Do Art Auction Houses Camouflage Results? – artmarketblog.com

 Do Art Auction Houses Camouflage Results?   artmarketblog.comI received an email on December 2nd from one of Australia’s leading art auction houses, Menzies Art Brands, with the subject ‘Defamation Alleged’. The email read:

DEFAMATION ALLEGED

Menzies would like to bring to your attention this story on Page 10 of The Age newspaper today:

LEADING art auctioneer Rod Menzies has described as ”scurrilous” allegations made by Robert Le Tet and Rick Anderson about his business practices, in The Age yesterday.

Mr Menzies, an entrepreneur, cleaning business tycoon and owner of Menzies Art Brands, said he ”always honoured every deal” and was ”well known for carrying out every commitment and for his integrity”.

He said he observed the ”highest ethical standards” and denied suggestions to the contrary. He said in a statement that he had instructed his lawyers to start proceedings for defamation and damages claiming $38 million.

Enquiries
sydney@menziesartbrands.com

Before we continue, this is not the first time that allegations have been made regarding Menzies’ business practices. In 2008 complaints were made by other auction houses in Australia regarding Menzies’ alleged failure to adequately disclose details regarding guarantees provided by Menzies, as well as details regarding works being sold by Menzies that Menzies either owned or had a share in. Menzies denied the charges which were dropped in March of this year by the Australian Competition and Consumer Commission.

This time around, Menzies is being accused of misleading reporting of art sales through his auction house. The accusations were aired in the Melbourne, Australia based newspaper ‘The Age’ where details of a transaction involving a painting by Brett Whiteley, one of Australia’s most famous and valuable artists, were questioned. According to The Age, the painting in question was reported by Menzies Art Brands as having been sold in Sydney on the 25th of March for A$1.44 million. Apparently, however, only two months later Mr. Menzies was offering the painting in question for sale privately through his company for A$1.25 million, which suggests that it wasn’t sold at all. It is then alleged that Mr. Menzies struck a deal with a collector, named as a Mr. Anderson, to swap the Whiteley painting, and another painting, for two paintings owned by the collector. The swap apparently took place in June of this year.

If this allegation wasn’t enough, ‘The Age’ alleges further issues regarding ownership of the Whiteley painting. Apparently a Melbourne financier launched a court case to retrieve the Whiteley painting, which he claims he owns because his company, Questco Pty Ltd. , loaned money to an art dealer to purchase the Whiteley painting – a dealer who is now having financial difficulties. The Melbourne financier apparently then asked Menzies to sell the painting through private treaty for A$1.25 million, but Menzies reneged on the deal a short time later. Menzies is being accused of then returning the painting to the dealer, not the financier, and purchasing it off the dealer for A$850,000. Mr. Menzies then put the painting up for sale in March of this year, which is where this story began. Menzies sought to retrieve the painting from Mr. Anderson whom he sold the painting to by private treaty and apparently even offered several other paintings in exchange which had also been reported as having been sold at auction. Mr. Anderson has so far declined to return the painting.

According to the article in ‘The Age’:

Mr Anderson claimed Mr Menzies has been ”ramping” up the art auction market, and he said it was in the public interest to know how the prominent auctioneer operated: ”He reported the Whiteley painting as sold and then he offered it to me for $200,000 less than what it was supposedly sold for at auction,”.

No charges have been laid against Mr. Menzies or his company and, as you can see from the email I was sent, Mr. Menzies strongly denies the allegations made against him and his company. The question of who is telling the truth will presumably come to light if the defamation case goes ahead.

The reason that I have alerted you to this case is that I have been on a bit of an art auction house crusade of late in an attempt to inform the public about what goes on behind the scenes and hopefully encourage the art auction houses to be more transparent and ethical with their dealings. With transparency being one of the biggest issues, I thought it was important to highlight this case even though none of the allegations have been confirmed as being true.  I will be doing a series on this issue as there are lots of allegations to cover.

 Do Art Auction Houses Camouflage Results?   artmarketblog.com**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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  • http://www.leewilde.com Lee Wilde

    Nicholas, having worked one day as an assistant during an art auction, I have first hand knowledge of an auction house falsifying auction results, shill bidding and engaging in other dishonest practices.

    I have been warned in emails and sms’s not to make accusations against them, or they will sue me for defamation. It turns my stomach that these parasites continue to feed off unsuspecting art buyers. They are truly the scum of the earth.

  • http://dailyartist.blogspot.com/ EEH

    I think that a lot of the public perception of auction houses is not due to the merit’s of any of the individual businesses, but to the sorts of goods they auction. I think that’s absolutely ludicrous.

    Sure, they may sell a Warhol, but that doesn’t mean the salesperson by the virtue of the artwork is somehow made honest.

  • http://www.examiner.com/x-12165-San-Diego-Fine-Arts-Examiner Max Emanuel

    Public companies listed on the Sydney and New York stock exchanges restate their earnings and revenues frequently. It does not matter whether they are hotel chains, mining companies or auction houses. It is allowed and has always been allowed. Art buyers who do not take this into account have not done the best possible job of preparing to buy art and need to be more realistic about interpreting revenue reports and amended reports.

    • http://www.leewilde.com Lee Wilde

      Companies restating their earnings is not the issue here. What this is about, is auctioneers pretending to have sold a painting at auction, perhaps to avoid embarrassment at not being able to sell it despite their best efforts…and maintain its perceived value and the perceived success rate of the auction house….and even the overall perceived buoyancy of the art market. Behaviour like this instills confidence in art buyers where none should exist.

      Its about shill bidding; having people in the audience, pretending to be genuine art buyers, who will make false bids in order to push the price of a work up…..or, if there are no genuine bidders interested, will bid once in order to “buy” the work…. rather than have everyone present know it couldn’t sell.

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