Ex-Auction Chiefs Face Conspiracy Charges
A federal grand jury on Wednesday indicted the former chairmen of the world’s two largest auction houses on charges of colluding to fix commissions on what sellers paid when they put artworks and other items up for bidding.
The indictment alleges that A. Alfred Taubman, who headed the Sotheby’s board from 1983 to 2000, and Anthony J. Tennant, Christie’s chairman from 1993 to 1996, met to exchange confidential information about customers and to set identical rates.
Government lawyers said that, as a result of the six-year conspiracy, people who wanted to sell goods at both houses lost the ability to bargain.
Both Taubman and Tennant denied any wrongdoing.
Taubman Cites Polygraph Test
“I am surprised and deeply disappointed by the charges made against me today,” said Taubman, the Michigan shopping center developer and art collector who bought Sotheby’s in 1983. “I am absolutely innocent. . . . As confirmed by the lie detector test I have taken, the truth is on my side.
“While any trial is difficult, I look forward to the opportunity to clear my name in court,” Taubman said.
Tennant issued a statement from England, saying he is “completely innocent of any involvement in price fixing.”
Tennant maintained that as a British citizen he is “not subject to the jurisdiction of U.S. courts and will not be taking part in any of the pending proceedings.”
Sotheby’s and Christie’s, fierce rivals for centuries, control more than 90% of the world’s business done in auction rooms. Their competition thrives on genteel appearances and tough tactics behind the scenes when they woo many of the same wealthy clients.
“This case will show that these individuals mastered the art of price fixing,” said James M. Griffin, deputy assistant attorney general in charge of the U.S. Justice Department’s criminal antitrust enforcement program.
The indictment accuses Taubman and Tennant of violating the Sherman Antitrust Act of 1890, which prohibits unfair competition by maintaining a monopoly.
The investigation leading to the indictment was hardly a secret, and for more than a year the fate of the two top executives was a major topic in the art world.
Some dealers said the Justice Department’s action should have no effect on the auction market.
“The art world is material driven,” said Manny Silverman, a Los Angeles dealer specializing in American postwar art. “Business will go on.”
The indictment set the stage for a court battle between Taubman and Diana D. Brooks, who resigned last year as president and chief executive officer of Sotheby’s.
Brooks pleaded guilty in October to violating the Sherman Antitrust Act and is expected to be a key prosecution witness at the trial. She, like Taubman, faces a possible three-year prison term and hefty fines but has not been sentenced pending her cooperation with the government lawyers.
Tennant faces a similar penalty if convicted, but some lawyers questioned whether he may avoid extradition because of his citizenship.
When she pleaded guilty in U.S. District Court in Manhattan, Brooks said she acted “at the direction of a superior at Sotheby’s.” Her only superior was Taubman.
Associates of Brooks said she spoke frequently with the Sotheby’s chairman and that Taubman wanted to be informed of any significant financial transaction.
Sotheby’s owner has denied this claim.
“Whatever Ms. Brooks chose to do, she did completely on her own--without my knowledge or approval,” Taubman said in a statement issued after Brooks’ plea.
Associates of Taubman said he never colluded with Tennant and that any meetings between the two men concerned issues in the French auction market.
In his statement Wednesday, Tennant said the allegations “appear to relate in part to periods where Sir Anthony had no involvement with Christie’s.”
According to court papers, Brooks met secretly for more than six years in limousines and obscure restaurants with Christopher M. Davidge, who was then Christie’s chief executive, to fix commissions.
The two allegedly exchanged information about employees’ salaries in an effort to prevent staff members from jumping ship.
Settling $512 Million in Civil Lawsuits
Christie’s and Sotheby’s have agreed to pay $512 million to settle civil suits stemming from the conspiracy. Taubman agreed to contribute $156 million of Sotheby’s share.
In October, Sotheby’s pleaded guilty to charges of fixing auction commission rates and the company was ordered to pay a $45-million fine.
Christie’s has been cooperating with government lawyers under the Justice Department’s corporate leniency program. Under the program, a corporation may quality for protection from criminal prosecution if it voluntarily reports its involvement in a crime and meets other criteria.
“We cannot but feel for Alfred Taubman and his family at this difficult time,” Sotheby’s chairman Michael Sovern said in a statement. “. . . None of our current employees was involved in or aware of a breach of the antitrust laws.
“Mr. Taubman has consistently maintained his innocence,” the statement said. “As his case is now pending before the courts, Sotheby’s will have no further comment.”
Goldman reported from New York and Muchnic from Los Angeles.
