Dark Side of the Boom

dark side of the boom

The Excesses of the Art Market in the Twenty-first Century

Georgina Adam

dark side of the boom First published in 2017 by Lund Humphries Office 3, 261a City Road London ec1v 1jx UK www.lundhumphries.com

Copyright © 2017 Georgina Adam isbn Paperback: 978-1-84822-220-5 isbn eBook (PDF): 978-1-84822-221-2 isbn eBook (ePUB): 978-1-84822-222-9 isbn eBook (ePUB Mobi): 978-1-84822-223-6 A Cataloguing-in-Publication record for this book is available from the British Library.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electrical, mechanical or otherwise, without first seeking the permission of the copyright owners and publishers. Every effort has been made to seek permission to reproduce the images in this book. Any omissions are entirely unintentional, and details should be addressed to the publishers. Georgina Adam has asserted her right under the Copyright, Designs and Patents Act, 1988, to be identified as the Author of this Work. Designed by Crow Books Printed and bound in Slovenia

Cover: artwork entitled $ made from reflector caps, lamps and an electronic sequencer, by Tim Noble and Sue Webster and One Dollar Bills, 1962 and Two Dollar Bills by Andy Warhol, hang on a wall at Sotheby’s in London on June 8, 2015. Photo: Adrian Dennis/AFP/Getty Images. For Amelia, Audrey, Isabella, Matthew, Aaron and Lucy Contents

Introduction 9 Prologue: Le Freeport, Luxembourg 17

PART I: Sustaining the Big Bucks market 25

1 Supply 27

2 Demand: China Wakes 51

Part II: A Fortune on your Wall? 69

3 What’s the Price? 71

4 The Problems with Authentication 89

5 A Tsunami of Forgery 107 Part IiI: Money, Money, Money 127

6 Investment 129

7 Speculation 149

8 The Dark Side 165

Postscript 193 Appendix 197 Notes 199 Bibliography 223 Index 225

introduction

When my first book, Big Bucks, the Explosion of the Art Market in the 21st Century, was published in 2014 the art market was riding high. All the talk was of when, not if, an auction would rack up a billion dollars in a single night. Those hopes were dashed in the following two years, which saw a distinct decline in the global market, from an estimated $68.2 billion in 2014 to $56.6 billion in 2016,1 due to a number of factors: weak sales in China, slowing economic growth globally, political uncertainty, and caution from buyers and more particularly vendors. The auction houses cut back on guarantees, which also had an impact on consignments. Reliable figures are difficult to come by in the art market, but auction sales – the most easily trackable – slumped by almost a third between 2014 and 2016.2 However in 2017 the market revived strongly, with much more positive results seen at auctions and art fairs. Profound transformations were continuing to impact the art trade, which was undergoing the process of consolidation and, at least until 2014, growth. Perhaps the most important change was its increasing polarisation and commodification, with the top players in the dealer sphere increasing in size and adding new outlets. Mean- while the erosion of the ‘squeezed middle’ continued, with a swathe of mid-market galleries closing or finding new models for their businesses. By late 2017, the gallery sector seemed to be hurtling towards the concentration of power – and of the biggest-selling artists – in the hands of just a few mega-players.

9 dark side of the boom Art fairs, which had been proliferating like condo towers in midtown Manhattan, started moving into a consolidation phase, with a growing gulf between the big groups such as Basel and Frieze, small, focused fairs such as Fog in San Francisco with just 45 dealers, and a soft middle. A few fairs folded; in Berlin, two merged. In what looked like a significant step, the powerhouse talent agency WME-IMG bought a stake in Frieze – possibly a step towards full acquisition. It was certainly a pointer to how the entertainment and art worlds were increasingly intertwining, particularly as a growing number of celebrities – James Franco, Miley Cyrus, Johnny Depp among them – were producing ‘art’. Enthusiastic high-profile art collectors include Leonardo DiCaprio, El- ton John, David and Victoria Beckham, Jay-Z, Pharrell Williams and Madonna, and their tastes and choices are obsessively monitored by their millions of fans. Considerable change came to the auction houses, notably with Sotheby’s hiring of Tad Smith as president and CEO in 2015. Coming from the world of media, entertainment and television, his mission was to shake up the firm after it had been attacked for ‘cultural malaise’ and poor performance by activist investor Dan Loeb, who, with two allies, won three company seats on the board. Smith’s most controversial move was certainly the surprise acquisition of Art Agency, Partners, the advisory firm started by Christie’s former contemporary art rainmaker Amy Cappellazzo and art advisor Allan Schwartzman. The deal was worth a potential $85 million, with an initial payment of $50 million and another $35 million to come, depending on performance. Two years on, the jury is still out on the eventual success of this decision. The deal triggered an exodus of senior specialists from Sotheby’s, matched by some departures from Christie’s. Confusingly for clients, some specialists ended up at their rivals, while others set up gallery/art advisory businesses. In 2016 Brett Gorvy, long-time contemporary art kingpin at Christie’s, left to go into business with dealer Dominique Lévy.

10 Introduction Musical chairs continued when Christie’s chairman Marc Porter left the company in 2015 to join Sotheby’s, took a year’s gardening leave then spent three months at Sotheby’s in 2017 as chairman of its newly created Fine Art Division – only to be wooed back by Christie’s. Mean- while two prominent Sotheby’s veterans, Melanie Clore and Henry Wyndham, established an advisory agency. Phillips continued to pick off the people it could, notably snaring Cheyenne Westphal, who had been head of Contemporary Art at Sotheby’s, as its new chairman. Movements between the public and private sectors – mainly in that direction – included Julia Peyton-Jones, former co-director of the Serpentine Gallery, joining Galerie Thaddaeus Ropac in London, and Philippe de Montebello, ex-director of the Metropolitan Museum of Art in New York, taking on a rather undefined role at Acquavella Galleries in New York. A shake-up in the auction world appeared possible with investment by Taikang Life, a Chinese insurance company, in 13.8 per cent of Sotheby’s shares in 2016. Taikang is run by Chen Dongsheng, a businessman who founded China’s second biggest auction house, China Guardian; an eventual acquisition of Sotheby’s would certainly turn it into the biggest player in the field. Post-war and contemporary art continued as the dominant sector, representing an astonishing 52 per cent of the market in 2016.3 A signi ficant move at Christie’s was the decision in 2017 to close its saleroom in South Kensington in London, which handled everything from mid-range furniture to silver, to concentrate on the high-end contemporary art sector and on the Asian market. The non-profit sector also reflected this increasing bias towards the new: according toThe Art Newspaper’s annual survey of museum attendance, ‘44 per cent of the more than 2,300 shows organized by 29 major US museums between 2007 and 2015 were dedicated to the work of artists active after 1970’.4 In the relentless battle for market share, artists’ estates suddenly became the focal point of value among galleries, which fought to bring in the best endowed. Sotheby’s muscled in – luring away the

11 dark side of the boom Rauschenberg Foundation’s chief executive Christy MacLear – leading to speculation that it was trying to encroach on what, until then, had been classic dealer territory. While the online sector continued to grow, representing 8.4 per cent of the global market in 2016 according to the annual Hiscox report, the online market’s predicted explosion did not take place, nor did the expected consolidation. Furthermore the amount spent remained stub- bornly low, with a whopping 79 per cent of buyers spending less than $5,000 per item when buying online, said the report. The day that multi-million-dollar sales of a Picasso or a Warhol would take place purely online still seemed far off, at least in 2017.5 However in summer 2017 Sotheby’s removed its buyers’ premium for all online purchases – a move designed to encourage new buyers into this sphere. On the other hand, the blurring of art and the luxury goods sector accelerated sharply. The fashion world drew on artists’ creativity to sell their wares; an example was the use of a Sterling Ruby tapestry as a backdrop to advertisements for Calvin Klein underwear. Artist–fashion collaborations ranged from W magazine featuring George Clooney wearing a startling black-and-white spotted suit by Yayoi Kusama, to more mass market offerings, such as Alex Katz’s ‘capsule collection’ with clothes retailer H&M. One egregious example at the top of the market was Jeff Koons’s 2017 partnership with Louis Vuitton, with a crass appropriation of well-known paintings by Rubens, Leonardo da Vinci, Van Gogh and other famous artists printed on handbags, with his trademark balloon dog hanging off one end and his initials on one side mimicking the LV logo. Another important trend was the impact of social media on art. The ability to put oneself centre stage with art in the background, posted as a selfie on Instagram, shifted the focus from the artwork to the user. No artist, museum or gallery can distance itself from the immense power of social media in making their story known; at the same time, producing social-media-friendly art certainly began to influence artistic practice.

12 Introduction Cellphone-friendly art drove the success of immersive installations such as Kusama’s Infinity Mirrors, held at the Hirshhorn Museum in Washington, with its glittering mirrored and pumpkin-filled rooms, which set records for attendance;6 before its move to Los Angeles’ The Broad, the private museum put 50,000 tickets on sale at $25 each, two months ahead of launch.7 The Japanese collective teamLab’s inter- active digital installation at Pace Gallery in London, with its swirling flowers and surging waves, was so popular that visitors had to book places.8 Damien Hirst’s Treasures from the Wreck of the Unbelievable in François Pinault’s two Venice ‘museums’ (for which one could read ‘showrooms’) in 20179 was another example of the ‘art-ertainment’ exhibition, with its combination of giant artworks and videos showing a fabricated salvage at sea, more like a theme park than an art show. All this was part of a wider shift, from product to experience, not only in the art world. The success of art fairs, biennales, gallery weekends and art-themed events contributed to this new, ‘experiential’ culture.

* * * *

In this book, I look behind the scenes at some of the excesses the explosion in the market in the twenty-first century has brought in its wake, notably those over the last few years. The active branding of art and artists as a commodity, the buying of art for investment or speculation, the temptations of forgery and fraud, conflicts of interest, tax evasion, money laundering, pressure to produce more and more art, changes in the way art is produced and sold are all part of the story. Revelations from the leaked documents of a law firm, known as the Panama Papers scandal, uncovered some murky deals, as well as the role of tax havens, used to hide art transactions – and ownership – from public scrutiny. Most of what I recount happens at the upper end of the market, and does not touch the bulk of the day-to-day art trade. Transactions

13 dark side of the boom at the top level are a tiny portion of the volume of the market, but represent a disproportionate part of its value. As the top prices are the only ones that hit the headlines, they are, misleadingly, thought to represent the market as a whole. But in fact works sold for over $1 million in 2015 were just 1 per cent of transactions. Those over $10 million were an even tinier fraction, but represented 28 percent of total sales.10 Nevertheless, the market’s light regulation, explosive growth in prices at the top level (coupled with the enduring issue of a lack of transparency), the portable nature of art and the difficulty of accurately assessing its value are all elements that have made it vulnerable to excess. Changes in structure, an increasing corporatisation of the art world and the impact of globalisation, new players and the internet have a huge effect, mainly in the upper reaches of the market. There are many people to whom I am deeply indebted for help in writing this book. Willing victims for my requests for interviews and information include Christian Viveros-Fauné, Cornelia Grassi, Vanessa Carlos, Olav Velthuis, James Butterwick, Pearl Lam, Ed Dolman, Stéphane Custot, Cristina Ruiz, Dr Nicholas Eastaugh, Dr Jilleen Nadolny, Laura Gilbert, Vincent Noce, Loretta Würtenberger, Dr Michael Savage, Dr Noah Charney, Dr Tim Hunter, Richard Nagy, Adrian Parkhouse, Lisa Schiff, Carlos Rivera, Tom Christopherson, Zhang Huan, Serge Tiroche, Christine Steiner, Diana Wierbicki, Stefan Simchowitz, Tim Schneider, Sterling Ruby, Detective Don Hrycyk, James Roundell, Mieke Marple, Scott Stover, Edward Winkleman, Philip Hook, Simon de Pury, Thaddaeus Ropac, Adam Sheffer, Mike Bruhn, Philip Dodd, Lisa Movius, Hadrien de Montferrand, Melanie Gerlis, Anders Petterson, David Arendt, Dr Roman Kräussl, Michael Short, Adriano Picinati di Torcello, Madeleine O’Dea, Kenny Schachter, Peter Brant, William Powhida, Asher Edelman, Donn Zaretsky, Kevin Lay, Jane Roberts, Valérie Cueto, Meridith Savona, Christopher McKeogh, Simon Hornby and Jacob Kleinman, while some did not wish to be named. I also want

14 Introduction to acknowledge the excellent work put in by my talented journalist colleagues around the world who cover the day-to-day business in the art market, notably Katya Kazakina, Kelly Crow, Scott Reyburn, the team at The Art Newspaper and many others. I am most grateful to my editor, Lucy Myers of Lund Humphries and to the copy editors. Any errors, naturally, are mine alone. Finally, my thanks as ever go to my husband Christopher for his unfailing support and love.

NOTES Currencies: When a different currency is necessary for comparison purposes, the historic converter tool at oanda.com was used unless a conversion was already provided by the vendor or buyer.

Reports: There are a number of reports cited in this book. None is perfect, due to the opaque nature of the art market, notably the dealer sector. A sign of the difficulty in quantifying the trade is that the two main ones, by Pownall and McAndrew, give very different figures for the size of the art market in 2016: $45 billion and $56.6 billion respectively, based on differing methodologies. The reports nevertheless are very useful, even if imperfect, notably for detecting trends in the market.

Legal action: A number of the cases I cite were continuing at the time of going to press. All information on these cases was finally checked on 22 September 2017.

Auction prices: Auction houses publish pre-sale estimates, both for indi vidual works of art and for the final results of the sale, without taking into account the buyers’ premium. These fees vary from 12.5 per cent to 25 per cent or more depending on the hammer price, and depending on the auction house. In this book I have given totals with premium.

15 dark side of the boom Definitions of sectors: I have taken sector definitions from Clare McAndrew’s The Art Market 2017 – post-war and contemporary, artists born after 1910; Living artists, those alive in 2016; Modern, artists born between 1875 and 1910; Impressionist and Post-Impressionist, artists born between 1821 and 1874.

16 Prologue LE FREEPORT, LUXEMBOURG

17 September 2014: On a hot autumn day, security was tight around Le Freeport in the tiny European duchy of Luxembourg. A freshly built, armoured warehouse was being opened by the Grand Duke himself, accompanied by his most senior ministers and a bevy of high officials. For the lucky ones on the guest list, arriving meant navigating a still- unfinished access road near Findel airport, the women tripping in their high heels on the uneven asphalt. After an identity check, guests moved through steel turnstiles and past walls topped with barbed wire into the prison-like building. Once inside they were greeted with all the trappings of a smart vernissage and the buzz of conversation as local notables rubbed shoulders with art dealers, auctioneers, collectors and bankers from around Europe, all watched warily by security men perched high up above the festivities. As cameras flashed and drinks circulated, the Luxembourg Philharmonic played a ‘Freeport’ overture, specially composed for the occasion. Blue and pink light played on the walls, somewhat soften- ing the austere grey tones and factory-like walkways. At one end of the lobby, a newly commissioned artwork stared down, a series of portraits deeply etched into the walls, by the artist Alexandre Farto. Un- der their impervious gaze, guests gathered around the stage to listen to the Grand Duke’s speech. The Grand Duke’s entourage included the deputy prime minister and the ministers of finance and culture – a sign of just how important the opening was for Luxembourg, whose immense wealth is built on discreet financial services to the uber-rich. One by one, the speakers hammered home the consequences for Luxembourg of the project: ‘Le Freeport will significantly contribute to the diversification of the Luxembourg economy, enriching and complementing both its logis- tics platform and its financial centre,’ said Deputy Prime Minister Etienne Schneider.

19 dark side of the boom

Among the speakers was a neatly dressed, compact, middle-aged man: Swiss businessman Yves Bouvier, the main investor in the building and already known throughout the art world as the ‘Freeport King’. This was his second such facility, after one he had opened in Singapore four years previously. His art shipping and storage company Natural Le Coultre was a major world player, and he was the biggest tenant of another such store in Geneva, which holds billions of dollars’ worth of art.1 At the time Bouvier had his fingers in many other art-world pies – from founding an art fair in Russia, investing in galleries in Geneva, Paris and Singapore and creating a projected art hub on a Pari- sian island to owning an art conservation and authentication service in Switzerland. ‘Le Freeport Luxembourg squarely addresses the exact- ing demands of the globalised art world,’ said Bouvier in his speech. ‘For collectors and investors there is no better place to store, show and trade their artworks and other valuables.’ His new project was specifically designed to hold such high-value goods. Boasting steel-reinforced concrete walls, the building is just 200 metres from the airport, ensuring that paintings, sculptures, wine, diamonds and precious metals can be jetted in and speedily tucked away behind five-tonne steel doors and an impressive security system. Even outsize works of art can easily be stored – manoeuvred in through jum- bo 2 x 3 metre doors and kept in 8-metre-high rooms. As well as art the repository can also hold 700,000 bottles of wine in perfect climate-controlled conditions. Luxembourg’s huge wealth, boasting the second highest per capita income in the world after Qatar,2 stems from banking, the largest sector of its economy, and notably investment: according to Nicolas Mackel, CEO of Luxembourg for Finance, assets under management in investment funds represented a mammoth €3.35 trillion in 2013.3 The Grand Duchy had spent years trying to block a European Union law on tax transparency. However in early 2014 it had caved in and agreed to open up the secrets of its banks, accepting automatic sharing of data – none of which suited those who wanted to keep

20 Prologue their tax affairs under wraps. Fearing an exodus of its well-heeled clients to Switzerland,4 the Grand Duchy had been exploring other services it could offer them, to keep them in the country. Among these was art storage, exploiting Luxembourg’s strategic position between France, Germany and Belgium and its excellent transport links. This plugged into a shift in how the uber-rich were investing their money, by increasingly accumulating tangible assets such as wine, art and vintage cars, particularly after the global financial crisis of 2008–9, when interest rates on other investments plunged to rock bottom.5 But they needed somewhere safe to store their acquisitions, and in addition while in these high-security warehouses, goods could be sold and resold within their armoured walls, with no one the wiser and with no tax payable. Also fuelling business in these freeports was the growing trend for buying art purely for investment and speculative purposes. Works bought by art funds and traders, even by collectors, could sit quietly in the vaults, hopefully accumulating value until the right time to sell came along. There could also be more nefarious motives at play. As cash became increasingly ‘hot’, with enforcement agencies constantly on the look-out for signs of money laundering, so tangible assets, sometimes held by nominees, became a safer way to stash dubiously acquired wealth. However, none of this was discussed on that sunny afternoon in Luxembourg, as the champagne glasses clinked and canapés were passed around. But only 18 months later, a bombshell hit the players of this cosy world. In February 2015 Yves Bouvier was arrested in Monaco, accused of fraud and money laundering. He spent three days in prison before being released on €10 million bail. It was the opening salvo in a titanic battle, which continues as this book is written, between Bouvier and his former client, and alleged victim, Dmitry Rybolovlev, a Russian billionaire, owner of Monaco football club and worth an estimated $10 billion in 2015.6

21 dark side of the boom

Over the next few months, it emerged that for at least ten years, Bouvier had built up a veritable treasure trove of art for Rybolovlev. The works included Picasso portraits, Rodin sculptures, paintings by Rothko and Modigliani and the last Leonardo painting on the open market at the time of sale, Salvator Mundi (1500), all of which were bought for about $2 billion and held in offshore family trusts (see Appendix). Few at the time knew that, as well as running his shipping company and freeports, Bouvier was also acting as an art dealer at the highest level. The transactions he handled were almost all secret, made outside art galleries, or negotiated through an auction house’s private sales channel. As a result, pricing was completely opaque, and according to Rybolovlev, he only discovered that the mark-ups on the works were gigantic after an art advisor revealed that the $118 million he had paid for Modigliani’s Nu couché au coussin bleu (1916) was wildly higher than the $93.5 million the previous owner had sold it for. Rybolovlev accused Bouvier of fraud, by misrepresenting his role by pretending to act as an agent, not as the seller. Bouvier insisted he was acting as a dealer, that this was clear to both sides, and that he was entitled to make what he could – and affirmed that without his knowledge and contacts, the Russian would never have been able to buy the works in dispute. His version is that Rybolovlev wanted to buy easily moveable assets and was not overly concerned by the prices he was paying.

* * * *

The Bouvier/Rybolovlev combat certainly should not stand as a para digm for the whole art market. This is an exceptional case of works of art bought and sold for prices outside the visible market in the multi-millions, by a billionaire Russian and a dynamic entrepreneur. In no way is this typical of the hundreds of thousands of transactions that occur every day around the world in fairs, auction houses and art galleries, or in artists’ studios.

22 Prologue

Freeports, high prices, opacity: these elements in the dispute do not imply wrongdoing, but can be found in other excesses at the top end of the art market, which will be examined in the following chapters. In the context of the industry’s huge growth this century, I look at issues of supply and demand, where artists and galleries are under pressure to produce, or over-produce, enough to feed an expanding series of events around the world. The uptick in faking and forgery, stimulated by the rise in prices, is also considered, as well as the increased pressure on authenticators, again triggered by increases in values, where a ‘yes’ or a ‘no’ can make the difference between either millions of dollars or a few thousand at best. There are also the financial aspects to note: investment in art and speculation, as well as more nefarious practices, such as price manipula tion, tax evasion or avoidance, money laundering, stashing stolen goods and general lawlessness. As a result of these, there have been increasing calls for more regulation of the art market, which until now has seen only light oversight. In the final chapter, I will look at how this could be done – and whether the various players in the market really want this to happen.

Part i sustaining the big bucks market

Chapter 1 supply Over-production is a serious problem; I would say the limit was reached in 2013 or 2014. And it has got to change, because it could eventually destroy confidence in the contemporary art market. Stéphane Custot, art dealer and gallerist1 November 2016: The taxi to Zhang Huan’s studio in the suburbs of southwest Shanghai takes over an hour, and deposits me in front of a barred entrance, with a gatekeeper’s hut inside. As the gate slides back, a uniformed guard lets me in; I wait. Soon the studio curator and a translator arrive, and then a photographer, who records every detail of my visit, followed by Zhang Huan himself. Neat, lithe, dressed in his trademark high-necked sweatshirt, glasses propped on his peaked cap, Zhang moves with cat-like grace as he shows me around his domain. Zhang bought the site, formerly a state-owned hydraulics machine factory, in 2005, after his return to China following 20 years in New York. The sheer scale of the factory/studio begins to dawn on me as we step over train tracks and past three wrecked carriages, one propped up against buffers – salvaged from the 2008 Sichuan earthquake. As our little group sets off, we see vast, neatly swept hangars displaying Zhang’s characteristic ash paintings and further on, a cathedral-like workshop houses a huge cow-hide sculpture, Hero (2009). Motioning to a giant bear and her baby made of flawless polished stainless steel, Zhang informs me that it is destined for a casino hotel in Vancouver. An architectural model shows a store he is creating in partnership with the jeweller I Do, as a ‘concept/shop/museum’ with a total budget of $16 million. Other hangars house equally huge works: the bearded head-and- shoulders Q-Confucius No. 2 (2011), part of the Q Confucius exhibition held at the Rockbund Art Museum, Shanghai.2 A darkened room contains models for a forthcoming video, featuring the face of a menacing King of Hell lapped by flames; another room has ancient Chinese stone coffins and the stone markers put on burial places. Zhang is collecting them for display in a planned ‘Ash Museum’; he is a practising Buddhist, and the religion infuses much of his work. One of the buildings, he says,

29 sustaining the big bucks market contains a library housing both Chinese and Western material, which is accessible to students. Outside, waterways run through vegetable gardens and around a cage of inquisitive monkeys. Zhang’s reputation was established in the 1990s with performances, some of them extreme, such as 12m2 (1994), which involved him sitting in a stinking village toilet at the height of summer, covered with honey and fish oil amid swarms of flies. Among the best known of his pieces are To Add One Metre to an Anonymous Mountain (1995), a photograph of naked bodies stacked one on top of another, and Family Tree (2001), a series of photographs of his face covered with increasingly dense calligraphy, denoting family relations, until it is completely blackened out. But while performance was a major part of his early practice, today he and his studio produce mainly painting, sculpture and video, sometimes on an immense scale. In 2015, an ash painting shown at Pace Gallery in New York, June 15, 1964, was 37 metres long and 2 metres high: it took three years to make, with 10 assistants working on it at a time. Zhang employs some 80 assistants in the studio, but in the case of such large-scale projects (he says he makes about two a year) this can rise to 200. ‘They stretch and prepare the canvases, separate the ash, apply plaster to sculptures, order materials, work with silicone, but I do the final creation,’ says Zhang. I ask him how many artworks he produces a year, but he doesn’t answer the question, simply respond- ing, ‘I am under no pressure to produce work. I follow my own ideas.’ I certainly do not see many assistants during my visit, although one is scraping away at what looks like a bone in one workshop, while a group are working on some plaster in another. Zhang’s studio is large, but the factory-like aspect of his practice is by no means unique in China. Other artists, mainly in Beijing, have similarly large studios, often in former factories, leading to accusations of formulaic mass production. Zhang Xiaogang, for example, according to an interview in the South China Morning Post 3 has ‘lost count’ of his ‘Bloodline’ series. These expressionless, stiffly posed family

30 Supply portraits that made his reputation in the early 2000s can command immense prices: Bloodline: Big Family No. 3 (1995) made US$12.1 million in Hong Kong in 2014.4 As I take my leave, Zhang asks me, ‘Have you ever seen a studio this big?’ ‘No,’ I say, ‘but I am visiting Sterling Ruby’s in Los Angeles in two weeks’ time. I believe it’s just as big.’ I can see he is miffed, disbelieving. He asks me who Sterling Ruby is, and asks me to write out his name.

