The price of a scandal
People who complain that great New York theatre costs too much just aren’t looking hard enough.
Case in point: A recently closed tale of power, pride, corruption and hundreds of millions of dollars that played in lower Manhattan, offering a riveting glimpse into a real life, secretive playpen for minor royalty and captains of industry. Film producers, actress Sigourney Weaver and Vanity Fair scribe Dominick Dunne showed up. More than four years in the planning, the spectacle played for a strictly limited three week run to full houses and it ended just as its creators hoped: with the criminal conviction of an aging multimillionaire and with high society types from America and Europe fearing for their livelihoods.
The central figure in the show actually a federal criminal trial was Alfred Taubman, the 76 year old former chairman of Sotheby’s auction house, who last week was found guilty in New York of conspiring with his counterparts at Christie’s International to keep profits high by fixing the commissions charged to clients. Taubman, who faces up to three years in jail and a fine that could stretch into the millions, will be sentenced in April. Christie’s former chairman Sir Anthony Tennant was named in the same indictment, but he refuses to leave England to face the charges, and he cannot be extradited in the antitrust case.
Story continues below advertisement
The case has left the fine art market scrambling to regain its equilibrium and reassert its integrity after a rocky few years. The scandal brought down not just Taubman but also his deputy, Sotheby’s former president Diana (DeDe) Brooks, who struck a plea bargain with the feds in return for testimony against her former boss. Convicted last year on charges of price fixing, Brooks still awaits sentencing. Neither works for Sotheby’s any more, but Taubman remains the largest shareholder of the publicly held company.
Christie’s was cannier, striking deals with prosecutors before Sotheby’s got the chance. As a result, the company was excused from paying a penalty (Sotheby’s was hit with a $45 million fine) and CEO Christopher Davidge received immunity in exchange for his testimony against Taubman and Designer Louis Vuitton Replica Handbags Tennant, should the former 1:1 replica handbags Christie’s chairman ever show up on these shores. Davidge also walked away aaa replica designer handbags from the executive suite with an $8 million severance deal.
The two auction houses didn’t just suffer a loss of reputation. They were also slapped with a class action suit filed by Montreal scrap metal millionaire Herbert Black and others. Almost 130,000 former clients joined the suit, which ended earlier this year when the auctioneers agreed to a $512 million settlement.
In New York, the case was treated as a delicious glimpse into a loamy world rarely illuminated by the light of public scrutiny or logic. The Sotheby’s board of directors reads like a page out of a high society annual. There’s one Rockefeller, a marquis, the newly lorded Conrad Black, and Henry Kravis, a partner in the notorious leveraged buyout firm Kohlberg Kravis Roberts Co. (Sotheby’s board members have not been implicated in the scandal.)
Both auction houses were born in the middle of the 18th century, and their business practices remain borrowed from another time. Dishonesty is common and accepted, as when an auctioneer bids up the price during a sale despite not having any active bids in the room.
“The art business is the high quality designer replica handbags wholesale way it is. Things are done on a handshake, certain things are understood,” shrugs Judith Selkowitz, the president of New York art consultancy Art Advisory Services Inc. “It’s not Wall Street dolabuy.su , there’s not a lot of government regulations, paperwork or documents.”
It’s a story tailor made for those who love scandal in high places. As Taubman’s trial progressed, there was a smudge of the old New York City schadenfreude that, until Sept. 11, was a central pillar of the city’s psyche. Sigourney Weaver showed up to observe Brooks in preparation for playing her in a planned pay television movie about the trial. For the three weeks that the circus was in town, it felt like old times.
Story continues below advertisement
The case began almost by accident. attorney attended an auction at Christie’s, where he noticed that an antique chest that had just sold was reauctioned minutes later outside the house among a small clutch of dealers. These dealers had agreed among themselves to withhold their bids from the open auction in order to prevent inflating the price. Department of Justice investigated the illegal bid rigging, ensnaring dozens of small time dealers, including Montreal rare banknote dealer William Barrett, who paid a $125,000 fine in 1995 for collusion.
