that FATF has published a case study that shows how a former Union minister in the UPA government pressured an individual into buying Priyanka Gandhi Vadra's average painting for Rs 2 crore," he added.

Thakur went on to ask if the Padma Bhushan was being given in exchange for money and painting. He further attacked the UPA government asking, "how many other national honours have you sold for money?"

An Enforcement Directorate chargesheet filed last year stated that Rana Kapoor paid Rs 2 crore by cheque for a MF Husain painting. The ED report said that Congress leader Milind Deora convinced Rana Kapoor to buy the artwork. Rana Kapoor has been in judicial custody in connection with a Rs 466-crore money laundering case. 

Also, it was said that Deora later told Kapoor that the proceeds of the sale were used in Sonia Gandhi's medical treatment.

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. It sets international standards to prevent these illegal activities and the harm they cause to society.