* * * *

Later that month I ring the bell at an unmarked door in Vernon, an industrial city to the south of downtown Los Angeles. Almost no one lives in Vernon, which is mostly given over to warehouses and factories; huge articulated trucks thunder across railway lines embedded in the streets. This is where the Californian artist Sterling Ruby has his studio, housed in a former truck factory. Again, I am astonished by the sheer scale of the place, which covers four acres – even though the original vast hangar has been divided up by temporary walls. In one area are lines of racks of clothing, while long ‘soft sculptures’ are laid out on the floor. In another, shelves are heaped with rolls of fabric while a hoist rope, reaching up 37 feet, suspends sculptures. Oversized glazed ceramics are crowded around kilns; a series of welding tables from the original factory have been turned into artworks, with splashes of the original weld still visible, while Ruby has added in disparate objects – a plate, a pipe. Laid out across one workshop floor is a huge succession of figures in Stars and Stripes fleece, their big-footed legs overlapping. The dappled abstracts Ruby is often associated with hang on the walls. Outside there are a number of courtyards; in one stands a forklift truck, in another parts of a chopped-up submarine, while blue tarpaulin cloaks a refurbished bus once used by a Californian prison and a giant

31 sustaining the big bucks market canary-yellow ‘electric chair’ stands bleakly against a wall. A battered car is propped up, sitting on a pipe. Ruby, impeccable and athletically dressed in an orange sweatshirt and green baseball cap, tells me he has between 12 and 20 assistants in the studio, where he moved in 2014. ‘I was paying a lot for storage of artworks, and I thought, why not have somewhere to keep everything together. This is where I can realise my dreams!’ he said. If the studio complex is large, then so is Ruby’s packed exhibition schedule – with 18 exhibitions in 2016 alone, demanding hyper-prolific output to supply them. His practice ranges from quilts and ‘vampire mouth’ soft sculptures through metal ‘stoves’, ceramics, video, photography, flags and abstract paintings to towering stalagmites made of shiny urethane. ‘Pro- duction is not a problem, but I never make work specifically for shows,’ he tells me. And then there are his fashion designs, which include paint-splattered ‘work wear’ produced from offcuts of other projects, and a collaboration with fashion designer Raf Simons, whose flagship store Ruby designed. Images from Ruby’s paintings on dresses and a coat were used for Simons’s first haute couture collection for Dior in 2012. As one of the hottest artists in the contemporary art scene, Ruby has been unabashedly commercial in driving his career, burning through galleries. At the time of my visit he was represented by Foxy Production, Gagosian, Sprüth Magers, Taka Ishii and Xavier Hufkens, having left the mega-player Hauser & Wirth in 2015.

SUPPLY AND SIZE – WHAT THE MARKET WANTS

These behemoth-like studios reflect two aspects of art production in the second decade of the twenty-first century: supply and size. It would be wrong to assume that ‘huge’ art is a modern pheno menon; centuries-old artworks such as the Sistine Chapel in Rome, the Medici gallery in the Palais du Luxembourg in Paris or the great Ba- roque palaces in St Petersburg were all vast undertakings. But a number of elements in today’s world have stimulated the need for large-

32 Supply scale artworks. Public institutions are pressured by the need to attract the public with a ‘wow’ factor; huge new private museums want im- pactful, striking works; and even the increasing magnitude of buildings in urban spaces has demanded scaled-up public projects.5 Exam- ples range from the ‘Monumenta’ series of installations in the Grand Palais, Paris, or Tate’s Turbine Hall projects in London to Christo’s 3 kilometre Floating Piers project across Italy’s Lake Iseo – all part of an event culture that demands BIG. This appetite for size is mirrored by the growth of the major art galleries, as illustrated by Hauser & Wirth’s massive Los Angeles space, a sprawling, 100,000 square foot former flour mill converted into galleries, a sculpture garden, restaurant and shop. Artists need to be able to make work to fill these spaces; they need assistants to help, and heavy lifting gear and forklift trucks to move it around. As Ursula Pasero has noted, ‘Many large studios are incorporated and registered as a company and need a turnover of millions of euros or dollars simply to sustain themselves.’6 Outsiders to the art market often find it difficult to comprehend the importance of supply in the art market. This is not an industry like most others, where the problem lies in finding buyers for your product. The problem here is to find desirable works for sale, notably on the secondary market. In the primary market, there is a theoretically endless supply as living artists create new work. The reality is more complicated. Galleries control the market for their artists, ‘rationing’ it in order to maintain prices and high demand.7 Only a small number of artists account for the bulk of the market and so the pressure on them to produce enough for their galleries can be intense. In the case of the secondary market for art – meaning its resale, along with anything by a dead artist – the inventory is limited, and cannot be increased (at least, not legally, although plenty of fakers try). Museums and private collectors have the means to constantly cream off the best works, and while collectors can and do resell, museums do so more rarely – in Europe, many are legally forbidden to do so.

33 sustaining the big bucks market The art market almost doubled between 2005 and 2015 when it reached $63.3 billion, before falling back to $56.6 billion in 2016, for both for sales at auction and those through dealers (though the latter are trickier to evaluate). And yet this extraordinary leap in size of art sales is only part of the story; the most astonishing aspect is how contemporary art has come to dominate the market today, with growth in demand from many different sectors, and not just for buying and selling. ‘The cross-pollination of celebrity culture, fashion and glamour has given contemporary art in general, and art events in particular, a promise of enjoyment, excitement and the promise of exclusivity,’ writes Marta Gnyp.8 There is now a proliferation of books, websites, articles devoted to artists and exhibitions in magazines, fashion and luxury goods tie-ups, plus the rapidly expanding calendar of biennales, art fairs and displays around the world. Art is used to sell real estate, to brand a hotel, to give a new building project or a restaurant the most hip and ‘now’ credentials. At the Art Basel Miami Beach fair, alongside the 20 or more satellite events, even companies such as Uber, Airbnb, Volvo and Mazda, as well as a gourmet food company, Dean and DeLuca, have put on art-inspired projects, while luxury goods firms also tout their products with art. All this needs supply. And possibly one of the main reproaches levelled against today’s art market, particularly the higher-end segment, is that of over-production, with some well-known artists locked into producing more and more – often similar – works, just to satisfy the demands of all these events. ‘You can only get so much out of a single artist, and the market wants repetition rather than innovation,’ says New York-based journalist Christian Viveros- Fauné.9 ‘Over-production is a serious problem; I would say the limit was reached in 2013 or 2014,’ says Stéphane Custot. ‘And it has got to change, because it could eventually destroy confidence in the contemporary art market.’10

34 Supply

’TWAS EVER THUS?

The issue of producing enough art to supply demand, and outsourcing production, is by no means new. Historically, some famed artists had large studios, with numerous assistants painting backgrounds and clothing while the master completed the hands and faces. However, according to art historian Michael Savage, the number of assistants was nowhere near today’s count; ‘There’s not a lot of academic research on the subject but I think the key constraint was physical space,’ he says. ‘We know where Rembrandt and Rubens worked, and you couldn’t fit in dozens of minions. There are some records of apprentices, but that doesn’t include family members helping out, or hired help. The artists are also likely to have been fairly flexible, adding labour at busy times, if other early cottage industries are anything to go by.’11 All the same, Lucas Cranach the Elder and his workshop produced hundreds of portraits of Martin Luther in the early sixteenth century: ‘We can get an exact idea of Luther by means of the almost five hundred pictures, while we have not a single portrait of Luther’s predecessors, John Wycliffe or John Hus,’ according to Professor Martin Warnke.12 Pieter Brueghel the Younger’s large Flemish workshop churned out dozens of copies of his father’s paintings, in one case making 30 render- ings of his father’s Adoration of the Magi in the Snow (original painted in 1567). J.M.W. Turner was highly prolific, producing in his lifetime 550 oils, over 2,000 highly finished watercolours and an astonishing 30,000 works on paper.13

TOO MUCH ART?

When we read of how many works some twentieth-century artists pro duced – for example, Andy Warhol’s estate transferred over 100,000 works of art to the Andy Warhol Foundation after his death, while Christian Zervos’s 33-volume catalogue raisonné for Picasso lists 16,000 works – it is worth remembering that the production of multiples has

35 sustaining the big bucks market always been a way of democratising the market and making art more affordable, as well as providing income for those artists who produce major works slowly. Damien Hirst has eagerly embraced making multiples, with a vast number of items available at his Other Criteria store in London, from teacups to chairs, from tote bags printed with butterflies at under a fiver to a full set of Cathedral prints, each of the eight in an edition of 50, retailing at £204,000. At the other end of the spectrum are his spot paintings, almost all made by assistants, which numbered 1,435 in early 2017.14 However, Hirst’s over-production, plus his 2009 sale Beautiful Inside my Head Forever, which generated over £40 million in sales,15 had a chilling effect on his market, and subsequently prices slumped, sometimes by a half. ‘As an investor, which I am, before undertaking such an investment you have to really make sure that the production is somewhat under control,’ dealer David Nahmad has told the New York Times. ‘The market doesn’t like chaos and the market doesn’t like confusion . . . How many units exist? How many butterflies? How many spot paintings?’ he asked.16 ‘The phenomenon of over-production was not created in the last ten years,’ says New York dealer Adam Sheffer; ‘I would say it dates back to the 1980s when artists suddenly became famed and successful. This was a new thing for them, the notion of an artist as a celebrity, they could make a lot of money . . . some started cranking out paintings and in the process some damaged their market quite seriously.’17 And according to London dealer Vanessa Carlos, ‘The galleries push for stock, stock, stock. Sometimes the artists become quite greedy or megalomaniac or just simply want to keep their galleries happy. Over-production is one aspect, but the other thing that concerns me is the quality of the art. There just aren’t enough conversations with the gallerist saying, “Actu- ally, that’s not good enough. That’s not interesting.” It’s just: “Yeah thanks, give it to me, beautiful, you’re a genius.” And I am seeing a lot of that.’18 Any visitor to a major art fair will be struck by the similarity of offerings by the bigger galleries. Most will feature a mirrored sculpture

36 Supply by Anish Kapoor (the ‘Pottery Barn of Void’, quipped one dealer, referring to a US homewares chain), a stack of bicycles by Ai Weiwei, a leaping hare by Barry Flanagan, some photographs by Gilbert & George with a few rude words and the ubiquitous pumpkin by Yayoi Kusama. Here, again, the supply seems to outstrip demand, and on Artsy no fewer than 21 pumpkin sculptures were on offer in late 2016. ‘There definitely is an issue of volume,’ agrees London dealer Cor nelia Grassi. ‘If one were to do a catalogue raisonné of certain artists you would find that they have done hundreds of this, hundreds of that. With great artists, you feel that there is a young style, there’s a middle style and there’s a late style. What you’re finding today is that the young style, if it’s successful, is being carried through for a very long time.’19

PRINTING MONEY

What has certainly facilitated over-production is today’s technology, coupled with the fact that artistic practice embraces today’s media in all its forms. An interesting example is that of the American Post- Conceptual artist Wade Guyton, whose digital paintings on canvas are made using an oversize printer, a high-tech Epson Stylus Pro 9600. With it, he creates huge letters, such as ‘X’ and particularly ‘U’, on black backgrounds, along with printer error marks, often with images of flames. His career’s rapid upward trajectory saw him included in Daniel Birnbaum’s curated show at the 2009 Venice Biennale and then in a show at the Whitney Museum of American Art in 2012–13.20 By then his work was topping $1 million at auction, and in 2013 a record was set at Christie’s New York when his Untitled (2005), made on an Epson Ultrachrome inkjet on linen, sold for $2.4 million.21 When Christie’s rainmaker Loïc Gouzer included another Guyton work, Untitled (Fire, Red/Black U) (2005), in a ‘curated’ sale mixing con temporary and modern works at the height of the market in May 2014, Guyton apparently tried to stymie the sale. The inkjet on linen carried

37 sustaining the big bucks market an estimate of $2.5 to $3.5 million, and a third party had guaranteed the sale, reportedly for $4 million.22 The artist was apparently so disgusted by the high price that he printed multiple copies of the work from the original disk and posted them on Instagram, with the suggestive handle ‘burningbridges38’, to show how easy it was to make many more. Did this have any effect? It is impossible to know if the final price would have been higher without his intervention, as the work did sell, but for $3 million (without fees). According to one Instagram comment on Guyton’s feed: ‘I was privy to some banter from some of the collectors after the auction and they were f**king LIVID about this.’ If the guarantee was indeed for $4 million, then the third-party guarantor probably lost money. Never- theless, two days later, a comparable work by Guyton from 2006 sold for almost $6 million at Sotheby’s.23 Guyton then gave each of his five dealers – Friedrich Petzel, Gió Marconi, Gisela Capitain, Francesca Pia and Chantal Crousel – almost identical black paintings, to sell at Art Basel in June. Each was priced at $350,000, and all were announced as sold on the preview day, in an illustration both of the difference between gallery and auction prices, and of the strength of his market in that boom year. But while Guyton tried, and failed, to rein in the market in 2014, it seemed to correct itself after 2016, and in May 2017 a typical ‘U’ work, Untitled (2005), sold in New York for just $670,000.24 ‘At one point,’ says the advisor and auctioneer Simon de Pury, ‘there was so much supply that the auction houses had really long waiting lists of people wanting to offload works. The problem was that prices climbed too quickly and everyone jumped on the bandwagon but then wanted to cash out. And the auction houses needed to manage the market – they didn’t want to accept too much, and accelerate the phenomenon of the artist being seen as failing.’25

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MONEYBAGS?

Greed and naïvety probably also played their part in the most emblem- atic example of massive over-production, and one which ended badly; that of the young Ghanaian artist Ibrahim Mahama. Mahama was virtually unknown to the art world and had never been exhibited out side his native Ghana until speculator Stefan Simchowitz (see Chapter 7) discovered his work, consisting of draped jute sacks, on the internet, according to the subsequent lawsuit he filed in the name of his company Simcor.26 Simchowitz contacted Mahama through Facebook and in 2013, he and Dublin art dealer Jonathan Ellis King each paid the artist £45,000 for six pieces of jute coal sack material. Two were to be kept intact and would be used for the background to a show; the other pieces would be cut up into smaller, unique artworks in three separate sizes, stretched and mounted, and then authenticated by Mahama. It was agreed that Simchowitz and Ellis King would then sell them. The jute material arrived in Dublin and a fabricator, Dylan Atkins, was hired to cut it up and attach it to the stretchers. Over 294 pieces were made, and Atkins received $67,000 for his trouble; Mahama visited Dublin and signed all of them. During an exhibition at Ellis King Fine Art in Dublin, 27 pieces sold at about $16,700 each.27 For the two investors, it was a great success, and they kept the rest of the pieces, which they valued at about $4.45 million according to court papers. By then Mahama’s star was rising fast – he was commissioned to make one of the largest installations at the 2015 Venice Biennale, with the outside wall of the Arsenale draped with his jute sacks. He was also shown in London at the Saatchi Gallery’s Pangaea II show of new art from Africa and Latin America.28 But things turned nasty. Apparently shocked by the difference between what he was paid and what Simchowitz and Ellis King stood to gain from their investment, Mahama publicly disavowed the works, saying that, signed or unsigned, the remaining pieces were not, in

39 sustaining the big bucks market fact, authentic artworks. The investors took Mahama to court, accusing him of selling other works secretly, of rejecting the authenticity of the works he had signed, of reneging on their contract, and also of dispar- aging them to other artists. Ibrahim Mahama fought back with his own lawsuit, rejecting almost all the claims by Simchowitz and Ellis King, saying they had ‘mutilated’ his work by cutting it up into around 300 pieces, for which he had not given authorisation. He invoked the Visual Artists Rights Act of 1990, which protects an artist from mutilation or modification of an artwork. It all ended with a confidential settlement, with each side paying costs and no appeal possible.29 The whole story shows one of the potential hazards of treating contemporary art as an investment vehicle (see Chapter 3) and demonstrated that the creator of these ‘assets’ was able, with a single statement, to render them worthless. While Simchowitz and Ellis King had not made a relatively huge investment in Mahama’s work, the subsequent lawsuits must have been expensive, particularly as each side agreed to pay their own costs. And indeed, the fact that a living artist can deny authorship of a work is one of the very reasons that has discour- aged art funds from investing in contemporary art.

GOING CLEAR

A few artists stepped back from the system entirely; one example was the German Anselm Reyle. His works, particularly those made of crinkled, coloured foil mounted in a glazed frame, were hot property just before the global financial crisis of 2008. At its height, Reyle’s studio employed 50 assistants and was costing him €800,000 a month to run. He produced prolifically and there was plenty to sell; in 2008 no fewer than 17 works went under the hammer, with one making $313,000.30 Christie’s owner François Pinault was an avid collector. But after 2009 his work went out of fashion; Reyle himself said, ‘By 2008, it was cool if you had flashy art on the wall, and after 2008 it was vulgar.’ Prices collapsed or works failed to find buyers at all at auction.

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‘The whole situation was surreal. And not necessarily just pleasantly so; it wasn’t that I was happier. Not at all. And the hype where auction prices suddenly became extremely expensive also brought unpleasant developments: complications with galleries, for instance,’ he said in an interview at the time. ‘I am looking for a place where I can develop my work, but not by producing more, already well-known, pictures.’31 In 2014 Reyle announced that he was taking a break, closing his studio and stepping away from the art world. Reyle did finally return to making art, with a new departure however: colourful ceramic pieces, shown at his dealer Contemporary Fine Arts in Berlin in 2016.32

VALID ARTISTIC PRACTICE OR PLAGiARISM?

One aspect of the art market in the last few years, perhaps partly caused by the relentless demand for supply, has been appropriation. Some critics have castigated this as simple plagiarism, representing a break- down of creativity and even sheer laziness. Appropriation has a long history, from Marcel Duchamp’s urinal, Fountain (1917), to the American artist Elaine Sturtevant’s remaking of Andy Warhol’s Flowers in the 1960s through to Richard Prince’s photographs of Marlboro advertisements in the 1980s and 1990s. The practice of appropriation ranges from paintings or works of art made from existing photographs (as seen in the work of, among others, Luc Tuymans and Glenn Brown); photographing existing paintings (Louise Lawler, Candida Höfer, Thomas Struth); photographing advertising (Richard Prince); creating sculpture with ready-made objects (from Pablo Picasso to, for example, Helen Marten), or sculpture inspired by a photograph (Jeff Koons), and videos using already existing film (numerous artists include Christian Marclay and Cory Arcangel). For most, it is a significant part of their practice, but for some it has been over-used and arguably might be seen as a sneaky way to piggy-back onto someone else’s ideas.

41 sustaining the big bucks market

The New York writer and former gallerist Edward Winkleman sees appropriation as a significant way that artists function in today’s world: ‘Our electronic devices are the new external “hard drives” for our brains. Our cell phones, computers, tablets, etc., hold the information we otherwise would need to take up brain space to memorize,’ he says. ‘So if we think of any thought that pops into our “brain” (whether internal or external) as our own idea then who’s to tell me it’s not mine?’ And he continues: ‘Any image or text that infiltrates your world (not just your external brain space) uninvited (such as on billboards, etc.) is also “yours”.’ He cites the street artist Banksy: ‘Any advert in a public space that gives you no choice whether you see it or not is yours.’33

SEE YOU IN COURT

Sourcing images, ideas and inspiration from the internet has had an inevitable consequence: the owners of the originals have fought back, seeking at least acknowledgement of their work. As a result there has been a sharp uptick in the number of lawsuits for breach of copyright over the past few years. The race to court has been accelerated by both the extraordinary prices paid for art, meaning the potential awards are higher, as well as an increasingly litigious environment with lawyers, in the US at least, prepared to fight on a ‘no win, no fee’ basis. ‘One of the main challenges in the art market in the last few years, from the legal point of view, has been around issues of copyright,’ notes lawyer Tom Chris- topherson, Head of Art and Law Studies at Sotheby’s Institute in London.34 ‘Digitisation of art means that people can use, re-use and re-re-use each other’s art with ease. And now cases seem to be coming out almost on a weekly basis, mainly in the US.’ One landmark case was the Prince vs Cariou lawsuit, which played out in New York courts over five years, between 2009 and 2014. The case concerned a series of photographs by Patrick Cariou, published in 2000 in a book about Rastafarians,35 which Richard Prince appro-

42 Supply priated to make a series of 30 paintings, Canal Zone (2008). They were offered by his dealer Larry Gagosian, and eight sold for a total of $10.48 million. Seven more paintings were exchanged for unspecified artworks, valued between $6 million and $8 million.36 Cariou brought a copyright infringement suit, but Prince’s lawyers argued that the works were ‘fair use’ and ‘transformative’, in that the artist had indeed used Cariou’s photographs but added his own com mentary, so turning them into a work of art that was recognisably his own. Cariou won in the first instance, but lost after an appeal in 2013. The appeal court ruled that 25 of the works were indeed ‘transformative’; it sent back the other five to the lower court to determine whether they were also transformative.37 Unfortunately for clarification of the legal question, Cariou and Prince then settled in confidential terms, meaning that the actual definition of ‘fair use’ and ‘transformative’ was never completely established. ‘The question posed, in various ways under different legal systems,’ says Christopherson, ‘is whether a work of art qualifies under one of the exceptions which allow you to make copies without breaching copyright, through parody or commentary or being transformative into a new work of art? When an artist first took an existing work for re-use, was he trying to copy it or was he trying to do something else, genuinely? So you’re not only looking at the art itself. You’re trying to work out what the artist was thinking . . . and legal processes struggle to work out what someone was thinking.’ He gives examples such as Koons, Prince and Tuymans: ‘Here you have an artist saying to another artist, “You just ripped me off,” particularly photographers finding their works being taken by people like Koons who put it into a different medium and saying, “Well, it’s new.” And if that doesn’t work they’re saying, “Well, I was making a joke or criticism of it.” If that doesn’t work they say, “Well, I’ve changed it.” So in the end you have a completely highly subjective process where the judge, quite often in practice an American judge, has to decide whether a work of art has been sufficiently transformative or not.’

43 sustaining the big bucks market

The key to this issue is the very nature of the online world, where the public aspect of social media has blurred the notion of authorship of an artwork. The internet provides a ‘digital archive’ of images and creativity which the consumer – or ‘prosumer’, who consumes and produces at the same time – can access, download, copy and paste, manipulate and turn into a work of art. Prince himself has said, ‘It’s almost like [the internet] was invented for someone like myself . . . It’s like carrying around a gallery in your pocket . . . Everything became easy.’38 The best illustration – either of his lack of originality or of his ground-breaking use of social media, depending on your opinion – is the Instagram-based New Portraits (2014). These consist of screen-grabs of other people’s images, with Prince’s only intervention being to add comments and emojis. He mainly features young and scantily dressed women, some celebrities, such as Kate Moss; he deletes some of the original comments, pushing his own up the screen. The images are then blown up and inkjet-printed onto six-foot canvases. In 2014 38 of the portraits were shown at his former dealer Gagosian,39 priced at about $90,000 each. Ten were bought by the Lebanese retail mogul Tony Salamé and were hung in the luxury boutiques he owns in Beirut (yet another sign of the blurring of the worlds of art and luxury goods). Prince did not contact the subjects of the images, nor did he ask permission to use them. He has faced lawsuits for copyright infringement, notably one brought by photographer Donald Graham for unauthorised use of an image, in this case Rastafarian Smoking a Joint (1996), and another by a makeup artist and model, Ashley Salazar, when she discovered that Prince had appropriated a mirror selfie of her, decorated with cat memes. The lawsuits also targeted Gagosian Gallery. In July 2017 a Manhattan federal court rejected a request by Prince, the Gagosian Gallery and Larry Gagosian to dismiss Graham’s lawsuit.40 At the time of writing all were unresolved. ‘The internet, and the generation that goes with it, appears to work on the basis that once something is on the web, it’s there to play with.

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But legally this doesn’t work at all; I suspect we’ll end up with an entirely different view of copyright in 10 or 20 years’ time,’ says Tom Christopherson. While Richard Prince is the poster boy for appropriation, other artists have also been accused of copying in the last few years. Jeff Koons has been sued for breach of copyright five times. He lost in a New York court in 1993 in a case brought by photographer Art Rogers over a sculpture based on a Rogers photograph; the court found Koons had breached copyright. He lost for the same reason, again in New York in 1993, in another case brought by United Features Syndicate; however in 2005 he won a case brought by fashion photographer Andrea Blanch over an ‘appropriated’ image, which the court ruled was transformative. Then in Paris in 2015 two cases were brought: in the first, Koons’s limited company, Jeff Koons LLC, and the Centre Pompidou in Paris were ordered by a French court to pay €40,000 to the family of the late photographer Jean-François Bauret for using one of his images to create a sculpture, Naked (1988). The sculpture was never actually exhibited at the Centre, because it was apparently damaged in transit, but it appeared in the catalogue and on the Pompidou website.41 In the second case, a sculpture was removed from a show at the Centre Pompidou in 201542 after a complaint by an advertising company that Koons had directly copied their advertisement for the fashion company Naf Naf.43 A verdict had not been handed down at the time of writing; Koons’s lawyers had argued in court that using the image was ‘freedom of expression’. And in 2011 in Belgium, Luc Tuymans was found guilty of copying a photograph of a politician to make a portrait. He was initially fined €500,000 but the verdict was subsequently reversed on appeal. ‘Copyright laws often don’t sit well with artistic freedom of expression,’ says art lawyer Daniel McClean. ‘The US has developed a broad defence for artistic expression based on transformative use, which was applied largely to the Prince/Cariou case; on the other hand, the European exemptions are drawn much narrower, centring primarily on parody – as seen in the Tuymans case.’44

45 sustaining the big bucks market

However, there is a pending case that might radically shift the boundaries, at least in France. In 2016 the French Cour de Cassation – which pronounces on law, not cases – upheld the ‘freedom of expression’ argument in an action brought against photographer Peter Klasen. It sent the case back to the Versailles Appeals Court;45 the outcome could have far-reaching implications for copyright law in France if this argument is accepted by that court.

