Seller Scams Sink Sino Scene

Taipei - The historic medal shown here, bestowed upon Genalissimo Chang Kai-shek, was put up for sale in Hong Kong on August 24, despite Taiwan’s Ministry of Defense saying it was a fake.

According to the ministry, the real medal was buried with the Kuomintang leader in 1975.

Savvy art collectors of ArtKabinett social network are increasingly worried about bogus buys in the Chinese market.

This botched auction is just the latest contentious sale in country's booming art market, which according to industry research outfit Artprice, overtook both the US and the UK as the world’s largest, with $4.79 billion in sales last year.

But some experts say there’s more to those numbers than meets the eye, pointing to an industry riddled with forgeries, money laundering, bid-rigging and fraud.

Art has surpassed real estate, stocks, gambling in Macau and overseas bank accounts as the method of choice for dodgy businessmen and corrupt officials to hide their ill-gotten gains.

In some cases the bids themselves are used to pass bribes, where buyers intentionally overpay for shoddy pieces in order to legally pay the seller.

In one high-profile incident last year, a Chinese businessman had a fake ancient jade burial suit made up.

After getting a group of appraisers to verify its authenticity, and value it at a staggering $375 million, the businessman used the suit as collateral to secure a $100 million bank loan.

“The figures are huge because they fetch very high prices. There is a hidden process of laundering through buying and selling of counterfeit and real paintings and antiques in this region,” said Lo Shiu-Hing, and expert on transnational crime at the Hong Kong Institute of Education.

“Most people in China are investors as opposed to collectors. It’s an investment above all else. They want to make on it fast."

At a June show in Beijing, a Taiwanese collector sold a 1964 landscape by Chinese painter Li Keran for $49.24 million.

Li is famous for paintings that celebrate Cultural Revolution protagonist Mao Zedong. An anonymous buyer from the Forbidden City picked up the painting — a record for a Li piece.

Nobody knows for sure how much of China’s art market is bogus. But one thing is for sure, it’s not just a Chinese problem.

The Association for Research into Crimes against Art estimates that art crime is the third biggest grossing criminal activity worldwide, behind only drugs and arms trafficking.

The association estimates that the art market brings in as much as $6 billion annually, saying that those funds are used to bolster organized crime syndicates. Still, experts say that like so many other industries, the gold rush is happening faster and stronger in China than anywhere else.

One expert noted, "people are very quickly going to learn that there is none of this spiritual art buying and collecting that they're used from Americans and Europeans."