smugglers at sotheby's:
the inside story

by Judd Tully

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 salesrooms.

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.