EXTENDING EDITIONS

Another way of increasing supply is to make editions – it is also a fine way to democratise art, allowing collectors with smaller budgets to acquire an otherwise inaccessible artist. In the luxury goods market, this is known as ‘brand-stretching’. A good example of this is Jeff Koons’s collaboration with the French porcelain manufacturer Bernardaud, for whom he has been producing ‘limited edition’ minia- ture Balloon Dogs on silvered plates, starting in 1995. The term ‘limited’ is arguable: with four colours, and an extra 50 artist’s proofs, meaning that the whole edition totals 9,400. It must also be a money-spinner for Koons: at prices between $8,000 and $9,000 (for an edition sold by, and benefiting, the Museum of Contemporary Art, Los Angeles),46 the edition’s total value could be between $75 million and $84.6 million. Despite the number of these shiny tchotchkes, they appear to have a resale market, with prices running between $10,000 and $20,000 at auction, although plenty of galleries have stock: the website Artsy had 36 on offer in December 2016. The Koons editions are genuinely limited, if large, but another problem that has appeared in recent years has been the extension of editions post production. In 2012 collector Jonathan Sobel sued the photographer William Eggleston and his trust, claiming that Eggleston’s recent production of enlarged inkjet prints of images devalued those already in his collection.47 The judge dismissed the case in its entirety,

46 Supply

leaving the field open for photographers and indeed other artists to extend editions as long as the new productions are of a different size or material. It was a lucrative process for Eggleston – as the respected financial blogger Felix Salmon commented at the time: ‘[He] had simply managed to conjure up $5.9 million for himself (or rather, for his foundation), without going out and shooting a single new photograph.’48 Eggleston is not the only example of this ‘extending’ of editions, and the video market has been particularly prone to confusion, even chaos, over reproductions. The collector Alain Servais recounts a col league’s experience with Fischli & Weiss’s video Der Lauf der Dinge (The Way Things ;Go 1987). She acquired it as a signed and numbered tape cassette. A few years later an unlimited edition of the same work was sold for just US$45, and then Artspace announced a ‘limited edition’ of 150 copies at $7,500.49 Another collector, Tony Harrison, was disappointed to find that more copies of an original by Joseph Kosuth had later been made. ‘I bought Neon (signed and dated 1965) at Sotheby’s in May 2002,’ he told me. ‘At that time, I recognised that this had to be Kosuth’s very first self-referential and most important work in a hitherto rarely used medium – with which he had since almost become synonymous.’ Then in 2016 Harrison discovered that there was what he described as a ‘slickly fabricated, “new”’ version being shown at the Grundy Art Gallery in Black- pool.50 His follow-up research revealed that this work, or another, had been in public circulation since about 2012. Asked about this, the artist’s dealer, Sprüth Magers, confirmed to him that the source of the exhibited work was indeed Kosuth, saying it was a ‘re-fabrication of a “unique” 1965 work, which was when he had the “idea”’. Harrison raised the matter with Sean Kelly Gallery, one of Kosuth’s dealers from whom he had purchased other works by the artist. Instead Kosuth himself replied, saying: ‘For what it’s worth the one of the three which you purchased is the only one, to my knowledge and memory, that I signed.’51 In view of Kosuth’s invitation to ask other questions, Harrison queried how many works there were in the ‘edition’; were

47 sustaining the big bucks market there variants and, if so, how many; were other variants signed and dated; did the others have certificates and, if so, would they be numbered or unnumbered? He received no reply from Kosuth.

MIRACULOUS REDISCOVERIES

A final aspect of the need for supply in the art market over the last few years has been the rediscovery of artists whose work had previously been dismissed as being ‘not art’, decorative ‘wallpaper’ or just plain bad. Eager to find supply in overlooked fields, the market has been keenly snuffling out neglected names or even those formerly reviled – in the process making some rather miraculous rediscoveries. Classifying a work of art as ‘bad’ is of course purely subjective, and subsequent generations have rehabilitated artists whose work was once despised; sometimes, however, it is difficult to avoid the impression that the rehabilitations may have a commercial reason as well, to boost a market where there is good supply. A case in point is Victor Vasarely, who was the toast of the French establishment in the 1970s, with his eye-bending optic artworks com manding high prices – but then for decades his work was shunned. Today, his paintings, particularly the early black-and-white pieces, reach well over $300,000, their prices having surged along with the works of another Op art artist, Bridget Riley. Another example is Bernard Buffet, the much derided painter of spiky clowns’ faces and black-outlined figures. ‘In the early 1950s,’ says Sotheby’s Impressionist and Modern Art specialist Philip Hook, ‘a survey was held to identify the most popular artist in the world. Picasso came number one, and Buffet at number two.’ But the artist later fell into near oblivion (except in Japan, where there is a private Bernard Buffet Museum in Shizuoka) and for decades his work was considered the ultimate in bad taste. Rehabilitation came in 2016–17 with shows at the prestigious Musée d’Art Moderne de la Ville de Paris52 and at the Musée de Montmartre.53 Sotheby’s held a selling show of works in

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Hong Kong,54 and in 2016 Les Clowns Musiciens, le saxophoniste (1991), sold for £1,022,500 at Christie’s.55 Meanwhile in New York the collector/ investor/dealer Adam Lindemann also got the Buffet bug, and in 2017 organised, in collaboration with the estate, Bernard Buffet: Paintings from 1956 to 1999.56 The market even took a shine to Mel Ramos’s pin-up poster images of sexy girls in various stages of undress, posing with suggestive props such as bananas, or lounging in martini glasses. A.C. Annie (1972), show ing a naked woman clutching a giant sparking plug, made a suitably electrifying £1.1 million at Sotheby’s London sale of the Gunter Sachs Collection in 2012.57 ‘All three artists have this in common: they are stylistically very easily identifiable and are coherent “brands”. And they were all prolific. All this is very good for people coming into the market for the first time, and for those keen to get art with a coherent financial value, to get a “brand” that is easily valued,’ says Hook.

WHERE DOES ALL THIS ART GO?

We have seen that with the growth of the market, the supply of art has had to be ramped up, to satisfy the needs of gallery shows, fairs and myriad other art events and projects. In the next chapter, we will look at demand – where it is coming from, and how it has impacted on the sort of art made. And later in the book, we will look at how the enormous amount of art made has triggered a boom in art storage.

Chapter 2 demand: china wakes We have seen a huge increase in demand for art from China, particularly in the last two years. Greg Hilty, Curatorial Director, Lisson Gallery 1 November 2016: Shanghai. A glitzy party marked the opening of West Bund Art and Design, a fair created in a previously bleak industrial area on a bend in the Huangpu River. West Bund is a good 10 kilometres upstream from the prestigious centre of Shanghai, with its nightly pageant of flashing neon, but the local district of Xuhui has big ambitions, dubbing its developing zone the ‘biggest global cluster of culture’ with ‘9.4 square kilometres of waterfront’. West Bund, once an area of low-rise buildings and workshops, now has been endowed with parks, high-rise housing, restaurants and cultural offerings. The city fathers continue to pour money into developing the area – over RMB20 billion (about $3 billion) by 2016 – with a growing number of private museums as well as art galleries, performing arts centres and an art fair. The fair was originally created by the artist Zhou Tiehai, probably best known for his 1990s ‘Joe Camel’ paintings, riffs on Western portrait ure but with animal heads substituted for the faces. Working closely with the municipality, he launched the event in a former aircraft workshop, and its surroundings gradually acquired the trappings of an art hub. Within walking distance is the Yuz Museum, privately funded by the Indonesian-Chinese Budi Tek, while a little further away is one of four Long (‘Dragon’ in Chinese) museums, created by the former taxi driver, now billionaire, Liu Yiqian and his wife Wang Wei. And that is not all – He Juxing, a collector/curator, is launching a long-promised Star Museum, also on the waterfront. The location for the dinner was a temporary tent built to accommodate art projects. Bathed in pink and blue light, the tables were heaped with flowers, while a giant screen noisily projected promotional videos for the district. The 360 guests included dealers Tim Taylor and David Zwirner, artists Martin Creed and Gregor Hildebrandt and collectors Budi Tek, He Juxing and Uli Sigg. As they took their places, a line of 40

53 sustaining the big bucks market

stylishly dressed servers – their movements being directed remotely through earbuds – swept in bearing dishes of sea cucumber intestines nestling inside frozen globes. They stopped, turned and served guests in a synchronised ballet, before trooping off to collect the next batch of plates. The tasting menu, as described on washi-paper scrolls propped before each guest, continued with truffles, abalone, yams, chicken, and culminated in a performance by chefs, plastic spit-guards hooked over their mouths, neatly carving the traditional Peking duck. It ended with a dessert of white chocolate curls flavoured elegantly, if unexpectedly, with wasabi and cream cheese. Throughout the evening honoured guests were called to the stage – there was a cheer for David Zwirner, who looked slightly confused when the presenter cried, ‘Everyone loves you!’ His being singled out caused some mutterings among other art dealers, who hadn’t been asked to the stage. Later He Juxing made a short speech and the artist, collector and dealer C.I. Kim sang a song. The following evening many of the same people gathered at the Yuz Museum for another gala dinner, although this was a fundraiser and many of the dealers had paid for their places. They were entertained by Budi Tek’s 11-year-old daughter, singing George Gershwin’s ‘Summertime’ and a Chinese air. The evening ended with a performance by Martin Creed in the theatre of nearby Shanghai Night, one of three clubs owned by collector Qiao Zhibing. A cross between a karaoke bar, night club, exhibition space and something more ambiguous, Shanghai Night boasts hostesses in slinky dresses bearing numbers who, if their number is chosen by clients, will drink and sing with them in luxuriously furnished rooms. In the common spaces fitted out with shiny marble and gilded wood- work, Zhibing’s collection of contemporary art is displayed behind glass or hangs overhead. Artists in his holdings range from the Chinese collective MadeIn to Thomas Houseago, Sterling Ruby and Theaster Gates, many bought through Hauser & Wirth. Back in West Bund, Zhibing presented a Martin Creed show in partnership with the gallery. His plans include opening an exhibition space on the waterfront, in disused

54 Demand: China Wakes oil tanks, again encouraged by the West Bund city fathers; the first space to open was inaugurated in summer 2017. Nearby, the Centre Pompidou sealed a deal to launch an offshoot branch in a wing of the new West Bund Art Museum, designed by David Chipperfield and tentatively due to open in 2019. The following two evenings saw festivities to celebrate two more openings: another art fair, ART021, held in the centre of the city, while at the state-run Power Station of Art, a repurposed former power station, the Shanghai Biennale celebrated its 11th edition.

* * * *

West Bund’s splashy dinner was just one sign of its determination to push forward its ambitious grand plan for its cultural district, which it hopes will rival London’s South Bank or Paris’s Left Bank as significant riverside projects, according to district director Fang Shizhong.2 Meanwhile, through emulation, competition or a simple desire to toe central government’s plans to boost culture, the neighbouring Lujiazui financial centre also announced plans, just as the West Bund fair opened, to build its own art museum along with other projects in Pudong, across the Huangpu River from the Bund. The local planning authority said it would use a prime 12,900-square-metre plot to build a Pudong Art Museum, which would display traditional and modern art.

DRIVING DEMAND – CHINA’S NEW MUSEUMS AND NEW RICH

‘We have seen a huge increase in demand for art from China, particularly in the last two years,’ says Greg Hilty, Curatorial Director of London’s Lisson Gallery, ‘and the two art fairs and the Biennale in 2016 were certainly also a turning point.’ The most obvious aspect of this demand is for works to fill the huge numbers of museums being built, both state-run and, notably for con temporary art, privately funded. Getting accurate figures is like ‘pulling

55 sustaining the big bucks market teeth’ according to one insider, but the Economist counted 3,866 at the end of 2012, citing An Laishun, vice-president of the China Museums Association.3 Not all these are devoted to art: the Chinese Museums Asso ciation told me in 2017 that there were 265 state-run fine art museums and that private contemporary art museums numbered about 200.4 The reasons for the push to build museums range from government policy, which has turned to culture as an important ‘soft power’, to a determination to play catch-up with the West for the number of museums per capita. In 2012 Beijing had released a ten-year cultural plan, aiming to have one museum for every 250,000 people by 2020. Apart from Shanghai and Beijing, China’s second- and third-tier cities have acquired their own institutions: for instance Sifang in Nanjing, Baijia Lake Museum, Oct Design Museum in Shenzhen, or the Museum of Contemporary Art (MoCA) in northwest China, on the old Silk Road in Yinchuan.

GOING PRIVATE

Significantly, almost a third of the country’s fine art museums are small private enterprises. Some of the reasons for collectors wanting their own art spaces are the same as those of collectors in other countries. They fear that the works given or lent to a public institution would languish in storage and not be displayed, or that the owners might lose control of them. In the Chinese context there are the additional fears of poor conservation and security standards in the public sector, as well as concerns as to whether uncontrollable changes in cultural policy could affect what is, or is not, deemed acceptable. There are also other elements at play. According to the Hong Kong and Shanghai art collector and dealer Pearl Lam, speaking about mainland China, ‘The private museum has become really trendy; everyone wants to have their own. It can also be an ego trip, to be honest.’5 Overwhelmingly, these private museums display contemporary art, although some have very little. In 2014 the Economist described

56 Demand: China Wakes visiting the beautifully designed Red Brick Museum near Beijing as: ‘like walking into an empty Olympic swimming pool.’ 6 Since then the museum has increased its cultural offer, showing its holdings of Tony Oursler, Erik A. Frandsen and Huang Yong Ping in 2016,7 but there are still times when it has nothing on show at all. It is difficult to generalise about China’s private museums, which vary from barely disguised selling spaces to well-respected institutions such as the Rockbund in Shanghai. However, there are a few common threads. One is the link with real estate: a number of privately owned institutions were built by property developers. Their projects have ‘museums’ attached to the planning applications: ‘If you are creating a cultural district you get tax advantages, the necessary permits and other benefits,’ says Madeleine O’Dea, author of The Phoenix Years: Art Resistance and the Making of Modern China. ‘And it’s often totally about a real estate project, behind it all.’8 According to long-term Shanghai resident Lisa Movius: ‘When you ask most museum founders what they will show, will it be West- ern, Asian, contemporary, traditional art? – they answer “everything”! But then a couple of years after the project is completed the whole thing just fizzles out.’ She notes this about one erstwhile major museum in Shanghai. ‘It’s now in parts an English First language school, a private maths tutoring centre for “elite children” and a very dusty seemingly abandoned warehouse.’ But, she continues, ‘the real estate projects continue well after such museums have served their original purpose, getting a discount on the land from the government and attracting visitors and attention to the development. The ones that do have very specific aims from the beginning, be they property or collector-driven, generally have longer, stronger lifes- pans.’ 9 Art – or the idea of art as an important part of lifestyle – has become highly fashionable among the affluent young in China, although it is heavily bound up with branding and fashion, and this is where retail comes in. One of the most surprising projects – for Westerners at least

57 sustaining the big bucks market

– in China and Hong Kong is that of the K11 ‘art malls’ created by a young billionaire, Adrian Cheng. Cheng comes from a background of inherited wealth – his family’s sprawling, $16 billion real estate, retail, hotel and transport empire includes New World department stores throughout mainland China.10 Cheng is executive director of his family-owned Chow Tai Fook, the world’s biggest jeweller, whose 2,260 stores line shopping streets in main land China and Hong Kong.11 Polished and urbane, Harvard-educated Cheng has a powerful interest in art, both as a collector and as a philanthropist. His non-profit K11 Art Foundation promotes young Chinese artists and organises exhibitions in collaboration with a host of Western art institutions, including the Institute of Contemporary Arts (ICA) in London, the Centre Pompidou, Palais de Tokyo and Musée Marmottan in Paris and New York’s Metropolitan Museum of Art. But it is with his K11 art malls that the overlap between art and hard-headed business considerations is most apparent. Billed as ‘a revolutionary museum retail concept and a hybrid model of art and commerce’, K11 malls are promoted as ‘the world’s first original brand to pioneer the blend of three essential elements of Art, People, Nature’.12 With two built in 2016 in Hong Kong and Shanghai, Cheng declared in 2017 that he was planning to open a total of 16 K11 malls in eight cities by 2021, with sites opening in Wuhan, Shenyan and Guangzhou in early 2018, defying a slowdown in retail spending due to the governmental anti-corruption drive. ‘Growth in sales at our Shanghai K11 are still double digit year-on-year despite weakened retail,’ his spokesman Douglas Kotwall told me in 2017.13 The Shanghai K11 mall sits at the base of a 61-storey skyscraper in trendy Huaihai Road. Brilliantly lit, with a freeform glittering glass skylight illuminating the lower floors, it boasts the tallest outdoor water- fall in Asia, rising up seven floors. Luxury shops – Chloé, Louis Vuitton, Burberry and others – cluster around the escalators that take the visitor down to the third basement and the Chi K11 museum, a low-ceilinged and featureless white space.

58 Demand: China Wakes

The venue plays host to travelling exhibitions that are far from garnering universal praise, with some criticised as hodge-podges of second-grade works. The first, entitled Truth, Beauty, Freedom and Money,14 inaugurated the space in 2013. The following year saw Master of Impressionism, which showcased 12 paintings by Claude Monet15 loaned by the Musée Marmottan in Paris, and in 2016 Dalí 16 was held in co-operation with the Gala-Salvador Dalí Foundation in Spain. They were big crowd-pullers: the Monet exhibition attracted 340,000 visitors, while the Dalí brought in nearly 200,000, according to Kotwall. Juxtaposed with the Western works were Chinese artists, and the space has also shown emerging Chinese names. ‘Walking into a “white cube” is not only intimidating; it is a foreign experience based on a concept that has not been ingrained in the psyches of most Chinese,’ according to Cheng. ‘So we bring the art to them in a setting they already know. With our local audiences, we are seeing that they often consume art much like they consume the “goods” in the art mall. They take pictures and videos, then share them on WeChat/social media. But at the same time, they are also learning a great deal,’ he said.17

FROM MING TO MODIGLIANI

For a long time, the dominance of China in the art market – the country has stood in the second or third place in the global market since 200918 – was mainly due to the strength of traditional Chinese art, the so-called ‘cultural relics’, from scroll painting to jades, ceramics and furniture. However, with the arrival of foreign auction houses in the mainland, the Art Basel jamboree in Hong Kong and Western galleries setting up outposts in Hong Kong and mainland China, a number of wealthy collectors have turned their attention to international contemporary art, after initially espousing their own country’s traditional culture. A typical, and the most prominent, example is that of Shanghai couple Liu Yiqian and Wang Wei. Liu’s rags-to-riches story is well

59 sustaining the big bucks market known – how he started out in life making handbags, then ran a small taxi company, before investing in the nascent Chinese stock market in the early 1990s. His timing must have been just right, and he struck it rich. After he diversified into pharmaceuticals and real estate, his fortune was estimated to have hit $1.35 billion in 2016.19 In 2012 he and his wife opened their first museum, titled ‘Long’, in Shanghai, and it displayed the traditional Chinese works, from scrolls to ceramics, which he had already been collecting. One floor was devoted to rooms and rooms of ‘Red’ Mao-period revolutionary art and there was a small collection of Asian contemporary art on the ground floor. Two years later, when I first met Wang Wei, she was still quite new to the collecting and museum business and had yet to visit many of the major international art fairs. But even then, on the brink of opening a second museum in the West Bund area, she was thinking of acquiring international art. ‘We need to collect foreign art so that our museums can be on a par with their foreign peers,’ she subsequently told the Financial Times. ‘Foreign countries have really a lot of museums, big and small, public or private. But we think China is lacking something when it comes to art.’20 In the same interview she revealed that she and her husband bought art based on price – the more expensive the better – notably targeting works featured on the front covers of saleroom catalogues. And it is this new-money bragging, coupled with their flamboyance, that differentiates the couple from most other Chinese art-collecting billionaires. ‘Most Chinese collectors keep their heads below the parapet, they don’t want any problems [that might be caused] by being too visible,’ a foreign collector told me. ‘The fact that the couple are so avid for publicity must mean they have very solid contacts, very high up. Maybe they have good relations with Poly,’ he mused.21 Poly is a governmental conglomerate which includes the army, a museum and China’s biggest auction house. In 2013, the Long Museum Pudong displayed two of the bronze zodiac fountain heads looted from the Summer Palace during the Opium Wars in the mid-nineteenth

60 Demand: China Wakes century; they were on loan from Poly. Many of these lost items are gradually being recovered by China. Liu in particular appears to like the fame he gains by paying huge prices for art. Many in China were shocked by his publicity stunt after he spent over $36 million on a Ming dynasty ‘chicken cup’, a tiny por celain bowl, which dated from the fifteenth century and had been owned by the revered Qianlong emperor.22 In front of a battery of cameras and reporters, he sipped tea from it. When he bought an eleventh/twelfth-century Tibetan bronze of a yogi for $4.9 million,23 he posted pictures on the social media site WeChat of himself in his underwear in the same pose. Liu is also quick to announce his prizes, as was the case in 2015 after his eye-watering purchase of a sensuous Modigliani, Nu couché (1917–18), for $170.4 million,24 the second highest price for a work of art ever given at auction. Wang Wei is not averse to flaunting their wealth either: she wore a glittering set of large jewels for the inauguration of the Olafur Eliasson exhibition in the West Bund Long Museum in 2016.25 While Wang Wei and Liu Yiqian are the most prominent collectors, China counts many others who are making their presence felt on the international art market. Also in Shanghai, Budi Tek has bought works by established names such as Anselm Kiefer, Georg Baselitz, Martin Kippenberger, Adel Abdessemed, Maurizio Cattelan and Fred Sand- back, as well as younger names such as Camille Henrot, Tatiana Trouvé and Alicja Kwade. Tek has also hosted shows of Alberto Giacometti and Andy Warhol in his Yuz Museum. In Nanjing, the real estate magnate Yan Lugen says he has collected over 3,000 works by Western artists, including Picasso, Monet, Van Gogh, Rodin, Matisse, Delvaux, Dalí, Renoir, Chagall, Derain, Degas, Utrillo and ‘hundreds more’.26 With real estate having slumped in China, Lugen has turned to art as a new potential profit centre and says his goal is to build the largest art group in China, with projected reve- nues of CNY10 billion and net profit CNY3 billion, and then launch on the stock exchange in 2020.27

61 sustaining the big bucks market

DRIVING DEMAND

Demand in China has been patiently nurtured over a number of years by dealers and auction houses – as well as governmental institutions such as the British Council and France’s Ministry of Culture. Also among the charm offensives are efforts by art fairs to bring Chinese main- landers to events in the West, as well as by Western dealers setting up in the mainland and familiarising Chinese audiences with their artists. A case in point were two shows by Sean Scully, which travelled to Shanghai and Beijing in 2014–1528 and then to Nanjing, Guangzhou and Hubei in 2016–17.29 The British cultural entrepreneur, curator and broadcaster Philip Dodd, working with the Timothy Taylor Gallery, organised and curated the show, which made Scully into a ‘super star in China’, according to Dodd. ‘The tour revealed that a sustained cam paign with a foreign artist who is not necessarily a “brand” in China can make an impact there,’ he said. And while that show was non-selling, the knock-on effect was clear: Dodd reported that Scullys were sold to private museums and art fairs in China and bought by Chinese collectors from galleries in London.30 Scully was not alone in being promoted in China – other examples were Michael Craig-Martin, Tony Cragg and Gillian Ayres, as well as Robert Rauschenberg, William Kentridge and the art duo Elmgreen and Dragset, all shown at the Ullens Centre for Contemporary Art in Beijing. While these were non-commercial events, the artists’ galleries were often ‘supporters’ in one way or another alongside the institutional organisers, and they could presumably offer other works for sale, or indeed the same works, once the exhibitions had ended. In alignment with this, Western auction houses, in China and elsewhere, have cleverly nurtured demand by positioning art with luxury goods and lifestyle. China, in particular, is fascinated by luxury goods and branding; the country represented a whopping 30 per cent of the global $285 billion luxury goods industry in 2016, according to consul- tants Bain & Co.31 Christie’s sells handbags and accessories in Hong

62 Demand: China Wakes

Kong ‘curated to fit the tastes and sensibilities of top Asian collectors,’ says the description in its promotional literature for goods that feature diamond bags, crocodile, lizard, and ostrich exotics. The firm achieved the world record sale price for a handbag in 2014, at $223,000 for a ‘18kt white gold and diamond hardware, Hermès Shiny Fuchsia Porosus Crocodile Diamond Birkin’ in Hong Kong.32 Selling such luxury goods is a way to bring in clients who subsequently could be moved towards art, and this is a step that the auction houses have been very strategic in taking. Sotheby’s and Christie’s hold sales in the mainland, and have brought in ‘brand names’ to sell – sometimes lesser-rated works such as Picasso’s Homme assis (1969), which made $1.6 million at Christie’s curtain-raising sale in Shanghai in 2013.33 But a Picasso it still was, one of the few recognisable Western artist names for Chinese buyers. And the significance of the sale went beyond the wine, jewellery and jade also on offer. Christie’s, which of course is part of François Pinault’s global luxury goods empire, used the sale as a way of anchoring its brand name in Chinese consumers’ minds; the city’s roadways were festooned with red banners proclaiming its name at the time of the auction.

