Going, going… to court?

Dodgy wheeling, dealing and price collusion might not come as a surprise in tne world or car auctions but surely the clients of the blue chip auctioneers should be able to trust them to act with total integrity. One might have thought so but it begins to appear that any faith in the probity of major auction houses has been misplaced following a series of startling allegations of commission-fixing by Sotheby’s and Christie’s. One would certainly not associate the practice of defrauding customers with the two senior figures who so far have resigned over the affair. Sotheby’s chairman, Alfred Taubman, who owns a controlling stake in the company, said his decision to step down was not easy, while Diana Brooks, the chief executive since 1994, well known in New York society and a director of Morgan Stanley Dean Witter, the investment bank, described her departure as a very difficult choice made in the best interests of colleagues and the company. The high level casualties, which were announced by the Sotheby’s board in New York on a February 21, a bank holiday when the stock market was closed, come after the Financial Times revealed last month that Christie’s in New York had given evidence of commission-fixing to the US justice department. In the last few weeks forty art specialists have entered class-action suits against the two houses as it became known that the inquiries concerned activities as far back as 1992. The two auction houses moved to a sliding scale of commissions within a few weeks of each other in 1995 as they sought to recover from the slump in the art market after it boomed in the eighties. A US Justice Department criminal anti-trust inquiry began three years ago and came to light when Christie’s took advantage of a US law which offers amnesty to the first party in an alleged cartel who co-operates with investigators. The company has since announced that it has supplied information to investigators about operations under the previous management before the company was taken over by Francois Pinault, the French businessman. The European Commission, the UK’s Office of Fair Trading and the Australian Competition Commission are also examining the allegations. Sotheby’s has met with the US Justice Department in order to reach a settlement with the government and in a bid to avoid the bad publicity of a trial.