In 1997, the Department of Justice papered New York galleries with subpoenas. Like street thugs flipped in exchange for dirt on a mob boss, the dealers let the DOJ into industry gossip about the behaviour of the two 800 pound gorillas. Investigators found that Christie’s and Sotheby’s had conspired to set an artificial floor for the rate they would charge clients.
When property is sold at auction, both buyers and sellers pay commissions. All told, the commissions can run more than 30 per cent, a hefty fee on a multimillion dollar work of art. To be sure fake louis bag , there’s nothing wrong with a company setting prices at the same level as its main competitor: Airlines do it all the time. It becomes illegal when the companies communicate with each other in advance over their intent to set those prices.
In 1993, with Christie’s and Sotheby’s profitability battered by severe competition for clients, Taubman and Tennant began meeting confidentially to discuss price fixing. All told, they met 12 times. The meetings were recorded in Taubman’s personal diaries, which were produced in court. Once Taubman and Tennant agreed on the premise, DeDe Brooks and Christopher Davidge were charged with ironing out the details in more secret meetings. The court heard that once Davidge flew from London to New York on the Concorde, met with Brooks in a limousine at John F. Kennedy Airport, then jetted back to London. He explained his absence by saying he had been at the dentist.
The trial was full of juicy moments. Brooks said as the investigation tightened around her office, Taubman taunted her with the prospect of prison, saying, “You’ll look good in stripes.” A defence witness countered that Taubman was actually being self mocking best replica handbags , saying, “How do you think I’d look in stripes?”
The main strategy of Taubman’s defence team seemed to be to paint the businessman as a genial but harmless fellow who slept through business meetings. Ever the agreeable sort, Taubman even took a few illustrative catnaps during the trial. His primary sin appeared to be that he tried to use his millions to buy his way into the company of British society, certainly no worse than his fellow board member Lord Black.
Story continues below advertisement
When the feds moved their dragnet closer through 1999, Davidge jumped from his post Perfect Quality Louis Vuitton Replica and Christie’s cut its deal, leaving Sotheby’s out in the rain. “It may have even been their idea, we don’t really know.” Watson’s 1997 book Sotheby’s: The Inside Story reminded readers that the auction houses are rarely free of scandal, and revealed that the storied house had trafficked in stolen antiquities.
There are no antitrust laws in Europe similar to those in the United States, so replica louis vuitton handbags Christie’s won’t likely face any legal reproach.
The salesrooms have both replacing the former commissions with rates that are still high but aren’t illegally co ordinated. Desperate for the public to see the company as squeaky clean, Sotheby’s replaced Taubman with Michael Sovern, professor emeritus of law at Columbia University. But it may not be enough to save the 257 year old firm, which lost $232 million over the last 15 months. Phillips, de Pury Luxembourg, the auction house that is ranked a distant third in the market, is owned by LVMH Moet Hennessy Louis Vuitton. LVMH chairman Bernard Arnault has expressed interest in taking over Sotheby’s. Taubman fake designer bags has always rejected the notion of selling his shares, but his imminent sentencing may force him to divest.
Even private dealers who resent the market power of Christie’s and Sotheby’s want to see them back on course. Fake Louis Vuitton Replica Bags “It’s the most public expression of the market, and we’re interested in there being a healthy art market,” Fake Louis Vuitton Replica Bags explained Charles Conkright, manager of the James Goodman Gallery in midtown Manhattan. “When the auction houses do badly, people will interpret that there’s something wrong with the market. We all rise with the tide.”
Despite the scandals, experts predict art sellers and buyers will continue to use Sotheby’s and Christie’s. The public has a short memory. “The houses… clear up after each scandal happens and then some other temptation arises down the line,” said Watson. “There will always be scandal in replica louis vuitton the art market because there’s no other field where knowledge and money are quite so intimately linked.”Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non subscribers can read and sort comments but will not be able to engage with them in any way.
Log in Subscribe to comment Why do I need to subscribe?
Welcome to The Globe and Mail’s comment community. This is a cheap louis vuitton bags from china space where subscribers can engage with each other and Globe staff. Non subscribers can read and sort comments but will not be able to engage with them in any way.