SWAPPING CASH FOR CHAGALL

Demand for Western art in China was also stimulated, according to Pearl Lam, by the 2015 devaluations of the yuan. ‘There was huge change when the Chinese currency depreciated,’ she says. ‘When this happened it pushed other currencies, Korean, Indonesian, Australian, down. The Chinese, thinking that the government was going to devalue, were really desperate to get money out of China. There are different ways of doing this, one of them being with art – buying in China and selling outside. The other way, which is what happened, was buying international Western artists.’ How exactly this enabled wealthy mainland Chinese to move money out of the country remains a mystery, but one anecdote is revelatory: a mainland collector bought a work of

63 sustaining the big bucks market art at Art Basel Hong Kong for $400,000, but payment was made from ten different bank accounts.34 Other art dealers tell similar stories, and one cites a sale of a pricey Chinese ceramic that was paid for by 17 different bank transfers. Chinese currency controls cap the amount an individual can take out at $50,000 per person per year.35 There are other ways, one described to me in Macau, and confirmed by the cited article – that of fake pur chases using a UnionPay credit card to buy a luxury watch or other item, and then immediately returning it for cash, paying a fee of between 2 per cent and 5 per cent for the favour. While this doesn’t cover the mega-sums needed for a Modigliani, this process repeated frequently could enable the individual to get substantial sums out of the mainland. In 2017 one case discovered by the Chinese authorities found that a Guangdong resident used the $50,000 quotas of 84 people to remit $4.35 million to his own accounts in Australia and Hong Kong.36

NOT ONLY IN CHINA

The use of art to promote real estate, shopping malls, hotels and fashion brands has mushroomed, not just in China, but around the world – and in turn, this has ramped up demand. ‘Art districts’ are a new phenomenon, clusters of commercial and residential properties using art to enhance and add pizzazz to the offerings. Dallas’s art district, for instance, combines artistic, residential, cultural and commercial offerings, from restaurants to a renowned museum. In London, Nine Elms hails itself as London’s next cultural/art district with the opening of Damien Hirst’s Newport Street Gallery. It boasts a ‘cultural steering group’ and collaboration with the Royal College of Art, as well as commissioned works of art for an art trail. In Hong Kong, the 100-acre West Kowloon Cultural District is anchored by the long-awaited M+ museum. And one of the most prominent projects is in Abu Dhabi, where on Saadiyat Island at least three

64 Demand: China Wakes museums are being planned: the Louvre Abu Dhabi, the Guggenheim and a National Museum, although initial plans to add a performing arts centre and a maritime museum seem to have been put on indefinite hold. In a clear sign of how the shopping experience has been piggy- backing onto art, the Saadiyat project has distinctly shifted from its original form. When launched in 2007, the area was to have five museums linked by a ‘biennale’-type corridor with pavilions. However, challenged by the global financial crisis, the drop in oil prices and other factors, the design was modified after 2015. A gigantic, 550-shop mall was added into the project, linking the three museums – although at the time of this publication, only the Louvre was completed. Signifi- cantly, the French luxury goods company LVMH is one of the investors in the mall.37 Residential property has climbed onto the same bandwagon, with what is called ‘art placement’. Promoters believe – with some reason – that adorning high-end homes on sale with art could seal the deal with high net worth potential buyers. Specialist firms, galleries and advisors have sprung up to supply the art, and often the client buys the art along with the property. Architects have also got in on the act, even going so far as to incorporate considerations such as reinforced floors and freight elevators for moving art into the property. Joe Burns, managing director of the London interior designers Oliver Burns, told The London Maga- zine: ‘The architectural fabric of a building is now carefully considered to best accommodate the needs of an aspiring art collector.’38

A KOONS OUTSIDE EVERY CONDO?

Nowhere has this use of art to sell property been taken further than in the US. From Manhattan to Miami, everything from a high-rise condo building to an individual home is touted as an ‘art project’. During the 2016 Art Basel Miami Beach fair, the London- and Paris-based dealer Tornabuoni Art decked out a home, already on the market for

65 sustaining the big bucks market

$28.5 million, with a further $30 million worth of Italian modernism, including works by Lucio Fontana, Enrico Castellani, Alberto Burri and Paolo Scheggi – all for sale. For the less deep-pocketed buyer, a firm in Miami hired Albanian-born artist Helidon Xhixha to create sculptures for each buyer in a 68-unit condo block. The 2016 Miami Beach fair also saw the inauguration of Faena Forum art centre, a purpose-built building able to be used for various art events and designed by Rem Koolhaas, part of a residential and hotel cluster. Outside one of the adjoining tower blocks, designed by Foster + Partners, is an 18-feet-high Jeff Koons sculpture, Coloring Book (1997–2005). The sculpture belongs to Len Blavatnik, the Ukrainian entrepreneur and partner in the massive scheme. He placed another of his artworks, Hirst’s Gone but Not Forgotten (2014), in the courtyard of the nearby Faena Hotel. This sculpture of a woolly mammoth skeleton, gilded and encased in glass, is an oh-so-fitting addition to the luxury hotel designed by Baz Luhrmann and Catherine Martin; its plush red velvet interior and massive gold columns are a monument to excess and opulence.

PRIVATE MUSEUMS – LOTS OF PLUSES

An important element in this examination of demand is the growth of private museums around the world. The number of these publicly accessible spaces funded by an individual, mainly showing his or her collection, is difficult to evaluate, but there are now hundreds of them predominantly showing contemporary art. These spaces, which can be very costly to set up and run, fulfil a number of objectives for their owners. The first is obviously bragging rights – propelling the collector from a mere accumulator, albeit hopefully with taste, to a lauded phil anthropist sharing their passion with the public. It provides endorse- ment to someone who might otherwise be ‘just another billionaire’ with a glitzy lifestyle and the opportunity to move in the same circles

66 Demand: China Wakes as other prominent collectors and celebrities. In China, these owners are also praised for doing their bit to fulfil the government’s cultural objectives. Having a private museum also provides crucial access in getting the collector to the top of the waiting list for the hottest artists. Further- more, it certainly does no harm, from an investment point of view, for works of art to have been displayed in a museum, which brings cultural validation even if the works, and indeed the museum, belong to one and the same owner. Probably the best example of this is Christie’s owner François Pinault, a major collector of works by Damien Hirst, who in 2017 devoted both of his Venetian ‘museums’ to Treasures of the Wreck of the Unbelievable by the British artist, during the Venice Biennale. The 189 works on show, some supposedly dredged up from a fictional first/ second-century wreck at the bottom of the sea, were all in editions of three plus two artist’s proofs and all for sale, priced from $500,000 to $5 million.39 Collectors were offered pieces in advance (shown to them on tablets in confidence) before a carefully orchestrated media campaign guaranteed publicity throughout the world. The museum effect is further multiplied if pieces are lent to other public institutions. For collectors, the benefits are multiple – the museum bears the costs of conservation, exhibition and publication, while the owners pocket the profits on resale, the works having gained value and prestige after their passage through the institution. And finally, there can be some tax advantages to owning a private museum, although the cost of actually establishing one may outweigh any such benefits.

Part ii A Fortune on your wall?

Chapter 3 what’s the price ?

When I left the art auction business in 2011, $110 million was a lot of money to pay for a work of art. In the last five years, prices have soared – $120, $180, $200, even a private sale at $250 million. That’s extraordinary. Edward Dolman, CEO, Phillips1 4 October 2016: Frieze Week in London has become one of the ‘must-go’ slots in the art world calendar, offering a packed itinerary of cultural events as well as two Frieze art fairs. Major museum exhibitions, from the blockbuster Abstract Expressionism show at the Royal Academy to the unveiling of Philippe Parreno’s commission in Tate’s Turbine Hall, to the Guerrilla Girls at the Whitechapel Gallery, were all timed to fall during the week when everyone, just everyone, was in town. This week had also become the choice moment for new galleries to be launched in London, mainly offshoots with existing spaces elsewhere being opened by dealers. So that October week saw a slew of openings, most in Mayfair, including the Milan-based Cardi Gallery in a five-floor townhouse and Parisians Olivier Malingue and Kamel Mennour in more modest spaces, while the secondary market dealer Per Skarstedt showed off stylish new digs just off Piccadilly. But one of the smartest openings was just up the road, where the Paris- and Brussels-based dealer Almine Rech had launched her second London space in Mayfair’s Grosvenor Hill right beside Gagosian’s super- smart, bunker-like behemoth. Rech – the daughter of a Vietnamese mother and French couturier Georges Rech – is Parisian art aristocracy; her third husband is Bernard Ruiz-Picasso. Whippet-thin and elegant, Rech has a roster of well-known names on her books, from younger artists such as Alex Israel, David Ostrowski and Joe Bradley to more established ones: Julian Schnabel, John Armleder, Joseph Kosuth. To launch her new space Rech had chosen Jeff Koons, whom she had represented in Europe since 2009. The show consisted of eight paintings and four sculptures, the paintings part of his ‘Gazing Ball’ series, featuring historical artworks with shiny blue mirrored balls more commonly found in garden centres. The paintings were all reproductions, copied in Koons’s New York studio, of famed masterpieces, such as François Boucher’s pert Reclining

73 a fortune on your wall?

Girl (1751), Giotto’s The Arrest of Christ( c.1304–6) and Jacques-Louis David’s dramatic The Intervention of the Sabine Women (1799). All were about the same size – the Giotto, for example, had been scaled up – and there was a striking similarity in the colour tonalities of the group. Koons had added to each a blue gazing ball propped on a small metal shelf in the centre. The show also featured four sculptures: two were larger-than-life depictions of ballerinas in highly reflective polished steel. Others were a copy of Marcel Duchamp’s Bottle Rack (1914) and a simple four-legged stool, both again topped with a gazing ball. As major collectors François Pinault, Stefan Edlis and Gael Neeson strolled around the gallery, Koons, as always neatly kitted out in a dark suit with a black open-neck shirt, commented on the works. In a soft drone he explained that the balls reflected back into the past and forward to the viewer, bringing art history ‘into the here and now’, adding that his work ‘goes back to the references of the ready-made’, which he said came from antiquity. His discourse was sometimes philosophical (‘ideas can morph into genes’; ‘transcendence leads to a higher state’) and sometimes rather surprising (‘Stainless steel is a proletarian material, which is what I like about it’). Undeniably unproletarian were the prices of these works of art. The paintings were made in a series of 50, with 45 having been completed at the time of the show. François Pinault had already bought one, said Koons. The paintings were tagged at $2.5 to $3 million each, with the largest sculpture at an asking price of $6 million,2 meaning that, even with discounts and the dealer’s cuts, Koons could have been looking to make at least $50 million from the series if the whole group sold. According to Rech, ‘there were sales’, although she did not say how many. A subsequent article claimed that sales had actually been lacklustre, leading Koons to downsize his studio by letting about 30 staff go.3 It should be noted, however, that the huge auction price paid for Balloon Dog (Orange) (1994–2000)4 – at $58,405,000, a record for any living artist – did not go to Koons,5 but rather to the vendor, in this case industrialist and publisher Peter Brant.

74 What’s the Price?

HIGHER AND HIGHER . . .

The prices for Koons’s work and the apparent depth of his market are an indication of how much money is available for art today. Koons has become the artist of choice for billionaires, whose instantly recognisable ‘trophy’ works confer status and prestige as well as underlining the owner’s financial prowess and – most importantly – exclusive access. Not everyone can buy a Koons balloon dog, so owning one places you in a select group. In Los Angeles, a flawless bright blue version has pride of place in a room devoted to the artist in the real estate mogul Eli Broad’s museum The Broad. The other four are with Greek collector Dakis Joannou, Christie’s owner François Pinault, hedge-funder Steve Cohen, and the anonymous buyer of the orange version. The dizzying figure paid for Balloon Dog (Orange) is just one example of the huge prices paid at the top of the market, which seemed to be on steroids between 2011 and 2014. As Edward Dolman told me, ‘When I left the art auction business in 2011, $110 million was a lot of money to pay for a work of art. In the last five years, prices have soared – $120, $180, $200, even a private sale at $250 million. That’s extraordinary. The obvious thing is the scale of the wealth of some of the new individuals in the market: Rybolovlev, the Japanese fashion magnate Yusaku Maezawa, some of the mainland Chinese collectors: they weren’t even on the art world’s radar four or five years ago.’ In 2013 Christie’s New York sale on 12 November scored the highest total ever for an auction, racking up an eye-watering $691.6 million for just 63 lots sold; 11 of them topped $20 million each.6 Many thought, at that point, that values could rise no further; yet just six months later, in May 2014, the market continued its seemingly gravity-defying leaps in value when Christie’s racked up a new record of $744.9 million for its post-war and contemporary art session.7 The final frontier was reached in November that year when, according to The Art Newspaper, ‘another step towards a billion-dollar sale’8 was taken as Christie’s made $852.8 million for 80 lots offered in its post-war and contemporary art sale.9

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Christie’s led the dance during this 30-month splurge, but it was not alone. Sotheby’s may have lagged behind the market leader for totals, but it produced some immense prices, notably selling, in the same sale of 4 November 2014, Giacometti’s Chariot (1951–2) for $101 million and a flower piece by Van Gogh – Still Life, Vase with Daisies and Poppies (1890) – for $61.8 million, the latter bought by Wang Zhongjun, a Chinese film executive.10 And even when the markets finally started levelling out, there were still fireworks in the sky: in May 2015 Christie’s hammered down both the most expensive painting and the most expensive sculpture ever sold at auction in the same sale. The knock-out price of $179.4 million, crowning the most expensive painting ever to be sold at auction, was paid for Picasso’s Les femmes d’Alger (Version O) (1955), a large, colourful and multi-layered work combining influences from Eugène Delacroix to Cubism. The work came from a series of 15 paintings of nude courtesans in a harem, with each version lettered ‘A’ to ‘O’. In the same session, Giacometti’s L’homme au doigt (1947) made $141 million – setting a new record for a sculpture at auction.11 While these immense prices were being paid at auction, sales in the private sector were powering ahead as well. Three deals, all conducted out of the public eye, give a glimpse of just how much the mega- wealthy have been prepared to pay for art in the last few years. The first deal only became public because of a lawsuit, which was finally settled confidentially, but not before revelatory details came out through court papers. At issue was a Picasso plaster sculpture, Bust de femme (Marie-Thérèse) (1931), depicting the artist’s mistress Marie-Thérèse Walter. Works showing her from that period are among the most prized and expensive of Picasso’s oeuvre. It belonged to Marie-Thérèse’s daughter Maya Widmaier Picasso. How much was it worth? Either $105.8 million – or under half that amount. In 2015 a legal drama played out in the New York courts where two of the world’s biggest art buyers each affirmed they had bought it.12 Gagosian Gallery had exhibited the sculpture in 2011 in a

76 What’s the Price? show entitled Picasso and Marie-Thérèse: L’amour fou.13 As is often the case with such exhibitions, the work was not ostensibly for sale. But Larry Gagosian’s lawyers said that the dealer had received offers of over $100 million, should Maya decide to sell one day. According to Gagosian, in 2015 Maya did indeed sell to him for $105.8 million. He did not buy it for himself, but for his client Leon Black, whose famed art collection is worth some $880 million.14 How ever, according to Pelham Europe, the company run by former Chris- tie’s specialist Guy Bennett, Maya had already sold it to the Qatari Sheikh Jassim bin Abdul Aziz Al-Thani, whose wife Sheikha Mayassa was among the most active art buyers in the world. The agreed price was €38 million (roughly $47 million), and the intermediary in the transaction, the art advisors Connery, Pissarro, Seydoux, were to receive a tidy commission of €2.5 million.15 Before the case came to trial, much to the disappointment of those expecting more revelations, the case was settled confidentially. All that is sure is that Black got the sculpture, but the ultimate price he paid remains known to only a few people; if rumours are true that a sweet- ener was paid to Sheikh Jassim to drop the case, then the price could have been even higher. The tiny but energy-rich state of Qatar was the biggest and most deep-pocketed art buyer during much of the early twenty-first century, particularly during the reign of the father of the current emir, Sheikh Hamad Al-Thani, who abdicated in 2013 in favour of his son Sheikh Tamim. While it never confirms purchases, Qatar is reliably believed to have set the highest price ever for a work of art by acquiring Paul Cézanne’s The Card Players (1892–3), which was sold privately from the collection of the Greek shipping magnate George Embiricos for about $250 million in 2011. But thanks to a legal battle in 2017, Qatar was identified as the buyer of another iconic painting: Paul Gauguin’s colourful portrait of two Tahitian women, Nafea faa ipoipo (When Will You Marry?) (1892). The painting had hung, on loan for over 50 years, in Basel’s Kunstmuseum,

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as part of a collection of 17 renowned Impressionist and Post-Impressionist works originally amassed by the grandfather of Rudolf Staechelin, a Swiss businessman. The Gauguin was the jewel in the crown of the group, and Staechelin had previously resisted all offers to sell. However, a dispute between the family trust, which owned the collection, and the museum led Staechelin to end the loan.16 He said at the time that the works, bar the Gauguin, would finally go to another museum, although this had not been determined at the time of writing.17 Initial reports after the sale put the price at an astonishing $300 million, but two years later it was revealed that the final price was $90 million lower – at $210 million. This emerged when the art dealer and auctioneer Simon de Pury brought an action in the UK’s High Court against Staechelin,18 claiming $10 million on the basis that he had been part of the initial negotiations but had not received any commission; that case was continuing at time of writing. De Pury did not want to comment on the case, but said: ‘It shows that rumoured prices for which some works are supposed to have been sold privately are to be taken with caution.’19

WHAT EXPLAINS THESE STRATOSPHERIC PRICES?

‘These very high, +$200 million, prices are basically about the number of high net worth individuals, billionaires, superrich – whatever you call them – who have an interest in buying these trophy works of art,’ says the economist Olav Velthuis, author of Talking Prices.20 ‘The factors underlying them are wealth creation and wealth distribution worldwide,’ he says. ‘There is econometric research showing that the art market is in the end benefiting from a less equal distribution of wealth. So if wealth gets concentrated with a smaller group of people, and if the number of billionaires rises further, I do think that price levels will also rise further. You can think about the entire health of the market in those terms; as long as the number of these billionaires continues to rise, I am convinced that a significant number of these

78 What’s the Price? people have an interest in acquiring status symbols – they are not buying for investment at those prices. As long as they keep doing that and there are more of them, my prediction would be that the art market will go through temporary downturns but the long-term prospects are quite good.’ Velthuis notes the parallels between the current state and the late nineteenth-century ‘Gilded Age’ of huge wealth disparity, when dealer Joseph Duveen supplied oil, steel and railway tycoons with the Euro- pean masterpieces they craved. In 2016, according to Forbes,21 there were 1,810 billionaires in the world, slightly fewer than in 2015 (1,826), worth an average of $3.6 billion; a stunning 198 newcomers joined the list in that year. ‘These are iconic, super trophy paintings, by artists you can identify at 100 paces,’ says London dealer James Roundell.22 ‘They are being bought for effect, for social acceptance, for prestige. There are so many people around the world, making so much money, and they are putting together art collections – or should I say assemblages – very quickly.’ ‘The people who buy these works are extraordinarily rich,’ concurs Edward Dolman. ‘For them, putting 10 per cent of their wealth into art they can engage with, put on their walls, talk to people about, trade, all this seems an attractive option – 10 per cent for someone with 10 billion is 1 billion dollars, and that buys you a lot of art – it makes purchases of, say, a Basquiat at $60 million or $70 million a relatively small bid. It ticks a lot of boxes for the super-rich – they see it as a store of money and the potential of trade later on is quite exciting.’ These extraordinary prices, spent on works of art that ultimately have no intrinsic value beyond their authorship and their desirability in the eyes of a small group of billionaires, is the aspect of the art market that most baffles outsiders, along with the seemingly random way art prices are established. The explanations are multiple, even if illogical in the eyes of some observers. For Dolman, ‘The obvious thing is the scale of the wealth of some of the new individuals in the market.’ Their fortunes come from varied sources: Russia’s privatisations for

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Rybolovlev; online retail for Maezawa, mining, investments and real estate among others for the wealthy Chinese. There are other reasons. While many collectors seek secrecy – to the point of obsession in some cases – some of these new buyers delight in the profile it gives them, such as Yusaku Maezawa or, as we have seen, China’s Liu Yiqian. Sometimes there is a more hard-headed reason – getting coverage for a purchase which will be exhibited in a museum, or to boost the image of the owner’s business. For instance, in May 2017 Maezawa bought a large Jean-Michel Basquiat painting of a grimacing skull, Untitled (1982), for $110.5 million.23 He then posted images of his purchase on Instagram (@ Yusaku2020; 78,300 followers) and Twitter (@yousuck2020; 130,000 followers). This brought plenty of publicity for the young entrepreneur’s online retailer Zozotown; it also served to raise the profile of the private museum he plans to build in Chiba, near Tokyo. A thought-provoking perspective comes from auctioneer and dealer Simon de Pury: ‘There are different collectors for whom art starts to register at different price levels,’ he said during a panel discussion in Barcelona in 2017. ‘For some it starts at $1 million, for others it might start at $10 million. I know some Rothko buyers – some of the key market makers today – who didn’t know who Rothko was until he reached $40 million. When they saw a good work could sell in the $40 to $60 million range, they suddenly said, “this is really interesting!”’24 Buyers from emerging markets for art, such as China or the Gulf, have such financial firepower that they can push prices up, even if ultimately they may be outbid by a more traditional collector. Compe- tition between owners of private museums to acquire trophy works has also had an impact, and these institutions and foundations have turned out to be tax-efficient ways of keeping collections in some countries, as well as being encouraged by the government in China (see Chapters 2 and 8). The efficient marketing machines of the major auction houses, who instantly broadcast new auction records and

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high prices, also help to maintain the idea that art is a great investment – an idea that is, as we shall see in Chapter 7, not always correct. For Velthuis, the art market is able to support these prices because, unlike most markets, ‘Success is not about selling large quantities but about selling highly exclusive commodities for high prices, and there are few other comparable examples. One other commodity I can think of is the exclusive car market – not only vintage but also new cars. You find similar processes with exclusive Ferraris produced in limited editions; you find waiting lists, you need to be loyal to your Ferrari dealer or even to the Ferrari company in order to get a new, limited edition car . . .’ He also cites luxury goods such as the Hermès Birkin handbag, which has well-publicised waiting lists. For those desperate to jump the queue, the auction route provides a solution, but at a premium, as we have seen in the case of a Birkin, which sold in Hong Kong for almost $223,000.

DO GUARANTEES INFLATE PRICES?

I have previously written about guarantees, the financial instruments that auction houses use to obtain the best consignments by promising vendors that they will get an agreed sum for their work of art, even if no one bids on it.25 Guarantees are a hotly debated subject and many, but not all, think they are also responsible for price inflation. Guaran- tees have been in play for decades, even centuries, in one form or another, but in 2013–14 they suddenly exploded, notably through an increase in the number of third-party guarantees – those when an outsider underwrites the risk by agreeing to buy the work of art at a certain price unless outbid in the auction. This practice has been widely criticised, at least by art dealers, for two reasons. Firstly, critics argue that it distorts the auction process because the guarantor has access to information – such as the secret reserve – unknown to other bidders. Furthermore it makes prices more opaque, because the final price paid by a guarantor, which includes

81 a fortune on your wall? various incentives, is not made public. ‘It has certainly distorted the auction process, because when a third-party guarantee is arranged between an auction house and a potential backer, you’re effectively doing a private sale before the auction,’ said Edward Dolman. ‘And that might be at a level that the market can’t compete with.’ He explained: ‘An auction matches buyers and sellers, demand and supply, so the hammer price is the market price. That matching doesn’t happen in a pre-agreed deal at a price that has been agreed before the auction. It doesn’t give you the temperature of the market at the moment. It gives you a sense of what one individual has been prepared to pay to get that work of art and potentially make some money in the auction, if they didn’t buy it. So, the third-party guarantee has the effect of pushing an auction price estimate to a maximum level that you wouldn’t see without that third party involvement.’ The use of these instruments reached their peak in the 2015 autumn season when some $2.1 billion worth of art was being offered in the main New York sales of Impressionist, modern, post-war and contemporary sales. But even before the sales, lots estimated at almost half of that amount (an astonishing $1 billion) were already sold, via guarantees.26 Those sales, inevitably, produced good results, raising $2.3 billion, but cracks were beginning to appear in the façade of a seemingly unstop- pable art market. Some guaranteed lots failed to sell, leaving the auction houses holding the babies. This was the case at Sotheby’s, which lost money on the Alfred Taubman collection, failing to find buyers for Edgar Degas’s Femme nue, de dos, se coiffant(1886–8), and Jasper Johns’s Disappearance I (1960), both of which were estimated at $15 to $20 million.27 Other guaranteed lots failed to sparkle, as was the case at Christie’s, when Andy Warhol’s Four Marilyns (1962), guaranteed for around $40 million and estimated at $40 to $60 million, could only raise one bidder and sold for just $36 million including fees.28 Not everyone believes that guarantees do boost prices, and among the dissenting voices is that of Olav Velthuis, who told me; ‘I see them more as a tool in the competition between Christie’s and Sotheby’s;

82 What’s the Price? that may have a slight impact on [high] prices but they are not the underlying cause,’ which he ascribes to the overall increase of wealth, as we have seen. Nevertheless, after the high level of guarantees offered in autumn 2015, the auction houses, faced with thin bottom lines, suddenly started taking radical measures. Sotheby’s launched a volun- tary redundancy scheme, and both it and Christie’s started pruning guarantees. This coupled with a drop in supply led to a sharp shrinkage of auction totals: in the autumn 2016 sales season in New York, the three main auction houses’ sales of Impressionist, modern and contemporary works were less than half those of a year before, when the total stood at $1.06 billion. While the auction houses blamed consignors’ reluctance to offer works for sale, it could also be argued that a reduc- tion in the number of guarantees was also responsible. In the spring season of 2017, guarantees underpinned a full 56 per cent of the value of New York’s three main evening sales, with a healthy $1.6 billion raised, although the total still fell well short of the record $2.74 billion set for the same set of auctions in May 2015. According to the prominent collector and investor Peter Brant, there have been recent changes in the strategies of auction houses, which he says have become far more risk-averse in 2015–17. ‘The proper way to guarantee a work is to commit to it,’ he says, ‘but now the auction houses are “testing the water” in advance. Their specialists will call around potential guarantors, to ascertain interest. They might show it to five or six potential people before taking it on. I find this very negative for the vendor, because the work has been “shopped around”. While it reduces the auction house exposure, it means that the work has effectively been offered twice, once to the possible guarantors and again when it is put up for sale.’29 He is one of a number of people who are reported to give guarantees, and he says, ‘I think they both inflate and deflate the market. They inflate because it gives vendors security that the work will sell, so they can push the estimate. On the other hand, a lot of people don’t

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like bidding against guarantees; people always have hopes of buying something for a good price, which the guarantee eliminates.’ In 2016, a little more clarity was supposedly imposed on the reporting of results by New York’s Department of Consumer Affairs (DCA). In a letter to auctioneers, the DCA told the auction houses to subtract any fees from the final price and publish the true price.30 Christie’s and Sotheby’s confirm that they now publish the actual prices, including any such fees, worldwide.

