Just as Sotheby's triumphantly released 1996 earnings
showing a bullish 26 percent rise in net income to $49.9
million from $32.6 million in 1995, sensational news
accounts in the London press reported a chilling scandal in
which the auction giant is accused of blatantly smuggling
Old Master pictures out of Italy for auction in its London
The screaming headlines and subsequent suspension of two
Sotheby's senior Old Master specialists (Roeland Kollewijn
in Milan and George Gordon in London) stemmed from a six-year
investigation and sting operation by the swashbuckling
British art journalist Peter Watson and reported in his new
book: Sotheby's: Inside Story and serialized in the London
Times last week. His hidden camera exploits were also
broadcast on England's Channel 4 in a "Discoveries" documentary that
aired on Feb. 6.
Watson is an old hand at generating art world upsets. His
1983 sting operation and expose of an art theft ring led to
his book, The Caravaggio Conspiracy, as well as convictions
of four perpetrators. His new book also alleges that
Sotheby's assisted in smuggling of antiquities from India
as well as other illegal activities. Watson was initially
tipped off by James Hodges, a disgruntled and former
Sotheby's employee who reportedly provided the journalist
with extensive documentation purloined from Sotheby's and
who later served a five-month sentence for "obtaining
property by deception." Sotheby's, in turn, charged the
affair was an isolated incident triggered by questionable
journalistic practices that amount to entrapment.
Curiously, the media firestorm arising from the seemingly
innocuous $16,100 sale of Giuseppe Nogari's Old Woman with
a Cup in Naples last March and which subsequently resold
in London last July for an anemic $12,558, had scant impact in the
U.S., at least by Wall Street standards. Sotheby's stock
(traded on the New York Stock Exchange) rose 3/8 of a point
to close at 17 1/8 on the day of the media bashing. Wall
Street was pleased as punch with the firm's improved
earnings and apparently unconcerned that Sotheby's 1996
auction sales figures of $1.59 billion came in behind arch-rival's
Christie's sales of $1.6 billion. It was the first
time since 1954 that Christie's had bested its competitor
in yearly auction sales, if only by a whisker.
The embrace from Wall Street however, did not stop Diana D.
Brooks, Sotheby's president and c.e.o. from flying to
London on Feb. 8 for emergency meetings with Sotheby's
board. The company reported on Feb. 10 that it would
establish a committee consisting of Sotheby's independent
directors to conduct "an internal review of the firm's
practices" and focus particularly "on international trade
issues and auction room practices."
"The reputation and integrity of Sotheby's (are) the two
things that matter the most to us all," said Brooks in an
address/pep talk to the assembled senior staff." London Old
Master specialist Gordon, meanwhile, has been suspended
"pending completion of this internal investigation" and the
Milan-based Kollewijn, who was secretly recorded in his
Sotheby's office saying, "If I were in power I would arrest
the whole lot here," has resigned.
It remains unclear whether outside investigations--in
Italy, Great Britain or both--will augment or supersede
Sotheby's internal review. A Feb. 7 editorial in London
Times called for an independent investigation.
JUDD TULLY covers the international art market for Art & Auction, The Washington Post and other publications.