THIS POST WAS ORIGINALLY POSTED IN 2013 (BUT IT IS INCREDIBLY CURRENT)
One of the reasons I stopped art dealing was the fact that it became more and more difficult and costly to identify forgeries. I am saying that because of the secrecy that shockingly still rules the world of art. Opacity is the norm and no one even attempts to deny it. The lawyers for Ann Freedman, the former director fo the Koedler gallery who is suing the NY dealer Marco Grassi for defamation after he claimed that she didn’t undertake due diligence on works being sold as Rothkos, Motherwells and Pollocks and that happened to be forgeries by a Chinese painter, Pei-Shen Qian. We are talking about millions here. Her lawyers say that ‘in Freedman’s world of high priced art sales, confidentiality is commonplace and transparency is the exception rather than the rule’.
Why? Because the secondary art market is supply-driven, so getting the best works of art for sale is the problem not finding buyers. The vendor is king and can demand and obtain complete anonymity. The whole art trade is complicit in this culture of secrecy. Dealers will accept it to protect a seller. Again, Freedman’s lawyers have no hesitation in acknowledging this. They say: ‘That’s the way of the art world: an investor buys a painting below market value with knowledge of its undocumented history in the hope that some day, with enough supporting expert opinions, the painting will be worth many times its purchase price’.
Dealers are not alone in this. The auctions houses carefully preserve vendors’ confidentiatlity, hiding names under labels such as ‘property of a distinguished lady’ or ‘from an important private collection’. They may even disguise the fact that a number of works are form the same source by using different descriptions, referring to one and the same vendor.
There is a fine line between competitive business practice and wrongdoing. A recent lawsuit concerning the dealer Daniella Luxembourg revealed a less than transparent deal that ended up in court, and ended in a confidential -again- settlement. This smoke-and-mirrors approach extends to others aspects of art business such as pricing. Is there any other field in which, at a commercial even, it is impossible to find out how much somethings costs? Try going into the booths of anynumber of exhibitors at any art fair and asking for prices. The same applies to many major galleries in their own spaces -good luck to Joe Public in trying to find out how much for example a Jeff Koons was selling at Gagosian or Zwirner.
Dealers also support their artists at auction, bidding up values to maintain prices: an outsider may not realise that the supposedly ‘record’ price is actually artificial. This is fraud. For example Alberto Mugrabi own a 5% of the totality of Warhols which means ‘cornering the market’ because he can influence on the prices. In fact, recently a conversation leaked between Larry Gagosian and Mugrabi that showed that they certainly appeared to have knowledge of how much the vendors of works coming up for auction would accept. This lack of transparency facilitates tax evasion and another extremely serious problem: money laundering.
In the most recent case, New York’s Helly Nahmad has been indicted for allegedly running illegal gambling dens at the family art gallery and money laundering. Although Nahmad’s lawyers strongly reject the accusations, the affair has led to renewed calls for the art market to be better regulated. In my experience, a former client of mine, David Dwek, Executive Director at Morgan Stanley Investment Banking responsible for Private Sponsor coverage, introduced me to Nahmad and offered to introduce me to Mugrabi to do business with him saying that both of them ‘control the market’. The moment I hesitated not only he poisoned my relationship with friends and clients but pushed me into depression and deciding to stop art dealing. A lot to think about, I guess. TO READ MY ARTICLE ABOUT THE NY NAHMAD (FROM 2013) CLICK HERE.
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