PRICE MANIPULATION?

Many suspect that prices are manipulated in the art market, particularly at the upper level. This would generally be through what is known as ‘shill bidding’, when a work of art is bid up by the owner or a con- spirator, to establish a high price rather than to reflect a true wish to purchase. Other works by the same artist, or a collection, would then benefit from the hike in value – useful, for instance, to offer as collateral against a loan. Or at a gallery a sale could be announced to push up the price for a potential buyer. Identifying rigging is very difficult, and only rarely do lawsuits enable a peek behind this particular curtain. One case was briefly aired when the serial litigator and billionaire Ronald Perelman31 sued Larry Gagosian over Cy Twombly’s Leaving Paphos Ringed with Waves (2009), offered in the dealer’s New York gallery. Perelman alleged that he had been duped in a series of art transactions, among them one for the Twombly. According to the lawsuit, Gagosian said its price was $8 million; Perelman offered $6 million, which was not accepted. Perel man tried again, and Gagosian said it was no longer available, but he could get it back for $11.5 million. It had, in the interim, been bought by an entity based in the Cayman Islands controlled by the Mugrabi family of dealers and traders for $7.25 million. Perelman’s contention was that the back-and-forth deal was just a way to ex tract a higher price from him. ‘Mr Perelman agreed to pay $10.5

84 What’s the Price? million, giving the Mugrabis a quick $2 million profit and Mr Gago- sian a $1 million commission,’ noted a New York Times article at the time.32 The case, which included other art transactions, among them four unspecified works of art and a Koons sculpture, was dismissed unanimously. The case revealed another aspect of this high-end market – art exchanges. As well as the ones enumerated in the Perelman/Gagosian example, there have been swaps elsewhere; Gagosian also accepted physical art instead of money for Richard Prince’s Canal Zone series (see Chapter 1). Rybolovlev paid for his Leonardo with a mixture of cash and a Picasso. Dealer Ann Freedman traded a work from her personal collection, attributed to Richard Diebenkorn, for one of the fake ‘Rothkos’ in the Knoedler affair (see Chapter 5).33 And of course traders such as the Nahmads or the Mugrabis are widely known to offer works for sale at auction instead of payment for the ones they have bought. While legal, these practices result in yet more opacity within the business of the art market and are yet another element that makes the true size of the market difficult to evaluate. On the other hand, lawyer Donn Zaretsky doesn’t believe there is much rigging in the market: ‘At the high end, collectors aren’t dummies, they are not so easily manipulated,’ he says; ‘they are smart people. But what we could be seeing, instead, is the “tulip” syndrome [a reference to the bubble in tulip prices in seventeenth-century Holland] and irrational exuberance. These high prices may be a bubble, not rigged, and the fact that they sometimes dramatically collapse, as in the case of the so-called zombie formalists [see Chapter 7], may be evidence of that. At the top end the collectors are the equivalent of “sophisticated investors” and they don’t need so much protecting.’34

VERY BANKABLE ARTISTS

One final reason for the extraordinarily high prices, and one that is unlikely to change going forward, is the focus of buyers on a very few

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names – what the Belgian collector and entrepreneur Alain Servais calls VBAs, or ‘very bankable artists’. To an extent, this is also explained by prices – at these levels, it is hardly surprising that buyers want a work that will hold its value and preferably go up, particularly as the investment aspect has become overwhelmingly important (see Chapter 6). Further reinforcing this desire to buy reliable ‘brand names’ was the cold shower that followed the unsuccessful speculative fever around a group of young artists working in a ‘process-based abstraction’, more unkindly dubbed ‘zombie formalism’. They were for a couple of years the subject of intense buying and reselling, but interest quickly faded once prices started falling. ‘There was definitely price manipulation at the beginning, with investors bidding up the works at auction to the hundreds of thousands of dollars,’ alleges dealer, curator, journalist and collector Kenny Schachter.35 However with the collapse of this bubble, buyers retreated quickly back into the tried and trusted world of a few, ultra-famed artists with a track record and an established institutional reputation.

BACK IN THE REAL WORLD

Establishing a price for emerging artists has always been difficult, and depends on the dealer, the gallery location, as well as the size and medium of the work of art. The New York artist William Powhida, whose work critiques and satirises the art market, says the problem should be simple maths: ‘If an artist makes about 10–12 serious works a year, they should fetch $10,000 to $15,000 each to give the artist and the dealer an adequate income. But it doesn’t work like that,’ he continues; ‘successful artists in the $100,000 plus range may only need to sell a few pieces to be fine for several years. But less well-known names will be struggling to sell ten. Most of the artists I know are working at other jobs to support themselves, particularly when sales can be infrequent.’ ‘What is important,’ Prowhida says, ‘is the level of access to collectors of the galleries – there is a ceiling for some artists, and for most

86 What’s the Price? emerging galleries. For example most galleries have a price limit, and their collectors will have a psychological limit – for example, they won’t buy over $10,000.’36 As a result artists have to move galleries in order to increase their prices – to move up the food chain. A 2008 work by Powhida, Pricing Guide, lays out a ‘formula’. The base price is calculated from labour, materials, studio space, which is multiplied by different elements, all written out on a trompe l’oeil drawing of a piece of paper torn from a notebook, with astute descriptions of the pyramid of buying and selling art. It includes art reviews (‘x10 for one in the Times’); ‘if last show sold out double dealer price IMMEDIATELY’; ‘If you get in Whitney Biennial + another (100,000) grand!’, and ‘if you are a hot male + $100,000’. ‘Auction Price x INSANITY!’ it concludes. The work is spookily accurate. For artists, the step up to being included in an auction is both profile-boosting and potentially dangerous. Seeing work sold in a saleroom reassures buyers that an artist has ‘arrived’ and has a track record. Another outcome – if the work doesn’t sell or goes under the gallery price – can have the result of torpedoing an artist’s career, as the smaller galleries do not have the financial power to prop up prices. In 2017 Sotheby’s withdrew all 18 works consigned to its London ‘contemporary curated’ sale by MutualArt,37 a company owning thousands of works that artists had given the Artists’ Pension Trust (APT). The idea was that APT would act like a pension pot with putative profits shared out after resale. Among the well-known names in the sale were David Shrigley, Jeremy Deller, Richard Wright, Liam Gillick and Douglas Gordon, but the artists and their galleries decided to abort the sale at the last minute. Why? The official line was that galleries would do a better job selling the works, but it is impossible not to think that they feared a too-public disavowal of the works, or prices going under expectations. ‘If prices go down, it is very hard to recover,’ says Powhida. Olav Velthuis has investigated this issue at length in his book Talking Prices, in which he emphasises the importance of the ‘symbolic meaning’

87 a fortune on your wall? of prices. They are a ‘source of identity and confirm status hierarchies among art dealers, collectors and artists.’38 He notes the strong taboo on price decreases, which ‘harm belief in the value of the work an art dealer has carefully built up.’ But, as he points out, ‘A high price for an artwork can be interpreted as a signal of quality by some, but it can also be ridiculed as a symbol of fraud by others.’39 This view bears out the fundamental contradiction in art pricing, which ultimately is highly subjective. Buyers and sellers are not dealing with a hard asset with an external means of valuation – such as gold or a government bond. Art is a unique object, and the motivations of the buyer are generally mixed. At the top end, the price can be determined by a few alpha buyers determined to duke it out. At the middle and lower end, the price will depend on a variety of factors, even, as Powhida says, on the looks of the artist. No one has to buy a work of art, but when someone does, caveat emptor still rules. This chapter has explored why prices, at the top end, have been driven so high; why they are often opaque; how and why their levels are maintained artificially, and how apparently inexplicable prices are even lower down the scale. A number of problems have flowed from these high prices and the difficulty of establishing objective value. One is the issue of authentication, a veritable minefield where determining the authorship of a work of art has given rise to some spectacular battles and some questionable practices. The other is the vexed question of fakes and forgeries, which have multiplied along with rising values, and not only in the field of modern and contemporary art. This century saw the unravelling of two massive faking scandals, undermining expertise and shaking confidence in the whole art market. In parallel, other scandals underlined how expertise even in more traditional fields could be shockingly unreliable. It is time to look at them more closely.

88 Chapter 4 THE PROBLEMS WITH AUTHENTICATION Authentication is an act of power. Claudia Andrieu, Legal Advisor, Picasso Administration1

People really do think that by suing you they are going to make their picture genuine! James Butterwick, Russian art specialist and dealer2 13 April 2016: The Herrick Gallery is sited on busy Piccadilly, in London’s Mayfair, just across from Green Park. As buses and taxis crawl along the crowded thoroughfare, weekend tourists can buy colourful paintings hooked on the park railings opposite, ranging from views of Tower Bridge to Constable-like pastoral landscapes. The small gallery sits in a Grade II listed Victorian block alongside a watch shop and the once-grand In & Out, formerly the Naval and Military Club, a palatial eighteenth-century residence now sadly decaying while it awaits redevelopment into a luxury hotel. There is a smart white space upstairs, while the basement space has a different vibe, with unrendered brickwork, more East End than Mayfair. On that April day, owner Alice Herrick had just opened a highly controversial show. Displayed on the walls were eight drawings and two pastels, supposedly by one of the greatest twentieth-century British artists, Francis Bacon – a name one would normally expect to see at the grandest London dealers. The prices, which were not marked, ranged from £52,000 to almost £800,000 for the works,3 and a hefty catalogue was prominently displayed, which listed 474 drawings and pastels of the 600-odd works that Bacon had supposedly given to Cristiano Lovatelli Ravarino between 1977 and 1992. Ravarino established the ‘Francis Bacon Collection of the Drawings Donated to Cristiano Lovatelli Ravarino’4 and has been battling for years to prove their authenticity, sell them or borrow money against them.5 His website cites respected specialists such as Giorgio Soavi, Edward Lucie-Smith, Vittorio Sgarbi and even the well-known art dealer David Nahmad among those backing up his assertion that they are authentic. But they are not included in the comprehensive five-volume catalogue raisonné edited in 2016 by Martin Harrison,6 who told a court in Cambridge in 2012 that six other drawings from Ravarino’s

91 a fortune on your wall? trove were ‘are fakes of his [Bacon’s] work. The style is in every way consistent with Ravarino.’7 The judge said they were ‘not the work of Francis Bacon’ and estimated their value at a mere £480 in all, or about £40 each. ‘Clearly, the views I expressed in Cambridge would preclude their inclusion in a catalogue of authentic[ated] paintings,’ Harrison said in an email to me, adding that the judge clearly pronounced these works as fakes.8 No other leading Bacon scholars accept the works, including his biographer Michael Peppiatt, and the Bacon estate told me: ‘since 2007 no further documents to support the authenticity of the six drawings in the court case have come to light.’9 However, in 2004, another court, this time in Bologna, Italy, cleared Ravarino of forging the drawings, ruling that ‘no one can say that Francis Bacon’s drawings owned by Cristiano Ravarino are fakes’ – although it did not say they were authentic either. Ravarino’s lawyer warned in 2011 that it could be libellous to cast doubt on their authenticity.10 And a projected forum on the subject at London’s Courtauld Institute of Art was cancelled in 2012, with the institute citing ‘the possibility of legal action’.11 The drawings have travelled the world extensively, being shown in places out of the main art world circuit, including the Fundação Eugénio de Almeida in Evora, Portugal (July–October 2010), Kaohsiung Museum of Fine Arts, Taiwan (February–May 2012) and Museo de Aquascalientes in Mexico (November 2012–February 2013), as well as at two commercial galleries in Berlin, before the Herrick show in 2016. ‘The show was all a bit of a fiasco,’ Alice Herrick told me later;12 ‘I was initially led to believe the works belonged to David Edwards, the brother of John Edwards, to whom Bacon left everything when he died in 1992. Then it turned out they were lent to Edwards by Ravarino. And just before the show opened I was asked to increase the prices of the pastels, because of “potential buyers in Spain”. The representatives of Ravarino asked for the change in prices – the previous pricing was authorised by Edwards.’ None of the works sold at the London outing,

92 The Problems with Authentication although Herrick said there was ‘some interest’ from potential buyers, which was never followed up. According to Lovatelli Ravarino, who confirmed that he is the owner of the drawings, ‘[I] discovered for chance he [Edwards] was goig [going] to make a commercial exhibition in London without asking my permission with some of the drawings and pastels beloved Farncis [Francis Bacon] gave me . . . they organized the show in Herrick Gallery withouth [without] informing me.’ About the prices, Lovatelli Rava- rino said: ‘our goal was to make a cultural show but as the firts [first] aime [aim] of Edwards family was to make a commercial show we had to change the too low values they gave to these items (probabily [probably] because totally anaware [unaware] of commercial market)’. Ravarino’s lawyer also contacted me to say, ‘The only person who doesn’t recognize the authenticity of these drawings is Martin Harrison.’13

* * * *

The tale of the Bacon drawings, however confusing, serves to illus- trate many of the problems of authentication of art today. Most obvious are the differing opinions among specialists and experts, often genuinely held but sometimes drastically undermined, as in a number of recent, spectacular faking scandals (see Chapter 5). In addition the threat of legal action always hangs over anyone who questions authenticity. ‘Authentication is an act of power,’ Claudia Andrieu, legal counsel for the Picasso Administration, has said, and in today’s art market, with its huge increases in prices, that power is enormous. On the say-so of the authenticator, a work of art can be worth millions – or virtually nothing, and often there is no appeal possible. As lawyer Nicholas O’Donnell explains: ‘The appraiser or art historian rendering an opinion as to authenticity is in the crosshairs of everyone involved. Someone may be very unhappy with the outcome of their opinion, and their unhappiness is going to be to the tune of tens of millions of dollars.’

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So far, he says, ‘The fundamental problem has not been resolved, how to protect the authenticator who can’t afford to be sued by a collector for huge sums of money.’14 A further outcome of accepting a fake as genuine is that it can devalue other, perfectly authentic pieces as well as corrupting scholarship. The financial stakes are so high that, in this century and even before, abuses have proliferated. One of the most common is rejection of a work of art unless the owner agrees to sell it to the authenticator, or allow them to handle it. ‘No sale, no certificate, that’s blackmail,’ says one French dealer, who has ‘dozens of similar awful stories; it’s the Wild West out there, and it’s almost like a parallel market – first you have to get the certificate, which you pay for, and then you can sell – but sometimes only to the person who reigns over that artist’s work. If you don’t want to sell to them or through them they won’t give the certificate.’15 The other side of this story is that authenticators are faced with being sued for giving their opinion. Again, because of the increase in the value of art, the incentive to go to court is much higher, and owners of art can demand huge damages if they don’t get the answer they want. The result has been that experts, over the last few years, have become increasingly fearful of pronouncing on works of art, particularly in the US. If the authentication is challenged, the costs of fighting such suits are prohibitively expensive, even if the specialist ultimately wins the case.

WHO OWNS THE RIGHTS TO A WORK OF ART?

Legally, artists’ rights to their work vary from country to country, and the length of time varies also – from perpetuity in France to the life of the author plus 70 years in the US under VARA (the Visual Artists Rights Act).16 These rights are about the ‘moral’ rather than the mone- tary value of a work of art. So an artist or their heirs could object to the use of a work of art in any way that could harm the artist’s reputation

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– even if the work of art has been long sold. In France, and in a number of other European countries, the moral right is inalienable, perpetual and inviolable. Heirs can make decisions about the use of a work of art after an artist’s death, for example to prevent it being used in a pornographic film. It is often thought that heirs to the moral right also inherit the right to authenticate, but this is not so; nevertheless, many do, simply because they were family members or were close to the artist. Rights may be left to more than one person, and in some cases mayhem results, with rival heirs battling to become the reigning authority. The problem for the art market is that it needs a reliable source for authentication, and uncertainty about the source – or worse, sources – impacts on valuation. On the other hand, abuses can also arise when power is concentrated in the hands of a single artist’s estate or foundation. Lawyer Daniel McClean concurs; ‘There are dealers (who can’t be named) who abuse the position of control over authentication; artists’ estates can do this too.’17

WHO AUTHENTICATES?

In the most obvious case, if the artist is still living, then he or she can confirm authorship. But even here there may be problems, with some cases where the artist, for various reasons, chooses to reject their own work, which is actually genuine. The German painter Gerhard Richter has decided he doesn’t like works from his early West German period, and has removed them from the meticulous online catalogue of all his work. Giorgio de Chirico so disliked his pre-1939 metaphys- ical paintings that he disowned them – but this hardly impacted on prices, since the market pays the highest premiums for precisely those works. Artists may reject their own works for other reasons. We have seen the case of artist Ibrahim Mahama and his jute sack pieces in Chapter 1, and there are other examples. Among them is the famously prickly,

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reclusive artist Cady Noland, who disclaimed authorship of two works, Log Cabin Blank with Screw Eyes and Café Door and Cowboys Milking (both from 1990) because of condition problems. In the first case, the fact that the original rotting timbers of Log Cabin had been replaced scuppered a $1.4 million deal after she ‘angrily denounced the resto- ration of the artwork without her knowledge and approval’, according to the purchaser, Scott Mueller of Ohio.18 He sued art advisor Marissa Newman Projects and the Michael Janssen Gallery in an attempt to recoup part of his purchase price, but the judge dismissed the case, saying that the complaint against the gallery was out of time, and that the advisor did not have a fiduciary duty to him.19 Left unresolved was the issue of whether the artist had rightfully disavowed her work under the Visual Artists Rights Act (VARA), something that might be clarified by the outcome of a new lawsuit filed in 2017 by Noland. In it, she said the piece was essentially an unauthorised copy, since it was entirely reconstructed from new wood without permission or notice – contrary to her rights under VARA. That case was continuing at the time of writing.20 The other case was of Cowboys Milking,21 which was consigned by dealer Marc Jancou to Sotheby’s for sale. Again, Noland disavowed it, saying the corners of the aluminium silkscreen were slightly bent; Sotheby’s then pulled it from a 2011 auction. Jancou sued Sotheby’s for $26 million in damages, saying the firm breached its consignment agreement by agreeing to Noland’s last-minute demand to have it withdrawn. Jancou lost his action in the appellate court.22 In contrast, there was a curious reversal of scenario in 2016, when an artist was forced, legally, to reject a work he hadn’t painted. The much-admired British painter Peter Doig was hauled before a Canadian court to justify his rejection of a daub signed ‘Doige’ given by a detention centre inmate to a corrections officer 40 years previously. The officer, and art dealer Peter Bartlow, tried to pin authorship on Doig, despite the fact that he was never a detainee in the centre and the painting’s style was completely different from his work.

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With a potential goldmine at stake – the pair were seeking $7.9 million23 – they took a punt and went to court. However, the judge clearly found for Doig and rejected the claim outright. Nicholas O’Donnell found the case particularly troubling because ‘these sorts of suits, until now, concerned artists who had recently died, so even though there were authenticators or family members brought to testify, there could be some doubt about whether the artist had actually made a work,’ he said. ‘But in this case Doig was sitting there, in court, saying “No, I did not paint that!” This trial expanded the pool of potential defendants to artists strenuously denying that they did not paint the work at issue. That’s alarming, even in the wider sense of the value of creative expression, as well as putting such pressure on an artist.’ Whatever the merits of the various cases, rejection by the artist of a work can have a devastating effect on its market value. In the Jancou case, another Cady Noland piece sold for almost $6.6 million just one day before Cowboys Milking was due to go under the hammer.24 Both Cowboys Milking and Log Cabin are now probably worth very little, since they are unlikely to be saleable at auction, at least during Noland’s lifetime or unless she changes her position. These are cases concerning living artists. Once an artist is dead the story gets far more complicated, and a host of different players may step up to the plate: heirs and family members, academics, specialists, the artists’ estates themselves – which sometimes form dedicated authen tication committees – compilers of catalogue raisonnés and art dealers. These roles may overlap, with the lure of the market meaning that manifold conflicts of interest can also arise.

THE GIFT THAT KEEPS ON GIVING? ARTISTS’ HEIRS

As noted above, in France heirs inherit rights and powers that they can use long after an artist’s death, although these rights are curtailed in the UK and US. And while these rights do not include authentication,

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in practice the two often overlap, leaving the door open for mischief, legal contradictions and in some cases downright dishonesty. Dishonesty cannot be suspected for the tribe of Picasso heirs, for whom the mere fact of bearing such a famous name has been a passport to riches. But even the offspring of many less stellar artists have made a good living from the dear departed’s work, by continuing editions and issuing, for a fee, certificates of authenticity. Most do this with scholarly diligence and a genuine desire to protect the artist’s legacy. A few may leverage their name into sometimes controversial schemes. ‘The problem is that many artists’ heirs have grown up with a sense of entitlement because of their name, and at the same time have had the example of an artistic lifestyle,’ one art dealer told me. ‘They don’t necessarily expect to have to work for a living.’ Pierre-Auguste Renoir’s son Paul (who died in 2005) briefly manu- factured French ‘Renoir’ cheeses in the US in an attempt to cash in on the family name; his son, Jean-Emmanuel, had a project to sell Renoir mineral water, featuring Renoir paintings with ‘Thirst Impres- sions’ on the label, before becoming involved in a controversial, and much litigated, plan to market reproductions of Renoir sculptures in Arizona. There was also a project to mass-produce toothpaste holders, candlesticks and other such domestic objects, based on well-known Renoir sculptures, a plan that many saw as disrespectful to the artist’s work.25 Then there are the cases of warring heirs, who hold diverging views on how best to protect – or in some cases exploit – the artist’s legacy. In Brazil, the foundation of one of the country’s most expensive artists, Lygia Clark, stopped authenticating works in 2015 because of a bitter family feud between her two sons, who were disputing rights to the works of art she left.26 In Germany, the granddaughter, aunt and son of Bauhaus artist Oskar Schlemmer (d.1943) spent so much time squabbling over the estate and blocking the publication of images that it was only after the copyright expired that a retrospective could be organised.27

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Enter as well the ‘terrible widow’ – a surprisingly widespread breed. One example might be Dina Vierny, widow of the sculptor Aristide Maillol. According to art historian Ursel Berger, Vierny made and marketed some 200 ‘Maillol’ bronzes, which she claimed in a letter to Berger were discovered in her country house.28 There are the mistresses such as Stéphanie Busuttil, 45 years younger than the French sculptor César Baldaccini, to whom he left the moral right to his work. She was at the centre of accusations of disappearances of works, production of unauthorised pieces and tax evasion, but a French court found her not guilty. As for the incredibly juicy Picasso estate, quarrels among his heirs meant that between 1981 and 2012, his daughter Maya Widmaier- Picasso and son Claude Ruiz-Picasso were issuing separate certificates of authenticity – and occasionally challenging each other’s opinions. This was more than problematic for art dealers and auctioneers; an unnamed director of an international auction house told Artnews in 2013: ‘To have something certified, you have had to get two different people to agree – and two people who don’t get along with each other personally. In simple, practical terms, it’s been impossible. It can take months and months just to get an answer.’29 This situation appears to have been partly resolved by the establishment of the Picasso Admin- istration in 2012, with Claude Ruiz-Picasso now dealing with all the requests, and having the last word, on behalf of the artist’s five heirs.

