The Art Auction House Sin Files – artmarketblog.com
Where does it all end? When will people realise that although the questionable practices exhibited by some auction houses are legal, they should not be tolerated? How far will art auction houses be able to go before someone steps in and says ENOUGH IS ENOUGH !! Let’s take a look at the history of sins committed, and those allegedly committed, by the big three art auction houses.
The most famous art auction house scandal took place in 2000 when Christie’s and Sotheby’s were dragged through the mud because of allegations that they had formed a “cartel” and were agreeing in advance to fix commission rates. The price-fixing scheme violated federal antitrust law by eliminating competitive choice and cost customers millions of dollars. Christie’s dobbed on Sotheby’s and were given immunity from prosecution for their information. Sotheby’s ended up taking most of the flak with several senior members getting the boot and two senior managers, A. Alfred Taubman and Dede Brooks, both getting jail sentences. Sotheby’s, Christie’s and their owners also paid a civil lawsuit settlement of $512 million.
In September of 2004, Forbes magazine reported that Christie’s were allegedly withholding information regarding the authenticity of objects from clients. These allegations were made by Canadian newspaper heiress Taylor Lynne Thomson who went on to sue Christie’s. According to Forbes magazine: “Thomson sued and British courts ruled in May that Christie’s had been too lax in its catalog description, leaving out qualifications to its classification of the urns as being “Louis XV.” The judge highlighted the auction specialists’ decision to remove the qualifying words “possibly Italian,” which would’ve raised the possibility of the urns being far less valuable 19th-century copies.”
Christie’s controversial purchase of the highly regarded gallery Haunch of Venison in 2007 caused a flurry of opinions, many of called the sale a conflict of interest and accused Christie’s of blurring the lines between what galleries and auction houses offer. Christie’s wasn’t the first auction house to purchase a gallery though as Sothebys also made a foray into the gallery world by purchasing Noortman Master Paintings in 2006.
In 2008, CNet founder Halsey Minor sued Sotheby’s for allegedly failing to fully declare when they had an ownership stake in works that they were selling. Sotheby’s won the case and were awarded $6.64 million in outstanding debts. Minor can appeal but, as far as I know, has yet to do so.
In February of this year Christie’s allegedly settled with a brother and sister who sued Christie’s for allegedly failing to identify a painting that they consigned to the auction house as being by Titian. The painting was sold for £8,000 by Christie’s in 1993 as a painting ‘from the school of Titian’. It was determined after the painting had been sold by Christie’s that it was in fact a genuine Titian which was worth in the region of 4 million pounds. The siblings claimed that Christie’s failed to competently research and advise on the painting’s value when it was sold in 1993.
In May of this year (2010), Jeanne Marchig, a Swiss animal philanthropist, launched a law suit against Christie’s for failing to identify a painting owned by Marchig, which was sold by Christie’s for $19,500 in 1998, as a painting by Leonardo worth upwards of 100 million pounds. Christie’s sold the painting as a mere ‘19th century German’ work for which Marchig is suing Christie’s for ‘wilful refusal and failure to investigate the plaintiff’s believed attribution, to comply with its fiduciary obligations, negligence, breach of warrant to attribute the drawing correctly, and making false statements in connection with the auction and sale’. Christie’s disagrees with the claims that the painting is a Leonardo. Reaching an outcome with this case is likely to take quite a while.
The most recent art auction scandal involves auction house Phillips de Pury and their ‘Carte Blanche’ sale which took place on November the 8th (2010). So many issues have been raised in relation to this auction that it would take a series of posts to explain them all so I will only mention the most serious allegations. To begin with, the so called “curator” of the auction, Philippe Ségalot, not only was directly responsible for negotiating and organising the consignment of works for the sale, but he also advised some of the buyers – a situation that could be seen as a serious conflict of interest. If this wasn’t enough of a conflict of interest, Segalot is reported to have bid on works himself presumably on behalf of his clients. There have also been several reports that the auctioneer on the night, Simon de Pury, failed to make it clear to the audience when works failed to sell, which auctioneers are legally required to do. By failing to announce the failure of a work to sell the auctioneer could be seen to be attempting to deceive the audience by inducing a false sense of success and excitement.
These are only a few of the more serious scandals that have arisen as a result of some questionable tactics and practices adopted by the world’s top art auction houses. Are these the sort of businesses that you want to business with? Would you trust such a company to treat you fairly and honestly? I have made it my mission to make art collectors and investors more aware of what is happening in the art auction world and hopefully at the same time encourage the art auction houses to be more honest, ethical and transparent. Stay tuned, there is more to come………
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications
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