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Artnet News
2/4/02


SUCKER BET FOR ART INSTITUTE
Would you turn over $43 million to a 32-year-old hot-shot day trader just because he guaranteed you profits of one to two percent a month, even in a flat market? And agree to pay him one percent of the total assets managed, plus 20 percent of the profits, every year? Then you are qualified to be a member of the finance committee at the Art Institute of Chicago, which seems to have done just that, according to a front-page story in the Feb. 1 issue of the Wall Street Journal. By the end of 2001, the value of the fund, Integral Investment Management, had plummeted, and the Art Institute accused its managers, Conrad Seghers and his partner, James Dickey, of fraud.

The dispute is now in court in Houston, but it seems that Seghers and Dickey invested $2 million of the Art Institute money in their own software company, and put another $17 million in a fund that trades in bad consumer debt, such as past-due credit-card bills. Hey, according to their contract, the guys "could have bet on the Super Bowl" with the money if they'd wanted, their lawyer told the Journal.

Managing a $650-million museum endowment like the Art Institute's can be a little tricky, judging by the story. As of June 30, 2001, the AIC had conventional stock-market losses of $33.2 million, but "paper gains" of $102.1 million from a hedge fund. Overall, the museum had almost two-thirds of its endowment, or $396.5 million, invested in such secretive hedge funds, which are only lightly regulated and aren't required to report their results publicly.

The Art Institute refused to reveal additional details of its investments -- curiously, despite being nonprofit institutions, museums are required to submit to very little public oversight. Post-meltdown, the AIC has dismissed the investment advisor that steered it to Seghers, accepted the retirement of its chief financial officer, and is supposedly in the midst of a complete investment audit.

SOTHEBY'S EMBRACES EBAY
When Sotheby's agreed to merge its online auction business with eBay, the battered but still beautiful art-auctioneer must have had one eye on its internet losses -- undisclosed, but presumed to be in the tens of millions -- and another on eBay's huge global customer base, said to be 42 million people. The terms of the deal are secret, but observers think it's a "no cash" arrangement: Sotheby's gets to use eBay's far-superior software and can probably lighten its payroll (a staff of 100 works on Sothebys.com, according to the Wall Street Journal), while eBay gets Sotheby's and its many "associate" dealers to breathe some life into its faltering "Premier" operation (which is currently plagued by kitsch, not to mention works of questionable authenticity). Back when Sotheby's tried a similar synergy with Amazon.com, the big online bookseller bought stock in the auctioneer, which Sotheby's apparently had to buy back (taking a charge of $11.6 million) when the two companies ended their unsuccessful collaboration.

So, what's actually happening on Sothebys.com? The auctioneer brags that it has sold property worth more than $100 million, including an $8.14 million copy of the Declaration of Independence and a $550,750 portrait by Frederic, Lord Leighton. Back on earth, however, the average lot price is $1,200, on which Sotheby's collects an additional 15 percent as a buyers' premium (up to $15,000) (Sotheby's associate dealers pay no seller's commission).

A quick look at the website's sold lot archive, once navigated properly, shows plenty of activity (though at 15 percent, not that much profit). A two-sided, hand-painted sculpture of a car by Chris Johanson from San Francisco dealer Jack Hanley sold for $400, an 18th-century Mexican crucifixion from Howard Nowes Ancient Art in New York sold for $500, and a red chalk portrait of a man after Anthony van Dyck sold by Los Angeles dealer Ronald Winokur for $900, all in the last week (and all at the hammer, without the buyer's premium).

NEW TRUSTEES AT GUGGENHEIM
The Guggenheim Museum has named two new members to its board of trustees: Russian businessman and philanthropist Vladimir O. Potanin, and New York philanthropist Frederick B. Henry, president of the Bohen Foundation.

Potanin, 41, is head of the Russian conglomerate Interros and an arts patron who has established the V. Potanin Charity Fund. A patron of the State Hermitage Museum in St. Petersburg, Potanin worked with the Guggenheim to open a joint branch in Las Vegas. The next project of the Hermitage-Guggenheim collaboration is the renovation of the 450,000-square-foot, 19th-century General Staff Building on Palace Square in St. Petersburg for a new 20th-century gallery, to be filled with works from the Guggenheim.

As for Henry, he has headed the Bohen Foundation since 1984, specializing in commissioning new art, with an emphasis on film, video, new media and installations. Last month, the Bohen Foundation donated 277 works by 46 artists to the Guggenheim, including pieces by Willie Doherty, Pierre Huyghe, Shirin Neshat, Inigo Manglano-Ovalle, Diana Thater, Jane and Louise Wilson and Sam Taylor-Wood. The one black spot on Henry's resume is the unfortunate 1996 affair of the American Center in Paris, which ran out of money on his watch and had to be shut down.

PARIS ART PALAIS
After a five-day free preview, the Palais de Tokyo on the Avenue du Président in Paris officially opened on Jan. 29, inaugurating a new art center in the former Art Deco home of the Musée national d'art moderne (now located in the Pompidou Center). Under the co-directorship of Nicolas Bourriaud and Jérôme Sans, the center is billed as "a public space in perpetual motion, a real laboratory to show Paris the artistic vitality of today's France." First up is an impressive mishmash of shows and installations, including "Audiolab 2," a music salon; a massive group of projects (by Naomi Fisher, Gelatin, Matthew Ritchie, Wang-Du, others); and works by Monica Bonvicini, Loris Cecchini, Meschac Gaba, Michael Lin, Henrik Plenge Jakobsen, Navin Rawanchaikul and still others. Open from noon to midnight, the center invites visitors to drop by after work. JAS Hennessy & Co. funded the project, donating more than 10.5 million francs.

HOCKNEY'S PRINCE CHARMINGS
Always ready to embarrass the royals, the British press has taken notice of unflattering 1969 sketches of Prince Charles of Wales at age 21, done by David Hockney, that emphasize the Prince's prominent ears, nose and teeth. Originally made for Time magazine in 1969, which rejected them, the drawings are now for sale and expected to fetch around $105,000 at Christie's in London this month.

STATUESQUE BOROFSKY PARKED IN FORT WORTH
American sculptor Jonathan Borofsky's new 50-foot-tall work -- Man with a Briefcase -- will stand tall this summer in Burnett Park in Fort Worth, Tex. Done in brushed-aluminum, the statue shows a businessman in silhouette, carrying a large briefcase. The Burnett Foundation expects the sculpture to become a local icon, attracting tourists and Borofsky enthusiasts alike. It is replacing the popular Matisse bas-reliefs, which were suffering weather damage. Arts Council of Fort Worth president Flora Maria Garcia said, "I have a feeling people are going to like it."



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