ARTISTS’ ESTATES AND FOUNDATIONS

Many artists have their own foundations, particularly in the US; some are extremely rich – the Rauschenberg estate is worth over $600 million.30 In 2010 the Aspen Institute identified 300 such foundations.31 Some artists establish foundations before they die – a shining example is the non-profit Henry Moore Foundation, one of the biggest such entities in Europe – and others are set up after their death. Going to an estate or foundation for authentication of works seems natural, as they

99 a fortune on your wall? generally hold the archives and expertise, and indeed, again mainly in the US, some of these bodies have established authentication boards. In the last few years, however, most of these boards have been closed, generally because of the rising cost of, and increase in, the number of lawsuits. The best-known example is the Andy Warhol Art Authenti- cation Board, which disbanded in 2011 saying it had spent $7 million in legal fees fighting lawsuits, money that could be better spent on its philanthropic projects. ‘We generally advise our clients not to do authentication at all, and indeed there is only a handful left who still do so,’ says Donn Zaretsky, whose firm, John Silberman Associates, specialises in foundations and artists’ estates. Of the notoriously widely faked field of Russian avant-garde art, dealer and specialist James Butter wick says; ‘I might still give an opinion but with numerous caveats,’ adding: ‘People really do think that by suing you they are going to make their picture genuine!’ Other examples of closures were the Krasner-Pollock Board (disbanded in 1996); Roy Lichtenstein, Robert Rauschenberg in 2011 and then Keith Haring, Jean-Michel Basquiat, and the Noguchi Museum in 2012. ‘In an ironic twist,’ writes Colette Loll, ‘the dissolu- tion of authentication boards of many iconic artists’ estates and foundations has increased in tandem with the market’s dependence on certificates of authenticity.’32 With highly expensive artists the cost–benefit calculation is simple: if the board rejects a work, then owners might envisage bringing a lawsuit, sometimes on a ‘no win, no fee’ basis. An interesting case is that of Jean-Michel Basquiat’s Fuego Flores (1983), which the Basquiat authentication board initially refused to pronounce upon. The owner of the painting sued the board for up to $10 million, saying that without a certificate the painting was worthless. The lawsuit was dismissed, but the board, after looking at new evidence, reversed its position, pronounced the work genuine – and then promptly disbanded.33 While it is clear that these boards should be devoting their funds to their prime objectives, which include keeping the market clear of

100 The Problems with Authentication forgeries and misattributions rather than warding off lawsuits, the story is not necessarily totally clear-cut. A complaint often aired is that those on the boards have a commercial interest in retaining authority over works, and a number of lawsuits, including one against the Warhol Board34 and another against the Haring estate,35 have seen owners of rejected works accusing the boards of ‘antitrust practices’, that is to say, rejecting works to minimise competition against their own store of works or those owned by members of the board. At the time of writing, no attempts to sue on this basis have succeeded. A glimpse of the sort of conflicts of interest that can arise came with the legal victory of the Dedalus Foundation, established by the artist Robert Motherwell, against a former employee and board member, Joan Banach. After she was fired in August 2008, she brought a claim against the foundation, claiming that she was entitled to lifetime employment under Motherwell’s will, that Dedalus had dismissed her because she was a woman, and because she had challenged the foundation’s authentication procedures and its chief executive, Jack Flam. The court was told that before being dismissed, she had sold several Motherwell works, without telling Dedalus. Some went to auction, others went through the now defunct Knoedler Gallery. She hadn’t told Dedalus of the existence of the artworks, despite being a member of its catalogue raisonné committee. The court threw out her claims, ruling: ‘It is not unreasonable that someone who is responsible for ensuring the accuracy and authenticity of Motherwell artwork and inventory would be terminated for not including her ownership of Motherwell artwork on that inventory.’36 An interesting sideline to the case was that when she was dismissed, Banach claimed that it was because of authentication disputes. The foundation was indeed engaged at the time in evaluating a number of Motherwell works submitted by Knoedler, which the committee decided were forgeries. As a result Flam went to the FBI (Federal Bureau of Investigations), which started investigating Knoedler. It was

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the first event in a chain of events that led to the closure of the gallery (see p.113). There is another danger with artists’ estates. ‘Ten or 15 years after the artist’s death, sometimes the sole purpose of the institution is to be a job machine for the people working there,’ says a New York lawyer, speaking on condition of anonymity. ‘They feel they are irreplaceable but also lose sight of the main aim of the estate, to promote the artist’s work and look after the legacy.’37 This comfortable position can extend to some trustees as well. Artists’ foundations can be extremely wealthy, but this may put temptation in the trustees’ way. In 2013 the Cy Twombly foundation sued the prominent art lawyer Ralph Lerner, and its treasurer Thomas Salida, accusing them of taking over $300,000 in unauthorised fees. The suit was eventually settled confidentially, but in a separate case, concerning the Rauschenberg estate, three trustees were found to have been charging the foundation a whopping $40,000 an hour for their services. Former foundation director Darryl Pottorf and two other trustees had claimed a total of $60 million in fees – and the foundation went to court. In the end, it settled for a final fee of $24.6 million – ‘which the foundation feels is still too much, but we are happy to move forward with our work benefiting artists and Rauschenberg’s legacy,’ said Christy MacLear, Chief Executive Officer of the foundation at the time.38

CATALOGUES RAISONNÉS

‘You can’t have a catalogue raisonné without some kind of authentication committee because otherwise who is the authority?’ asks Richard Calvocoressi, former director of the Henry Moore Foundation.39 But in reality, few artists’ estates do have such committees, so inclusion in a catalogue raisonné is generally the final word. These comprehensive lists of the artist’s work can be compiled by the artist’s nearest and dearest, or by specialists in the work. They can take years to compile and can be subject to the same pressures as

102 The Problems with Authentication authentication boards. Simply put, a refusal to include a work in the catalogue renders it valueless, and some owners have gone to court to force the listing. In 2001 a collector sued Modigliani scholar Marc Restellini after he rejected two works for the drawing catalogue he was preparing with the Wildenstein Institute. A court-appointed expert said one of the drawings was authentic, and the judge ordered its inclu sion in the catalogue. The institute and Restellini then abandoned the work, ending the issue,40 although in 2017 he was maintaining that he was close to publishing a catalogue online. A case in 2016, unresolved at the time of writing, concerns a suit filed by London’s Mayor Gallery in New York against the dealer Arne Glimcher and members of the Agnes Martin Authentication Board.41 In it, James Mayor sued for ‘product disparagement’ after the board refused to include 13 works in its forthcoming catalogue – works which he had sold to three clients whom he then had to reimburse to the tune of $7 million. The suit affirmed that authentication committees held too much power and were not obliged to disclose members’ identities or their policies, practices and procedures. Mayor further claimed that the board’s position was due to the presence among its members of Arne Glimcher, the founder of Pace Gallery, one of the top galleries in the world, which represents the estate of Agnes Martin. Mayor noted that ‘longstanding frictions and disagreements that existed between him and Glimcher, prevented an objective and fair vetting of submitted artworks’. At the time of writing, Pace did not wish to comment but its lawyer had filed a motion to dismiss, saying that Mayor had no standing to bring the case, that the board was not obliged to give reasons for rejections and that the allegation of a conflict of interest was unsupported.

CONFLICTS OF INTEREST

Authenticating experts, as we have seen, are subject to increasing pressure by disgruntled buyers, so much so that many have simply refused

103 a fortune on your wall? to pronounce at all on works, for fear of lawsuits. One very contentious issue concerns 74 Degas plasters, which were ‘rediscovered’ in 2004 and supposedly made during the artist’s lifetime. Battles continue to rage about them between experts, with some prominent Degas scholars convinced of their authenticity, among them Gregory Hedberg, director of European art at Hirschl & Adler Galleries in New York, and his business partner, Walter Maibaum, of the Degas Sculpture Project Ltd. They also have a commercial interest, as the project has sold sets for $20 million each. In the other corner are leading art historians including Gary Tinterow, director of the Museum of Fine Arts, Houston and others. But Arthur Beale, retired chairman of the Department of Conservation and Collections Management at the Museum of Fine Arts, Boston, changed sides in 2016, and now says he believes at least one of the group, Petite danseuse de quatorze ans (1881), dates from Degas’s lifetime.42 Two bronze sculptures made from the rediscovered plasters were put up for sale in London by dealer Guy Stair Sainty in 2017, priced at $3 million each, a price which falls between two stools – high in the case of doubt, but a bargain if the plasters are genuine, as one sculpture from the original casting of the subject sold for £15.8 million in London in 2015.43 According to Sainty, one of the two sold in 2017 to a US buyer ‘close to the asking price’. An inevitable result of these doubts in authentication has been to shake confidence in expertise, and it is difficult to avoid the impression that some established experts are not able to tell if a work is forged or genuine. And authentication itself is the victim – if the specialists don’t know, then who does? The problem, says writer and industry analyst Tim Schneider of The Gray Market newsletter, is that specialists become ‘untouchable’, which reinforces the idea of ‘a small, frequently self-interested group of industry insiders and professed experts.’44 And according to Dr Noah Charney, author of The Art of Forgery, there is more than a touch of arrogance in many experts: ‘[This] is a classic element that goes back in history, to the Leonardo da Vinci trial, Duveen vs Hahn, in 1929,’

104 The Problems with Authentication he says. ‘Duveen declared La Belle Ferronière could not be a Leonardo, based on only a photograph, which actually did a lot to cement the idea that art experts were the haughty elite. There was a sense of talking down to the working-class Hahn family – they shouldn’t have the privilege of owning a Leonardo therefore it’s not really possible that they do.’45 Hahn’s wife sued Duveen for slander, and he settled out of court for $60,000 after the jury failed to reach a verdict. ‘With Duveen it is sometimes difficult to decide when he was being recklessly overconfident and when he was sure of his ground,’ wrote Meryle Secrest in her biography of the dealer.46 In this case he was proved right; after decades in an Omaha vault, the portrait finally resold in 2010 at Sotheby’s New York, catalogued as ‘by a follower of Leonardo, probably before 1750’, and making a triple-estimate $1,538,500.47 In contrast, many experts have faced threats of lawsuits for the mere fact of giving an opinion. In the cases of the Bacon drawings and the Degas plasters, a number declined to pronounce on authenti city. According to London specialist lawyer Adrian Parkhouse, ‘Experts have been particularly threatened with litigation in the US, and it’s inevitable that they will think, “Why should I do this?” It’s no fun giving evidence, being cross-examined; they have to be prepared to put their head above the parapet. Today the commercial issues are quite extreme, and with the permeability between the commercial and non- commercial worlds, an expert in a museum might think, “One day I might go to work for an art gallery, what’s this going to do for my career?’’’48 Despite the fact that such threats of legal action are rarely carried out, London specialist art lawyer Karen Sanig says; ‘The percep- tion is having a freezing effect on scholarship.’49 There has been an attempt to put the onus on those bringing suits against authenticators to produce ‘clear and conclusive evidence’ of their claims. This is the subject of a bill sponsored by the Art Law Committee of the New York City Bar Association. However, at the time of writing it had not been passed, and according to Donn Zaretsky, it has, in any case, been ‘severely watered down’. So for specialists, scholars, dealers

105 a fortune on your wall? and collectors, the problem remains and fewer and fewer will want to pronounce. In the next chapter we will look at how authentication was at the core of an extremely public lawsuit involving one of America’s oldest art galleries, the culmination of a rising tide of high-profile forgery scandals that has hit the art market over the last few years. Chapter 5 a tsunami of forgery Each society, each generation, fakes the thing it covets most. Mark Jones, former director of the Victoria and Albert Museum1 14 June 2016: The VIP-only opening of the annual Art Basel fair is always the art market event to attend. As one of the oldest contemporary and modern art fairs in the world, it sets the standard for all other events, and it has extended its reach globally to include similar happenings in Florida and Hong Kong. On that grey, rainy day the usual crowd of well-heeled collectors was gathering in the main square in front of the immense Messe hall, waiting for the official opening, when a curious spectacle caught their attention. A television crew was filming a motley crew of middle-aged men, all sporting trilby hats perched on obviously fake flowing blond tresses and beards, and wearing garish blue-and-yellow Hawaiian shirts. Leading a ‘performance’ – which consisted mainly of walking around – was the infamous German art faker Wolfgang Beltracchi. This was a distraction the organisers of Art Basel could have done without, because Beltracchi was the most unwelcome presence they could imagine. Beltracchi was notorious, fresh from a six-year jail sentence handed down in 2011 in Cologne for a 35-year spree of art faking, carried out with the complicity of his wife Helene. Major names in the art world – Sotheby’s, Christie’s, the Los Angeles County Museum of Art and the Sprengel Museum in Germany, the dealers Marc Blondeau, Hopkins- Thomas and Dickinson Roundell, and even the Hollywood actor Steve Martin – were all taken in by Beltracchi’s productions. Perhaps the most embarrassed victim was the influential German art historian Werner Spies, the reigning expert on Max Ernst. When he was still director of the Centre Pompidou, Spies had authenticated what turned out to be a Beltracchi fake – The Forest (2) – which was even exhibited at the Max Ernst Museum in Germany in 2006 and sold for an impressive $7 million to the French publisher Daniel Filipacchi, through Galerie Cazeau-Béraudière.2

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Spies actually nodded through no fewer than seven counterfeit works supposedly by the Surrealist painter, in fact by Beltracchi; but he wasn’t the only specialist to be hoodwinked. Alexander Pechstein, grandson of the German artist Max Pechstein, initially agreed to include Bridge on the Seine with Barges in the catalogue raisonné of his grandfather’s work. Art historian Andrea Firmenich was at first convinced by a ‘Campendonk’, Red Picture with Horses, after it sold at auction through the German firm Lempertz for €2.4 million to a Swiss gallery, Artvera’s. But when asked by Lempertz to produce a certificate of authenticity for Artvera’s, she had some doubts about the provenance. Having failed to obtain more information, she asked for technical analysis. The initial examination by a German laboratory, Doerner, was inconclusive but worrying enough for her to seek a second opinion, so the London-based forensic investigator Dr Nicholas Eastaugh was called in. He proved it was a fake by finding titanium white, which wasn’t commercialised at the time the work was supposedly painted, under the other paint layers.3 Other artists ‘revisited’ by Beltracchi included Fernand Léger, André Derain, Raoul Dufy and Kees van Dongen. At his trial, the German authorities had only cited 14 fakes, for reasons of time and money – despite having many more doubtful paintings in their files. Beltracchi subsequently gleefully proclaimed to anyone who would listen that the number he had produced was much higher, at least 300. Many, he claimed, remained unidentified as his productions and were still circulating on the market, with some even hanging in museums. Beltracchi left jail in January 2014 but even before that, he had been painting again while on day release, this time signing the works with his own name. As well as writing two books in prison, Beltracchi starred as himself in the documentary Beltracchi, The Art of Forgery (2014)4 produced by Arne Birkenstock – who coincidentally was the son of his lawyer. That spring day in Basel, Beltracchi was publicity-gathering for a reason – he was selling new work on the third floor of the adjoining

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Ramada Plaza hotel, in an exhibition organised by his gallery, art room9. Hung around a single room were a selection of the same sort of rip-off works that he had once passed off as genuine – a ‘Vlaminck’, a ‘Derain’ or a ‘Léger’, but this time signed ‘Beltracchi’. The gallery claimed that three paintings had sold on the first day. When not perform ing for journalists and cameras outside, Beltracchi hung around the hotel. He, who had become an unlikely folk hero in Germany during his trial for having fooled the whole art trade, experts, dealers and collectors, now cut an unimpressive figure in Basel, with unwashed long hair and a distinct stoop.

RISING PRICES, RISING FORGERY

Counterfeiting art has a long and inglorious history, dating back to antiquity. For an artist in the Middle Ages, an important element in their work was the authenticity or otherwise of the expensive materials used in paintings, such as metal leaf (gold, silver) and pigments such as red lakes (made from insects) and mineral blues (ultramarine and azurite). Sometimes artists substituted cheaper versions, or were duped with poor materials by their suppliers. But by the Renaissance, says Dr Jilleen Nadolny of Art Analysis and Research, ‘[The] newly emerging commodity of collectible art, desired for its embodiment of the skill of a revered master or of a glorious historical era, was now fair game for the forger and the response seems to have been rapid.’5 Famously, even the great master Michelangelo faked a sleeping Cupid, artificially aged it and sold it to Cardinal Raffaele Riario of San Giorgio,6 while Terenzio da Urbino painted on old panels and then smoked and distressed the end result – pretty close to what is still done today. So faking has always flourished; as the former Victoria and Albert Museum director Mark Jones has written, fakes are, ‘Before all else, a response to demand, an ever changing portrait of human desires. Each society, each generation, fakes the thing it covets most.’7 One only has to look no further than the booming trade in relics of saints

111 a fortune on your wall? and martyrs in the medieval world, or Roman or Greek ‘antiquities’ cobbled together for eager Grand Tour collectors in the eighteenth century. Quite simply, whenever the price of art is high, so faking proliferates as greedy forgers get to work. Thus the conditions in the twentieth- and twenty-first-century art markets, with their skyrocketing prices, were ripe for a veritable tsunami of counterfeiting. From multiples ‘by’ Salva dor Dalí to questionable Modiglianis, forgeries poured onto the market, transacted through dealers or auctioneers or offered to the naïve over the internet. Eastaugh estimates that today, between 20 and 50 per cent of the works on the art market are fakes, forgeries or misattributions. Dr Tim Hunter, whose firm Falcon Fine Art lends against artworks, goes further: ‘I would say that 90 per cent of the works of art shown to us are not “right”,’ he says: ‘And they come back regularly. We get shown a dud Modigliani, Leonardo, Caravaggio or Pollock about once a month, for instance.’8 Others are more cautious – Noah Charney puts the number of true forgeries, those created from scratch with intent to deceive, at just 1 per cent of the market. But he says that the number of fakes (existing works deliberately misattributed, repainted, etc.) in circulation might be up to 20 per cent of the market, adding, ‘It’s impossible to estimate the true figure.’9 Claudia Andrieu, legal advisor to the Picasso Administration, says that the organisation receives over 1,000 submissions every year of ‘Picassos’ – of which about 5 per cent are genuine.10 The twentieth- and twenty-first-century art sectors have grown astonishingly over the last decade or so; this growth, in turn, translates into the eye-wateringly high prices seen in the auction room, which act as a huge incentive to produce counterfeits. ‘Twentieth-century art is logistically easier to fake; it’s easier to do something abstract or min- imalist than it is to do something more naturalistic such as an Old Master painting,’ says Charney. ‘The materials are where people get it wrong most frequently,’ he continues. ‘Getting old supports and types of pigments, that’s the hardest thing to do and that’s usually how

112 A Tsunami of Forgery people are caught out. The wrong materials are what the industry refers to as “time bombs”, a term that was first coined by [the twentieth- century faker] Tom Keating. He inserted them intentionally, but they can also be anachronisms.’ Charney makes a sharp distinction between ‘mass market’ forgers who churn out, for instance, Miró, Chagall or Dalí lithographs, based on images found online, and the ‘master forgers’, which he says is a different category: ‘Often, they are in it for the thrill of fooling the art world. The money is sometimes secondary.’ And fool them they certainly did – and still do. This century has seen a number of major scandals, whose reach and scale surpasses even the headline affairs of earlier times. Beltracchi was one; some of his fakes, as we have seen, still infest the market. But just as he was being jailed, in 2011, a much bigger case blew up, this time in the US. This time the targets were the giants of the American Abstract Expressionist movement, being audaciously copied and sold as the real thing. The first public sign of the brewing scandal was the sudden shuttering of Knoedler, one of the oldest and most prestigious art galleries in the country, after 165 years in business. It quickly emerged that the vener- ated institution, and its former president Ann Freedman, were suspected of having sold counterfeit works ostensibly by artists such as Robert Motherwell, Jackson Pollock and Mark Rothko, over a 30-year period. In fact, Knoedler had been on the authorities’ radar for some time. Court papers have revealed that as early as 2009, the United States Attorney’s Office had begun to investigate the gallery and subpoenaed it, seeking information about the works in what was dubbed the ‘Rosales Collection’.11 Soon after, Freedman resigned and opened her own gallery close by. It emerged that between 1994 and 2009 Freedman and Knoedler Gallery had been obtaining works of art from a Long Island art dealer, Glafira Rosales, firstly on consignment, then as outright purchases. Rosales had cooked up a story about obtaining the paintings from an unnamed client (‘Mr X’) or his son (‘Mr X Jr’) who had inherited

113 a fortune on your wall? them but who wanted anonymity. Freedman had accepted this fabrication at face value, or so she maintains to this day, arguing that such secrecy is part and parcel of the way the art market works and that she believed the works were genuine; she even bought three herself, plus a part share in a ‘Pollock’. She sold other paintings to a series of high-profile clients, who trusted her judgement and the reputation of the art gallery. Alarm bells didn’t ring when the Dedalus Foundation, which owns the copyright to Robert Motherwell’s works, reversed its earlier authentication of Spanish Elegy, supposedly painted in 1953, and branded it a fake. The work had been sold in 2007 to a European gallery, Killala Fine Art, for $650,000 by a former salesman at Knoedler, Julian Weiss man. He had obtained it from Rosales. When Dedalus reversed its opinion two years later, Killala went to court to get its money back, and in a 2011 settlement Rosales and Weissman paid back the $650,000. However, the trigger was pulled over a densely patterned drip painting in black, yellow, red and white ‘by’ Jackson Pollock, Untitled (1950). It was sold by Knoedler to London-based hedge-funder Pierre Lagrange for $17 million in 2007. When Lagrange later tried to resell, both Sotheby’s and Christie’s refused to handle the painting, because it wasn’t in the Pollock catalogue raisonné. Subsequent testing revealed that the drip painting had yellow pigments that dated from 1970 – well after the artist’s death in 1956. Lagrange threatened a lawsuit; Knoedler snapped shut. Lagrange sued, but before coming to trial the case was settled confidentially.12 Still, the dispute spread panic; as the news of possible counterfeiting hit the press, other collectors were examining their Knoedler purchases with growing horror. Former Gucci president and subsequent Sotheby’s chairman Dome- nico De Sole and his wife Eleanore discovered there was a problem while attending Art Basel Miami Beach in 2011. Eight years earlier, they had bought a ‘Mark Rothko’ from Knoedler for $8.3 million. Scanning a newspaper on her iPad at the fair, Eleanore read that other buyers were suing the gallery for allegedly fake paintings. ‘[Their] provenance

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was exactly what we’d been told,’ she testified later in court. ‘I went into a shaking frenzy.’13 The revelations kept coming, until the final bombshell exploded, confirming that Knoedler had indeed handled forgeries. Glafira Rosales – the source of all these Motherwells, Rothkos, Pollocks and de Koon- ings – suddenly crumbled, and in 2013 pleaded guilty to conspiracy to sell fake works, conspiracy to commit money laundering and even several tax crimes related to the fake art scheme. She admitted selling some 60 works of art through Knoedler and Weissman for about $33.2 million; the gallery had sold on the works for a stunning total of over $80 million.14 It emerged that all the fakes sold through Knoedler and one other Manhattan gallery had been produced by an aged Chinese painter, Pei-Shen Qian, who was living at the time in Queens, New York. Pros- ecutors found at his home books on Abstract Expressionist artists and an envelope full of old nails marked ‘Rothko’, according to the federal indictment.15 According to the same document, two Spanish brothers, José Carlos Bergantiños Diaz (Rosales’s partner) and Jesús Ángel Bergan tiños, had supplied materials for the fakes that Rosales had confessed to selling. It turned out that they might have been making fakes for much longer; according to the indictment, in the late 1980s they had commissioned Qian to paint works ostensibly by Keith Haring, Jean- Michel Basquiat and Francisco Zúñiga. The Diaz brothers reside in Spain, and a Spanish tribunal refused the US’s demand for extradition; their lawyer says they should be tried in Spain.16 As for Qian, he disappeared back to China before Rosales’s confession; interviewed in Shanghai in 2016 by ABC News, he claimed he did not know his paintings were being sold as genuine. In total, ten suits were brought against the Knoedler Gallery, with nine also naming Ann Freedman as one of the defendants. The charges ranged from fraud, fraudulent misrepresentation and breach of warranty under the RICO Act (Racketeer Influenced and Corrupt Organizations), legisla- tion originally brought in to prosecute the Mafia in the 1970s.

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Once it was confirmed that the paintings were indeed fakes, the duped buyers had to take another tack in their lawsuits against the gallery, its owner Michael Hammer and its former president Ann Freed man. They now needed to prove that the defendants should, or could, have known that the paintings they sold for such massive prices were duds and so were guilty of fraud, obviously something that Hammer and Freedman vehemently denied. Domenico and Eleanore De Sole sued Knoedler, Freedman and the gallery’s holding company 8-13 for $25 million, triple the cost of the Rothko. On a cold February day in Manhattan, a battery of journalists plus many interested visitors – including gallery owners – settled into the public gallery in the grand Southern District Court to watch the fireworks. For two weeks the prosecution and defence indulged in thrust-and-parry battles about authenticity, provenance and trust, with some fierce clashes between lawyers, witnesses and the judge. Among a cascade of details it emerged that without what Freeman had called the ‘Secret Santa’ (Rosales), the Knoedler Gallery would have been millions of dollars in the red. One expert witness, Martha Parrish, testified that in her opinion, buying unprovenanced works of art at knock-down prices and paid for in cash, as the prosecution claimed Knoedler had done, should have made any reputable dealer ‘run like hell’.17 Before the trial started, Ann Freedman had proclaimed that she was looking forward ‘to her day in court’, when her good faith would be demonstrated and she would be cleared of any suspicion of wrongdoing. But two weeks into the trial, just before her eagerly awaited appearance on the witness stand, the judge announced that the case had been settled. The terms remain undisclosed, and the key question – did Knoedler and Freedman knowingly sell fakes, or were they duped as well? – remains unanswered. But what is certain is that the case unveiled a murky side of the art market, with its lack of transparency over provenance, the unreliability of expertise and conflicts of interest between galleries and specialists.

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Half a dozen specialists were called to testify, including Rothko’s son Christopher and art historian Stephen Polcari. ‘Haven’t you said in the past that all Rothkos look alike?’ art historian Stephen Polcari was asked during the trial, to which he replied – to some mirth in the audience: ‘Well, yes, he’s famous for having a signature style.’ ‘So, as for that signature style,’ the attorney continued, ‘from one to another, you can’t tell?’ Polcari agreed. He had produced ten reports on works from the Rosales trove, paid for by Knoedler, and was forced in court to admit that all ten were forgeries. In testimony, he insisted that he was placing the works in the context of the artist’s work, rather than simply authenticating them. ‘They were very good works . . . they just happened to be done by other artists,’ he said.18 This exchange and another at the same trial, with art historian and Rothko scholar Oliver Wick, revealed that Wick had received $300,000 from the gallery and a $150,000 ‘introductory commission’ from the buyer of a Rothko. At the time of the sale, Wick was a curator at the Fondation Beyeler in Zurich, which had previously displayed the work in an exhibition.19 At the time of writing, the De Sole case was the only one of the original ten lawsuits to have gone to court; three were still pending, concerning two ‘Rothkos’ and one ‘Jackson Pollock’. Among those who partly settled was Las Vegas casino owner Frank J. Fertitta III, who bought a ‘Rothko’ in 2008 for $7.2 million. According to Fertitta’s lawyers, ‘Wick had an ongoing relationship with Knoedler and showed at least two forged paintings from the Rosales Collection at the Beyeler Foundation’. Wick’s lawyer denied there was such a relationship; insisted that contacts were ‘sporadic’; that Wick was one of many people who were fooled by the Rothko and that he ‘had no role in the sale of it whatsoever.’20 According to court documents, after the deal to sell the ‘Rothko’ to Fertitta was concluded, Wick sent an email to Eykyn Maclean, the London dealership which was an intermediary in the deal, writing about a second work by Rothko. ‘It seems as if they have been painted within a week,’ Wick wrote, describing the second painting as ‘[a]gain

117 a fortune on your wall? in excellent condition, from another private collection, same mount, simply perfect . . .’21 According to Wick’s lawyer: ‘[Wick] never had the work to offer for sale, and he never offered it for sale; and he did not even know whether it was available for sale. He merely mentioned it to Eykyn, as the gallery frequently inquired about pictures with him.’ Fertitta reached a confidential settlement with the gallery and Freedman in 2016, and in 2017 settled with Wick, whom he had initially taken to court in Switzerland, accusing him of knowingly nodding through a forgery. The court eventually dismissed those claims, saying that ‘no evidence was submitted showing that the defendant was aware of the painting being a fake’.22 ‘We won the case in Switzerland, where Wick’s name was cleared and we won our legal fees. After that was upheld on appeal, the case in New York had no future,’ said Wick’s lawyer, David Baum.23 In 2017 Fertitta settled with Ann Freedman and Knoedler but still had an outstanding case against another specialist at the time of writing. The last case against Freedman, brought by collector Francis Hamilton White, was settled in August 2017. A number of worrying elements clearly emerged from the two cases of Beltracchi and Knoedler. Firstly, the lack of transparency in the art market, with a storied gallery – and its customers – apparently willing to accept a ‘Mr X’ and a ‘Mr X Jr’ as provenance. But just as important was the devastating undermining of trust in expertise. It is difficult to avoid concluding that experts in these faking cases might have been careless – in the case of Beltracchi, Werner Spies did not even look at the backs of the seven Ernsts he authenticated;24 in the case of Knoedler, one work was sold with a ‘Pollok’ signature.25 Or, perhaps even more challenging, some experts appeared simply not to be able to tell ‘right’ – the term in the art market for genuine – from wrong. ‘Connoisseurship as we know it has almost become a naughty word these days,’ says Noah Charney. ‘Experts often get it wrong, and it’s such a faux-pas in the art world to do so, that they end up entrenched in their opinion – even if evidence arises that they did make a mistake.’

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The undermining of specialist opinion demonstrated by these cases was not confined to contemporary art, and a number of cases concerning Old Master paintings and the decorative arts also exploded shortly after the Rothko/De Sole case ended in New York. Again, renowned experts were found to have authenticated forgeries – at the highest level. One case concerned two elaborate gilded chairs, supposedly from a set originally in the Palace of Versailles, which turned out to be counterfeit. Others, in the Louvre and in Versailles, were suspect. During a police investigation it emerged that a commode attributed to the cabinet maker Alexandre Jean Oppenordt was suspected of being phoney. The renowned specialist, often dubbed ‘Monsieur Meuble Royal’, Bill Pallot, author of The Art of the Chair in Eighteenth-Century France,26 a professor at the Sorbonne and a court-approved expert on seating furniture, admitted in court he had had the two chairs fabricated.27 The full hearing was expected to come to court in 2018. What made this all the more astonishing was that the two chairs – supposedly made in 1780 for Marie Antoinette – had been classified by Louvre specialists as ‘national treasures’ in 2009 and barred from export. The only reason they had not been bought by Versailles was their price – €1 million each, which the palace deemed too expensive. They had been sold to Sheikh Hamad Al-Thani of Qatar for his Parisian Hôtel Lambert, but he had returned them to the venerable Parisian dealer Kraemer, and been reimbursed just before the scandal broke.28 Laurent Kraemer has always denied knowing they were fakes.29 Just as astonishing was the scandal, also in France, concerning Old Master paintings – a sector that requires exceptional skill and artistry as well as a thorough knowledge of materials. These are not simply a few blocks of colour on a canvas, but works centuries old, in one case painted on lapis lazuli ostensibly by Orazio Gentileschi, as well as others by Frans Hals, Lucas Cranach the Elder and Parmigianino. The first sign of a problem came in 2015, when French police seized ‘Cranach’s’ Venus, supposedly from 1531, from a French exhibition after an anonymous tip-off that it might not be authentic. It belonged to the

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Prince of Liechtenstein.30 Soon other paintings came under scrutiny, with Gentileschi’s David Contemplating the Head of Goliath on lapis lazuli also questioned. By 2016 Sotheby’s reimbursed $10 million to the US buyer of a portrait of An Unknown Man ‘by’ Frans Hals with the same provenance. Sotheby’s stated that ‘an in-depth technical analysis . . . established that the work was undoubtedly a forgery’. The vendor of the painting, London dealer Mark Weiss, did not accept this finding and at the time of writing was being sued by Sotheby’s to recoup its losses – demonstrating once again that authentication remains an imprecise art. France was also the scene of another interesting case, this time concerning Van Gogh. In 2016 the publisher Seuil released a book, Vincent van Gogh: the Lost Arles Sketchbook. Written by the Canadian academic Bogomila Welsh-Ovcharov and retired British academic Ronald Pick- vance, who died in 2017, the book reproduces a hitherto unpublished sketchbook supposedly used by Van Gogh from May 1888, soon after his arrival in Arles, up until shortly before he left the asylum at Saint- Rémy-de-Provence two years later. The owner remains anonymous, and the sketches, if genuine, could be worth millions of dollars. But a major row immediately blew up, with the Van Gogh Museum issuing a statement rejecting authenticity: ‘In our opinion, the drawings in the sketchbook were not made by Van Gogh . . . These are much later imitations of Van Gogh’s drawings by someone inspired by reproductions of his work, who overlooked the fact that the drawings had originally been made in black ink and had faded to brown over time,’ it said in a statement posted on its website.31 It turned out that the museum had already rejected the works some years previously – curators had been shown photographs of 56 of the drawings in 2008 and 2012, and then some of the originals in 2013. Both times the museum did not consider them authentic.32 But the authors of the book are well-respected academics; their publisher, Seuil, told me: ‘Further researches are under way but we have no doubt about this sketchbook and about the provenance.’33

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NOT JUST THE TOP END OF THE MARKET

While these cases all involve high-end art, they are not the only ones, and indeed according to FBI agents, forgery is widespread, and growing, at a much lower price level. The FBI’s Meridith Savona, who investi- gates art and antiquities with the Major Thefts Squad, says; ‘The high- end cases are fewer and further between, but they are the ones to hit the headlines. Far more victims are caught by fakes selling for $10,000, $12,000 or $20,000; we see these cases all the time.’34 A case in point was a group of hundreds of works purportedly by Jackson Pollock, some identified as fakes by the International Founda- tion for Art Research (IFAR) in 2017. According to Dr Sharon Flescher, IFAR’s executive director, the works were sold at five-figure prices and targeted modest collectors in the Mountain States and along the East Coast, ‘a whole network of people who are not professional dealers, a different world from what we’re used to’, says Flescher, who notes that with lower prices, the fakes circulate more easily, but that the figures add up because of the potentially large number of victims.35 Another case successfully prosecuted by the FBI was that of art dealer Eric Spoutz, who in 2017 was sentenced to prison for selling forgeries of lower-value works by well-known artists such as Willem de Kooning, Franz Kline and Joan Mitchell, using counterfeit documents to convince buyers of their authenticity.36 According to Savona’s col- league Christopher McKeogh, ‘a single case may be about the sum of $5,000, but then we run the names in our system and find that six months ago there was a person in Phoenix with a similar complaint, then six months before that in Seattle; it quickly turns out there are 150 victims.’37 In the case of Spoutz, the FBI recovered about 40 forgeries, but McKeogh thinks there could be hundreds more as yet unidentified. ‘This is a case we’re going to be dealing with for years,’ he says. And other cases are not even pursued, according to the agents; some owners of fake art remain in denial, refusing to believe they have been conned even when presented with irrefutable evidence.

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A GLOBAL PROBLEM

The problem is not confined to the US and Europe. ‘As prices rise, the amount of faking rises as well, as new opportunities present themselves,’ says Eastaugh: ‘There are similar cases in India, Indonesia . . . even China. Often they concern artists who have recently died.’ India has seen its share of scams, particularly for the work of the Moderns, and notably before the global financial crisis of 2008–9, when prices were soaring and dozens of art funds were tempting investors with promised high returns. In just one example, Syed Haiden Raza found almost all of a Paris show of his work – put together by his nephew – consisted of forgeries.38 While there are no verifiable figures available, an Indian art blog estimates that the market for fake art in India could be as much as 30 per cent of the total – a market which it estimates between Rs 500 to 1,000 crore (approximately $75 to $150 million). Its authors wrote: ‘We walked in unannounced to a few galleries that deal with works of the Moderns in Colaba, Mumbai. What we uncovered was shocking: fakes of major artists such as M.F. Husain, Manjit Bawa and F.N. Souza, among others, line the walls of these galleries, with art dealers openly touting poor-quality fakes as originals.’39 In Indonesia, a 2014 film by Patricia Chen, The 24 Hour Art Practice,40 tracked the collection of the country’s tobacco mogul Dr Oei Hong Djien, who has established three private museums for his vast collection of contemporary Indonesian art. But a book launched by a rival Indonesian Art Lovers Association (PPSI), entitled Jejak Lukisan Palsu Indonesia (Tracing Fake Indonesian Paintings), openly questioned the authenticity of his collection, claiming it was full of counterfeits.41 Speaking to Chen, Dr Oei did not deny he could have fakes, saying no collector has perfect judgement; however, he also said that he would only accept that the works were fakes if the forger demonstrated the execu- tion of the exact same painting right before his eyes – which was never tested.42 Chen presented both sides of the problem, but says she was

122 A Tsunami of Forgery threatened and her film was suddenly pulled from its first showing in Singapore in 2015 for reasons that she was unable to explain fully.43 As for China, in 2011 a New York Times investigation found manifold examples of faking, including a painting attributed to the twentieth- century artist Xu Beihong which sold at auction for more than $10 million, but was in fact produced by a student in an art academy.44 The problem is compounded by other issues which are not easy to explain. An example is Gong Fu Tie, an $8.2 million calligraphy scroll by a Song dynasty poet, Su Shi. It was bought by the flamboyant Chinese collector Liu Yiqian.45 But three experts from the Shanghai Museum quickly contested its authenticity, although Sotheby’s specialist Henry Howard Sneyd firmly backed it.46 Local sources suggested that this may have been a face-saving exercise, covering for the fact that the scroll had previously been allowed to leave China. The balance of opinion is that it is genuine, and in 2016 the scroll was shown in the Long Museum in Shanghai, along with another 40 Song and Yuan pieces.47

A WORLD APART

Most people wouldn’t buy property or even a second-hand car without a minimum of checks, of ownership and condition. And yet one of the puzzles of the art world is that these massive scandals are so prevalent. The reasons are multiple. One is a question of trust: confidence trick- sters throughout the ages have understood that people have more faith in those they perceive as being from the same background or class. In the art world, a dealer once told me he visibly used a prestigious ‘black’ credit card to pay for dinners – ‘It costs a lot but I have it to reassure clients I am “one of them”, it makes them feel more comfortable,’ he told me. In the case of Knoedler, buyers relied on the gallery to sell authentic works; indeed, this aspect was much discussed during the De Sole/Rothko trial. In the case of Bill Pallot, it is perhaps unsur- prising that the Versailles furniture specialists could have been swayed

123 a fortune on your wall? into making a less-than-rigorous analysis, assured of Pallot’s hitherto stellar reputation. They would certainly have been more wary of chairs presented by an unfamiliar dealer in a battered van. And yet, in the case of Rosales, according to court documents, she was previously unknown to the gallery and brought some of the paintings in the boot of her car – hardly the white-glove treatment generally accorded to multi-million-dollar works of art.48 But the buyers didn’t see this; they relied on the storied reputation of Knoedler. ‘There is a strange psychology in the art world, which requires explanation for those who aren’t familiar with it,’ says Charney. ‘There is a tendency for the trade not to let on even if they have suspicions – it’s easy to claim that you made a mistake. It’s very difficult to prove the intention to defraud.’ And, he continues, ‘There is at least a sub- conscious desire for a work to be authentic and saleable because it makes money if it is good and everyone loses out if it’s not.’ According to Christopher McKeogh of the FBI, greed is a significant element: ‘There are Joan Mitchell paintings selling on eBay for $3,000, and the person who buys them isn’t thinking, “this is lovely”, they are thinking, “The vendor doesn’t know what he or she is talking about, it’s worth $180,000, I’m going to put one over on him, buy it and resell and make a fortune!’’’ As for provenance, which has become heavily relied on for establishing authenticity, cunning forgers have got there as well: one notorious case involved the British painter John Myatt. In 1999 he was jailed for 12 months after admitting faking some 200 modern artworks supposedly by artists including Alberto Giacometti, Ben Nicholson, Nicolas de Staël and Graham Sutherland, under instruction from his ‘puppet master’ John Drewe, who is thought to have made some £1 million from the scam and who was jailed for six years.49 Not only did Drewe commission the fakes, he also contaminated the archives at the Tate and at the Victoria and Albert Museum, cunningly inserting images of forgeries into catalogues and so manufacturing bogus provenances. To this day, some 140 of his creations are still at large, unidentified.

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Spoutz also forged provenances through receipts, bills of sale, letters from dead attorneys, and other documents, using a vintage typewriter and old paper. But he made mistakes such as including zip codes in addresses of previous owners – before these codes were introduced – and using the same typewriter for different invoices.

FORENSIC TESTING – THE WAY FORWARD

Forensic testing, which is a comparatively new weapon in the arsenal for fighting forgery, has been key in unmasking many of the works cited above. According to Nicholas Eastaugh, ‘We are in a small field, and it has taken time for us to let the art world know we are here. But today there is a significant shift to look at the structure of a work of art, as well as its sources.’ He has set up a historical ‘pigments project’ with over 3,000 samples, and is adept at identifying subtle differences. Despite this he warns that forensic testing comes as only a part of a package of information: ‘Something can be unlikely, but not zero: for instance, a new pigment might have been tested before being commercialised. This comes to the heart of one of the perceptions about science, it’s either true or not; in reality, testing is about risk assessment.’ Noah Charney thinks every work over a certain value should be subject to forensic testing: ‘There is too much of the gentlemen’s agreement still present in the art trade, and objects, particularly of extremely high value, should all be tested; there’s no reason not to do so,’ he says. ‘If forensic testing was a default on such works, you would see far, far fewer because they would be eliminated; that would be a huge disin- centive to put forgeries on the market.’ But while forensics have advanced, so have the fakers’ techniques. According to the famed ‘art cop’ Detective Don Hrycyk who runs the LAPD Art Theft Detail, technology is making it easier for forgers. ‘Reproduction techniques mean they can run off excellent fakes by the likes of Chagall, Matisse or Picasso and pass them off as limited editions very easily,’ he says. ‘And what really worries me is 3D printing;

125 a fortune on your wall? this enables small sculptures to be made very accurately, with the correct dimensions. I am already seeing them. They can be produced quickly and cheaply. Antiquities are being particularly targeted, and they are being sold to people without much knowledge – but with more money than sense!’50 McKeogh concurs: ‘High-resolution computers and printers allow con artists to really make fantastic copies today. You can make such high-quality prints it’s tough to tell the difference.’ ‘Faking doesn’t just damage wealthy people,’ says Eastaugh; ‘it corrupts and degrades the information we have on art history, which undermines our culture and harms us all.’ But, he adds: ‘We usually try to use a broader word or phrase than ‘faking’ – ‘uncertain attribution’ is closer as it covers things like hopeful (mis-) attribution and changes in scholarship.’ And there is more at play than just wrongdoing, as Mark Jones has written: ‘It is not that [fakes] cheat their purchasers of money, reprehensible though that is, but that they loosen our hold on reality, deform and falsify our understanding of the past.’51

126 Part iii money, money, money

Chapter 6 investment You have to collect wide and deep, and within your portfolio things will go up and down. If you buy two stocks and one goes down, don’t be angry at IBM or GM. Aby Rosen, real estate tycoon1

Art as an investment? Terrible! Awful. No liquidity, difficult to sell and the chances of you buying the right stuff are slim to none. Stefan Simchowitz, art investor and collector2 5 April 2017: The Crozier warehouse in Chelsea, New York, close by the Hudson River, was built in 1923, at a time when the area was buzzing with transportation and stowage of everything from coal to dry goods. Raised 6 feet above sea level, the concrete building is now given over to storage of fine art. It sits in the centre of a humming contemporary art district, with mega-galleries such as Hauser & Wirth, Zwirner and Gagosian all clustered in the same few blocks. The firm has eight warehouses – one close by in Brooklyn, others further afield in Delaware and Connecticut – and trucks shuttle constantly between them. In Chelsea, three ground-floor ‘viewing galleries’, smartly kitted out with track lighting and spotlights, can be used by art dealers to show works to prospective clients. Another room is set aside for photography. Discreetly placed cameras record comings and goings, while some of the 250 art handlers employed by Crozier – some of them aspiring artists themselves – bustle around, moving crates into the clanking industrial-size lifts. The Chelsea site has nine floors of storage, all packed with crated art. ‘And each of our Newark facilities is three or four times as big,’ Crozier’s president, Simon Hornby, tells me. He says that private collections account for about 35 per cent of the art held; the rest is split between museums, art galleries, banks and estates. On my visit, crates holding photographic works from a recent Pace show were being manoeuvred back into one of the units. According to Hornby, some private collectors’ art goes on a circular trip each year – following the owners when they move to their holiday homes in the Hamptons, in Palm Beach and in Aspen, even to a yacht on the Mediterranean – and returning to storage in between. I couldn’t help thinking of Renaissance France, when the monarchs’ processions to their châteaux in the Loire were preceded by baggage trains of furnishings; the châteaux were left bare between visits.

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Hornby reckons that 80 per cent or even more of all the art in the world is in storage at any one time; this is now a $1 billion+ a year global business. Collectors have just too much art to keep at home, or they want it in a safe place, or they have only bought it as an investment; galleries need storage between shows and to move the art from fair to fair, or to be shipped worldwide. Banks that have taken art as collateral against loans tuck it safely into Crozier’s vaults. The business, according to Hornby, has doubled in size in eight years, and he says it can only grow as more and more art is produced.

* * * *

What has certainly enormously boosted the art storage business, and explains the rising demand for new warehouses worldwide, is the art-as-an-investment industry. ‘Until about 10 years ago,’ says London dealer Stéphane Custot, ‘modern and contemporary art collectors were mainly made of art enthusiasts and amateurs, they had a real passion, spending their money on what they liked, and they collected in order to simply enjoy the work in their home environment. This kind of client still exists, thankfully, but today you have to work with an increasing number of art funds or speculators buying art for investment. Art buying has become accessible to a much larger audience than before and is today considered an asset. The result of this is that more work sleeps in warehouses rather than hanging in collectors’ homes.’ Even more tellingly, a New York dealer and appraiser says: ‘In the last year, I only physically saw one piece of art that I negotiated. Every- thing else was bought and sold via jpegs and remained in storage. It was all for investment.’3 The importance today of art as an investment is testified by the swathes of articles, reports, online resources and books that have been published on the subject, from Melanie Gerlis’s Art as an Investment? – complete with that sceptical question mark – to the Art and Finance reports produced annually, since 2011, by Deloitte’s Luxembourg offices.4

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Indeed the combination of two very different sectors – art and finance – has spawned or bolstered a whole new branch of activity; banks, advisors, dealers and auction houses have all profited from the growth of this industry. Among the initiatives targeting art buyers, either directly or indirectly through their advisors and other intermediaries, are online data analytics, collection management, valuation, authentication, shipping and storage. Then there are the newcomers in the investment field – art funds, specialist art loan companies and even bodies who are attempting, unsuccessfully at the time of writing, to turn art into a fungible commodity which can be traded on a stock exchange like copper or equities.

UN PEU D’HISTOIRE

The notion of art as an investment is not new. In 1625 Balthazar Gerbier, adviser to George Villiers, Duke of Buckingham, promised his client: ‘Our pictures, if they were to be sold a century after our death, would sell for good cash, and for three times more than they cost. I wish I could live a century, if they were sold, to be able to laugh at these facetious folk who say it is money cast away for baubles and shadows.’5 More recently, the Peau de l’Ours was probably the first art fund, established in Paris in 1904 and liquidated at the Hotel Drouot in 1914, with its 13 partners reaping four times their original outlay.6 In 1955 Fortune magazine published an article touting art as a speculative investment, citing de Kooning, Rothko and Clifford Still among others as ‘growth stocks’.7 In the 1970s and until 1980, the British Rail Pension Fund put 6 per cent of the railwaymen’s cash – around £3 million per year – into a wide range of art, from manuscripts to Monet and Matisse. Its results were mixed, though, with some investments, such as furniture and tribal art, dragging down better results from Impres- sionist paintings, leading to an overall return on investment of 4 per cent, after allowing for inflation.8

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ART FUNDS . . . GOING, GOING?

Art – particularly expensive art – has justifiably always been regarded as an investment in that the owner expects it to increase in price or at least to hold its value. But the idea really accelerated after about 2004, according to Deloitte Luxembourg’s Advisory and Consulting Director Adriano Picinati di Torcello. ‘That was a time when the art market was rising fast,’ he says. ‘The interest in this alternative market was fuelled by academic publications analysing art as an investment and as an option of portfolio diversification in the early 2000s. There were influential articles for instance by the New York University professors Jianping Mei and Michael Moses, or Rachel Pownall [Campbell] from Maas- tricht University who, in my view, added to the increasing interest in this type of asset class. And in the wake of these developments the first Fine Art Fund was launched in 2004.’9 The FAF was far from the only launch in that heady period: ABN- AMRO’s ‘fund of funds’ caused even greater anticipation when it hit the headlines a few months later. ‘There was huge excitement because you had a bank deciding to invest in art and create this vehicle, and on the back of that there were smaller entities springing up saying, “We too can set up an art fund,”’ says Anders Petterson, founder of the art market analysis firm ArtTactic.10 However, this whole sector came crashing down, particularly after the 2008–9 global financial crisis. The ABN-AMRO fund of funds was abandoned a year later; of the 36 funds listed by Noah Horowitz in Art of the Deal in 2011, 24 had been abandoned or had undetermined status after 2009.11 While the art fund industry revived to an extent after the global financial crisis, and peaked in 2012 with Assets Under Management (AUM) of $2.3 billion,12 it then slowed. In 2015 AUM in this sector had halved to just $1.2 billion. However, private funds (when a group of investors work on a less structured basis without seeking regula tory approval) seem to have grown, although by their under-the- radar nature they are more difficult to quantify. The Deloitte report

134 Investment even sounded a warning: ‘There is an increasing possibility that the art investment market could grow into becoming an unregulated shadow market, further undermining market transparency and poten tially increasing speculation and volatility in the art market.’13 (See Chapter 8.) ‘There were some survivors of the initial boom, notably the FAF, but due to the lack of transparency in the art fund market, no one really knows how well these funds perform,’ says Petterson.14 Indeed, FAF has moved away from being purely a fund, changed its name to ‘Fine Art Group’ in 2016, and has added a number of other services to its offer, including art lending – about which more below. According to Petterson, art funds had two handicaps. Firstly, banks were wary of investing in art in view of its drawbacks, as explained later, and secondly there was a reputational issue, particularly after the Fernwood fund went belly-up in the midst of lawsuits.15 Investors sued Fernwood Art Investment’s CEO Bruce Taub, accusing him of embezzling $8 million of company funds after the company went into receivership.16 A further question, Petterson says, was that of sustainability. ‘Was the industry big enough to go beyond personal consumption to be put on an institutional footing?’ he asks. ‘“Investible art” is in fact in a very small segment of the market, and you can’t pour billions into it. Everyone is in that territory, fighting for the same artworks – the funds, the dealers, the auction houses, the private collectors, advisors! This doesn’t mean that individuals can’t make a lot of money out of art – but it is difficult to create an industry around it because there simply isn’t the depth of the market.’ This was borne out by the 2017 Art Basel/UBS report on the art market, which found that in 2016 almost half the value of sales at auc tion came from just 1 per cent of artists. ‘Only 15 per cent of artists had works priced in excess of $50,000, and a tiny fraction (just over 1 per cent) had works that sold for more than $1 million,’ said the report.17 From Picasso, Bacon and Richter to Zhang Daqian and Qi Baishi, these

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are the blue-chip, safe ‘brand names’ that investors want – and their focus on such a small group of artists is one of the elements that has been a strong factor in pushing up prices at the top. Research carried out by Artnet magazine in 2017 confirmed this concentration on a few artists. It found that just 25 artists were responsible for 44.9 per cent of all post-war and contemporary art auction sales in the first half of the year. ‘As increasingly wealthy buyers compete for a shrinking supply of name-branded artists, the art market has become highly concentrated at the top,’ it said.18

STUMBLING BLOCKS

As well as lacking depth as a market, investing in art poses a number of problems, both in acquisition and ownership. One of the major handicaps is the market’s illiquidity, lacking a real-time trading platform such as the London Metal Exchange or the Dow Jones. So to resell, an owner has to wait for a suitable auction – which could be six months away – or return the work to the gallery that originally sold it. The gallery will generally not buy it back, but take it on consignment and wait for a suitable buyer to appear or propose it to its existing clients. Here, there is an additional issue: in the contemporary art field, the gallery may be busy selling newer work, and may not be so interested in offloading earlier material. While galleries often demand that they are offered back works of art, as a way of preventing ‘flipping’ (see Chapter 7), in practice this can be problematic. As a West Coast collector explained to me, ‘The non-mega galleries usually have unsold primary market material in stock for which they are paid 40 per cent of the sale price when resold. Why should they use scarce resources (staff and clients) to earn 10 per cent on a resale?’ He continues with this calculation: ‘They prefer to sell a new work from the artist at, say, $60,000, on which they will make $24,000 than sell an older piece for $80,000 on which they will make $8,000.’19 So, as another collector told me, ‘The gallery will take your work on

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consignment, and stick it in their reserve. The chances of them even trying to find a buyer are slim to nothing.’ As well as being illiquid, the market for art has extremely high transaction costs. When buying at auction, the collector has to add a hefty commission, from 12 per cent to 25 per cent, onto the hammer price (see Notes, p.15) – which the pre-sale estimates cunningly do not reflect. So a work estimated at $100,000 to $150,000 – for example Félix Vallotton’s Femme au manchon (1895), which sold at Christie’s London in 201720 and made £320,000 hammer, actually cost the buyer £389,000. In the same sale Diego Giacometti’s Buste de Diego (c.1954), went for £900,000 hammer, under expectations of £1 to £1.5 million – but the buyer ended up with a final price of £1.085 million. To this must be added shipping and eventually storage costs, plus insurance and in some cases conservation. For a single medium-sized painting, storage could be about $250 per month plus insurance at $0.04 per $1, so a $1 million work could cost $3,400 annually. All this for an asset that yields no income. Buying and storing art is not cheap. It doesn’t end there. As an investment vehicle, art has further disadvantages: the very heterogeneity, which gives an artwork its attrac tion, makes it difficult to value, since comparable examples are difficult to find. Even the case of multiples, say a print or a sculpture – which start out identical – can change in value as time passes. The main elements that change desirability are condition and provenance. Asso ciation with a celebrity can boost the price of a work – for instance Robert Indiana’s Numbers (1968), a set of ten prints, made £38,250 ($58,440) in the Gunter Sachs sale in 2012,21 no doubt boosted by the glamour of the German playboy, whereas other sets have never topped $37,000 at auction. And as London prints dealer Alan Cristea points out, prices for Matisse’s Odalisque à la culotte bayadère from an edition of 50, dating from 1925, can vary by three times or more depending on the state of the fine paper they were printed on.22 In addition, track records are limited. The Mei Moses Art Indices – bought by Sotheby’s in 2016 – bases its analysis on 45,000 repeat sales

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of works in eight art-historical categories, about 4,000 of which are resold each year. However, the area that is hottest for investment – post-war and contemporary – is the least tracked, since it offers fewer repeat sales. The index has other weaknesses – the 4,000 results per year are a fraction of the true volume of the market, and in any case only apply to public auction, not to private sale and dealer transactions. And finally, there is a selection bias built in, since resale only tends to occur for the most desirable works. The difficulties of valuing works of art, and particularly of price volatility, are also linked to another phenomenon in the contemporary art market, namely tastes quickly going in and out of fashion. Exam- ples proliferate of artists and movements whose place in the sun came and went briefly. One example is Matthew Day Jackson, who had his moment of glory when his work figured prominently in François Pinault’s Dogana art space in Venice in 2009. The following year his charred portrait of a man with kaleidoscope glasses, Bucky (2007), made over £600,000 – more than ten times its estimate – at Christie’s London.23 More recently, however, after a critically panned exhibition, Day Jackson’s work has not found favour at auction. According to Artnet’s price database in 2016, seven of his 15 works offered were bought in or withdrawn, generally a sign that there was no pre-sale interest. Another example is the British artist Eddie Peake, whose colourful spray- painted works had their moment in 2014 when one sold for £47,500 in London,24 but similar works were making just a quarter of that sum two years later. Taste, fashion, the artist’s own evolving talent are all difficult factors to predict for someone interested in the investment aspect of art, and wanting to gauge possible returns. To this grim list of obstacles must be added the recent and growing problem of faking and forgery (see Chapter 5), as well as the possibility that an artist might decide to dis- own works he or she had definitely made – such as the cases of Cady Noland or Ibrahim Mahama. As Los Angeles-based writer and blogger

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Tim Schneider has noted: ‘The next time you hear a silver-tongued broker explaining the wisdom of adding living artists’ works to your portfolio, ask him how he’d feel about investing in Facebook if Mark Zuckerberg could suddenly “de-authenticate” a few thousand shares any time Goldman Sachs pissed him off.’25

ET POURTANT

And yet, and yet . . . there is no doubt that art is firmly established as an investment. According to the Deloitte report, ‘Art collectors appear to be increasingly focused on investment returns.’ The report notes that this was an important motivation for 64 per cent of the art collectors it polled in 2016.26 The 2016 Wealth Report indicated that 36 per cent of bankers and wealth managers expected their clients to increase their allocation of tangible assets (art, cars, wine) in the next ten years.27 So what are the reasons that persuade collectors to ignore all the above obstacles and plunge into art? The motivations for buying art are complex, and rarely purely commercial. According to the Basel Art Market 2017 report,28 aesthetic and decorative considerations were the prime driver for collectors – 62 per cent of those asked ranked this highest, along with a passion for art and the pleasure of supporting art and culture. The investment potential only ranked fifth on the list. There may be some reporting bias here, though, as buying art as an investment is still rather frowned upon, both in the market and among many collectors, who like to affirm they are buying at least partly for cultural reasons. Art’s special status as a positional good, communicating wealth, prestige and status, well outweighs some of the disadvantages. Art’s special qualities of portability means it can be bought with one currency in one country, but resold in another – acting in effect as a sort of alternative currency or shadow money. ‘I think everybody sees art as a considerable store of money that is quite easy to move around the globe,’ says Phillips’s highly regarded CEO, Edward Dolman. Then there is the

139 money, money, money desire to take part in the seductive lifestyle of the globe-trotting art collector, jetting between smart vernissages, edgy openings and studio visits. ‘Collectors feel part of an extraordinary group, which has a very attractive, culturally charged program at its disposal,’ writes Marta Gnyp29 who notes that such ‘social events are the adhesives of the art world.’30 In addition, there is an emotional, ‘passionate’ aspect to collecting art that transcends, but does not necessarily eliminate, the hard-headed desire to make a profit as well. Certainly, there is the chance of making extraordinary profits on art, at a time when other investments have offered poor or non-existent returns, particularly since the financial crisis of 2008–9. The auction houses blow their own trumpets the loudest, proclaiming the latest record prices and never failing to signal for how little the work had previously sold. Take the case of Jean-Michel Basquiat’s Untitled (1982) which rocketed from $19,000 in 1984 to $110.5 million in 2017 (see p.80), or Gustav Klimt’s flower paintingBauerngarten (1907), sold for £47.97 million at Sotheby’s London in March 2017,31 well above its pre-sale estimate of £35 million. At its previous appearance at auction in 1994, it had sold for just £3.7 million at Christie’s London.32 At that time there was just one bidder on the painting, and a specialist for the sale said he was ‘very relieved to get it away’.33 Considerably less well publicised are the amounts that can disappear on investments in art. Some art funds have quietly floundered. Own- ers are inevitably discreet about losses, but examples include those caught up in the speculative fever around ‘zombie formalism’ in 2012– 14, as we shall see in the following chapter, as well as, probably, anyone trying to sell works by Damien Hirst after the artist’s 2008 auction at Sotheby’s, which had a dramatically negative effect on his market. In 2017 Phillips made just £449,000 for a Hirst spin painting, which had sold at Sotheby’s at that auction for £668,450.34 Takashi Murakami’s Miss Ko2 (1997), sold at Phillips New York for $6.8 million in 2010,35 was resold by Sotheby’s, which declared an ownership interest, in Hong Kong in 2017. It achieved just $2.9 million – a 57 per cent drop in

140 Investment value.36 A work by the Georgian artist Niko Pirosmani sold at Christie’s in 2015 for £962,500,37 and yet it had sold only five years before for £1.6 million.38 Global politics, as well as finances, have their part to play. Those who hoped to make money from Russian art would have been severely burnt after the 2014 plunge in the Russian rouble. Coupled with Western sanctions against the country over its involvement in Ukraine, Russian art bombed in the saleroom. There was no guarantee even on the steadily colossal returns a Jeff Koons work might be expected to make. His Jim Beam Observation Car (1986) sold at Phillips New York for a mid-estimate $1.625 million in 2013.39 Four years later in London at Christie’s,40 it was only estimated at £400,000–£600,000 and coupled with a guarantee, it finally made just £545,000 ($665,990) – a probable loss of almost $1 million for the vendor despite the strongly reviving market seen in 2017.

THE ART AND FINANCE INDUSTRY

So is contemporary art a good investment? As the economist and academic Don Thompson has written: ‘In the case of inexpensive art, the answer is definitely no. Eighty per cent of the art bought from local dealers and local art fairs will never resell for as much as the orig inal purchase price. Never, not a decade later, not ever.’41 Thompson does not back up his affirmation with hard figures, which in any case would be impossible to confirm, but others in the art business concur. As Stefan Simchowitz – someone whose business is making money out of art – told me, ‘Art as an investment? Terrible! Awful. No liquid ity, difficult to sell and the chances of you buying the right stuff are slim to none.’ Tim Schneider has wryly noted: ‘There’s more money in telling people that you can make money with art as an investment than in telling them you can’t.’42 A paper published by three academics in 2013,43 and updated in 2016, appears to confirm that the returns of fine art may have been

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significantly overestimated. Looking at the results of repeat sales of almost 33,000 paintings sold between 1960 and 2013, they calculated the Sharpe ratio – a tool for comparing asset classes on a risk evaluation basis. This gave an overall figure of 0.111 – halving the previous ratio which had been calculated at 0.268. Over the same time span the Sharpe ratio for US equities was 0.358 – three times that for art. ‘The existing indices based on repeat sales are completely overrated,’ says one of the authors, Roman Kräussl of the Luxembourg School of Finance, ‘because they are just looking at the winners. The big auction houses can only put about 60 lots into an evening auction – because they believe someone will buy them. This means there is a selection bias. This is a severe problem and we correct for it.’44 Nonetheless, he adds, ‘Of course you can make some strong returns from art when you have superior information, through unique data, top quant models, or insider information. The market is so opaque, the better your information, data and models, the more likely it is to beat the market. The key is that the “average investor” will not win in this market. So if you have solely an investment perspective – do not put a single penny into art! If you don’t like the work, if you don’t get any pleasure from it, don’t do it!’ Kräussl is continuing research into another aspect, which he believes will ‘cruelly’ confirm his findings: ‘The repeat sales analysis is based on hammer prices alone – but the buyer has to pay a premium, so skewing the results even further.’ None of this has stopped a flourishing industry growing up around the art market. This is due in part to the huge prices the top pieces make, leaving owners with an asset that must be managed along with the rest of their wealth. It also means that, particularly for contemporary art, the potential returns in the top segment of the art market can be spectacular. Banks have long had art advisory services although most claim they do not offer investment advice, but rather help their clients ‘manage’ their collections, as well as assisting with decisions about philanthropy, estate planning, art finance and analysis of art trends. The first such service was started by Citibank in 1979, but since then

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dozens of others have jumped on this bandwagon, and banks are often the prime sponsors of art fairs – for example Deutsche Bank for Frieze or UBS for Art Basel.

ART LENDING

Another burgeoning area has been art-secured lending. In 2016, accord ing to the Deloitte report,45 this sector represented between $15 and $18 billion – up from $9.6 billion in 2014. The players in this market are private banks, auction houses and ‘boutique’ specialised lenders. They range from Borro at the lower end, which makes high-interest, short- term loans against lower-value art and collectibles, to Athena, which is backed by mainstream financial firms Carlyle and Pictet and only loans sums from $1 million upwards to very rich, Ultra High Net Worth individuals (UHNWIs) against their art collection. A further incentive for some borrowers has been the absence of regulation of boutique lenders, who do not fall under federal banking regulators – the so-called ‘shadow banking’ sector (see Chapter 8). While banks and auction houses have been active in this field for decades, the real change has been the arrival of these specialised lending firms. From about 2010 onwards, after the global crisis, when other investments were offering minimal returns, investors looked to new ways of leveraging their assets. ‘Our clients – hedge funders, financiers – are very smart in doing this,’ said Suzanne Gyorgy, Citi Private Bank’s Global Head of Art Advisory and Finance at the 2015 Art Business Conference.46 ‘They love leverage.’ She joked: ‘You go into their houses, and you look at their children, and you think, watch out, maybe they will try to leverage you!’ The huge rise in the price of art coupled with the drop in returns on other investments has spawned a number of specialist firms who will lend against art, among them Art Assure, New Oak, Art & Finance Partners, Art Capital Group, Right Capital, Athena and Falcon – there were at least 20 active players in this field in 2015.47 One of the best

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funded is Athena, launched in 2015 with $280 million of equity capital and backed by the powerful Carlyle Group and the private equity arm of the Swiss Pictet Group. Its eyebrow-raising claim is that $1.5 trillion worth of art is in private hands, and that 10 per cent of this could be eligible as collateral for lending.48 The art loan companies have taken over, to an extent, from the art funds, and present less risk. The owner can generally borrow up to 40 per cent, or even occasionally 50 per cent, of the value of their collection, and keep the art on their walls – in the US, at least, where the Uniform Commercial Code (UCC) means that lenders can safely leave the art with the owners, with any lien registered. This is less common in other countries, where in the absence of such safeguards, lenders often want to take possession of the art. As a result art lending is a bigger market in the US, although some of the European-based specialist lenders will, in certain circumstances, also allow retention of the art. ‘For wealthy individuals, there are a lot of reasons to borrow against art. For a start they will have loans or leverage against virtually every asset they have; that’s the way they operate,’ says Anders Petterson. ‘It’s a facility which suddenly releases capital or cash from something that sits dead on the wall; it’s a tool to extract value. They don’t want to sell the art, it could be inherited, and in any case it would trigger capital gains tax if sold. When the values of art reached certain levels, clients started consulting their wealth management advisors, saying, “My collection is worth say $25 million, what services can you offer?’’’

ART AS AN ASSET – OR AN ASSET CLASS

While there is no doubt that expensive art is an asset, there is more dissent about its position as an asset class. ‘I would say that anything that can be guaranteed, as the auction houses do, is an asset,’ says Melanie Gerlis. ‘However, the problem is that only work by about 20 white, male

144 Investment and modern artists could actually be considered an asset class. The danger is to think that all art is an asset class, and it simply isn’t.’49 As seen earlier, one of the handicaps of treating art as an asset class is the difficulty of accurate evaluation. ‘The only real valuation point is when something is sold, and you know, we all know how volatile that can be,’ says Edward Dolman. And as collector and investor Alain Servais once asked, ‘How could you ever consider as an “asset” an instrument that needs to rise in price by at least 50 to 100 per cent in order to recover transaction costs, without mentioning the total opacity of these complex transactions?’50 Because high-value art, while burnishing the cultural credentials of its owner, produces no return unless resold, there have been, and continue to be, various attempts to monetise it without actually selling it. As we have seen, this can be done by taking a loan against a collection, with the money borrowed used to invest either in more art or in other business ventures. This works for those who own art or can afford, and have access to, the expensive art that is likely to go up in value. But what about democratising the sector, by allowing the masses – as some entrepreneurs want – to get a bit of the action without having to pay millions for a Bacon or a Monet? A number of initiatives have been knocking around the market in recent years. Some have involved considerable investment and have obtained regulatory approval; some have been almost laughably naïve, while a few have been alleged to be downrightly dishonest ways of defrauding investors. Among those that never got off the ground was the Paris-based A&F Markets, an initiative that was offering €10 shares in artworks owned by the scheme, with prices quoted on its own ‘stock exchange’, basically its own website. Only four works of art were ever offered for ‘investment’ on the site, with no apparent take-up. More spectac- ularly, in 2012 a Luxembourg-based initiative named SplitArt burnt through €5 million in start-up costs, mainly from an Israeli investor, after attempting to launch a complex scheme to turn works of art

145 money, money, money into fungible commodities and sell shares in them, which would be traded on a sophisticated platform of its own creation. That never even made it to lift-off and SplitArt was liquidated in 2013. Another example was the Paris- and London-based My Art Invest, which offered the chance to buy and sell shares in, for example, a Takashi Murakami screen print for €15. Buyers could hold onto their shares until all were sold, when the founder would sell the work and share out eventual profit, or they could try to sell their shares on the company’s own ‘My Art Invest exchange’. Launched in 2011 with a Paris gallery and an online presence in 2015, the London company quickly folded.51 As Gerlis trenchantly sums up: ‘So far, all attempts to divide works of art into equal shares, emulating companies that trade on a stock exchange, have proved to be the stuff of fantasy.’ But despite these discouraging examples, new initiatives keep appearing: in 2017 start-ups included ARTSTAQ and Feral Horses, both of which proposed to allow investors to trade shares in works of art on an exchange.

FROM INNOVATION TO ILLEGALITY

The widely broadcast high prices of art in the twenty-first century were certainly instrumental in the creation of a number of other schemes, some of which looked like pure Ponzi operations. One of the most extraordinary was in France, where shares in the Aristophil collection of about 135,000 historic manuscripts and letters were sold to thousands of investors for an estimated total of €850 million over a ten-year period. Aristophil’s high-profile founder, Gérard Lhéritier, opened museums in Paris and Brussels to display his acquisitions, and for a while the system worked – mainly supported by hundreds of sales staff tempting in new investors with promises of 8 per cent annual returns.52 Just one example illustrates the crazy valuations which enticed these clients. In 2002 Lhéritier bought a 54-page set of letters, mentioning the theory

146 Investment of relativity, between Albert Einstein and the Swiss mathematician Michele Besso, at Christie’s New York, for $559,500.53 He valued the manuscript at €12 million, and divided it into 400 ‘shares’, which he sold to investors. He then tried to sell shares in the same documents to Swiss punters for €4,000 per share, along with a promise that they would gain 40 per cent in five years. The whole house of cards came crashing down in 2014 after French authorities started investigations. The museums were closed, the collections placed under seal by the French judiciary and Lhéritier’s company was declared bankrupt. Subsequently he and a number of other people, including a well-known Parisian bookseller, Jean-Claude Vrain, were indicted on charges of embezzlement, money laundering and organised fraud, charges which they deny. At the time of writing, the case had not come to trial, but the first sales of the letters and manuscripts were scheduled for 2018, through the Parisian auctioneer Claude Aguttes. According to the French Le Quotidien de l’Art, the documents would have to be gradually dispersed over at least six years, with an overall estimation of €200 to €300 million – so for the 18,000 disappointed investors, the hopes of recovering all of their funds look slim.54 Different, and this time definitely above-board initiatives were in development at the time of writing. In 2016 a company called Pi-eX had obtained authorisation from the UK financial regulator to arrange and sell ‘contracts on future sales’ – synthetic financial positions that function like guarantees given to the owners of art sent for sale at auction. Eventually, according to founder Christine Bourron, these CFSs could also be traded amongst holders on the Pi-eX platform.55 Another attempt to financialise art was a Luxembourg-based start-up being developed in 2017, Passion Protect, which planned to issue PassionBonds, the underlying asset being artworks belonging to private owners. The firm would sell fixed-income bonds to qualified and institutional investors. At the time of writing, it was too early to judge the success of these and other such initiatives. However,

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comments Petterson: ‘All these things are tricky, and for a simple reason. It’s not that it can’t be done, but I question whether there’s deep enough demand. Will there be enough people who want these products?’

ARE ARTISTS AND GALLERIES PLAYING ALONG?

One final aspect of art as an investment is whether some artists – and their galleries – have been playing along in all this. In the case of the zombie formalists (see Chapter 7) and some of the leading brand names, ‘investment ready’ works certainly have been churned out. And while artists have often produced long series (Monet’s ‘Waterlilies’, Picasso’s ‘Mousquetaires’, Chagall’s blue-hued scenes of Russian life), the twenty- first century has probably seen more directly comparable works made, aided by technology which allows rapid and large-scale reproduction. The high prices commanded by the big names have also allowed them to employ hordes of assistants and so ramp up production to meet demand (see Chapter 1). Speaking off the record, the head of one auction house outlined his view of this: ‘Today I see a frightening uniformity of art being produced. Whether it’s in South America, China, India, America, it’s pulling everything into this sort of slimy, dull space where it’s one endless abstracted canvas after another. There seems to be something about patronage and the expectation of artists now, which is pulling them into this safe, commercial space.’ Another result is what an art dealer with a gallery in Rome has sadly noticed: ‘People come in and they say they want to buy to invest. They aren’t in the least interested in the art, they don’t even want to look at it. “I just want to invest,” they say.’

148 Chapter 7 speculation It’s [a] phenomenon of the past 15 years where art has become a commodity and it’s purely bought to resell within a limited period of time for a profit. Thaddaeus Ropac, gallerist1 November 2016: My appointment with Stefan Simchowitz is at a low- built, Spanish-style house in Los Angeles’ Mid-City West, just off smart Wilshire Boulevard. I am expecting to interview him, but don’t even have time to pull out a notebook. Constantly on the move, occasionally taking a brief call on his mobile, in double-quick time Simchowitz has walked me around his house and office, shown me his library, pointed out artworks throughout the two buildings. I briefly meet his partner – both in life and in business – Rosi Riedl, an Australian former model. He then whisks me off to a smart new skyscraper on Constel- lation Boulevard, which houses the fashionably cool, elegantly designed offices of ICM Partners. One of Hollywood’s leading talent and literary agencies, ICM occupies the top five floors in the building, with extensive views over the Los Angeles basin, the Hollywood hills and even on to the Pacific. But we are not here for the view – we are here to see what Simchowitz calls ‘Museum 21’, his collection of contemporary art which is displayed in the offices. In corridors, in the kitchens (Stefan grabs a coffee as we pass through), on the landings, on the staircases, on the walls around agents’ low-walled cubicles – there are paintings everywhere, ranging from works by Oscar Murillo and Sterling Ruby to colourful abstracts by Kour Pour and Petra Cortright and ‘tapestries’ by Serge Attukwei Clottey. There is hardly time to pause as we stride through the offices and up and down stairs, with Simchowitz keeping up a running commentary that ranges from the philosophical to the profane – notably when he blasts the existing art market structure as being elitist, out-of-touch, self-regarding and destined to be swept away by ‘disruptors’ such as himself. From time to time he takes a telephone call: ‘Hello?’ Once, he listens for a moment, then says, ‘Just do what you can, get an offer for it. I gotta go.’

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In all, the offices display some 330 works by more than 80 contemporary artists in a partnership that reflects interests on both sides. By hosting the ‘museum’, ICM fired what one journalist called ‘the latest salvo in the top agencies’ fine-art wars.’2 It entered the art fray after rival United Talent Agency started an artist division, plastering its walls with its CEO’s collection, while another rival, WME-IMG, bought a 20 per cent stake in the Frieze art fair. As for Simchowitz, the partnership with ICM gave him somewhere to display just part of his collection, which he says now numbers 3,500 works. He is continuing to nurture future clients; gesturing at the young, glossy agents clicking away at their computers, he says: ‘These are the people art galleries should be going for, the people they currently keep out, not the crowd of the usual suspects that they have the black velvet rope for, the private views that exclude them. These are people who don’t have time to go to galleries or museums and the art system needs to figure out how to reach them.’ Later in an email, he is keen to stress that: ‘[It’s] about getting broader participation and engage- ment in the collecting community through trying alternative mechan isms to get people who have the potential to collect to experience art.’

FLIP, FLIP, FLIPPING . . .

There is a fine line between speculation and investment (see Chapter 6). Throughout history many speculative bubbles have formed and burst, for assets as varied as tulips, South Sea stocks, railway shares, ostrich farms, dot-com ventures and real estate. Is art different? Through its illiquidity and heterogeneous character, art is more problematic to resell quickly. Yet, despite this and the financial crisis, the idea that art could be bought and sold quickly for huge gains has taken a firm hold. Its growing profile as an alternative asset put it squarely on the radar of financiers and investors, something they could buy and sell like stocks. And this was encouraged by some sensa-

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tional results: for example, the Basquiat sold for $110.5 million in 2017 (p.140). What other ‘investment’ could offer such amazing returns? Until the late twentieth century, contemporary art was rarely sold at auction, so the possibility of ‘flipping’ – buying and reselling rapidly – was damped down. But as contemporary art came to dominate the auction house offerings after 2009, and with publicly available prices, so the possibility of flipping increased. Yes, there was a risk, particularly for emerging artists, but a breed of wealthy young ‘COINs’ (‘Collec- tors Only In Name’), according to Tim Schneider,3 or ‘spec-u-llectors’, treated buying this art as they might any speculative investment or even gambling, expecting one or two names to hit the jackpot while taking a loss on the others. In 2014, just as the art market was surging and the phenomenon known as zombie formalism was in full flow, an article for Bloomberg quoted art advisor Todd Levin saying there was ‘a tremendous amount of speculation in the market right now, particularly for emerging artists. It is more fero- cious than it’s ever been.’4 The article cited a number of up-and-coming artists whose work was being flipped – resold quickly – by speculators, for huge returns. Simchowitz was interviewed as one of those who was producing these huge profits on previously unknown artists. Just nine months later, Simchowitz himself became the story with a lengthy profile in the New York Times magazine, led by a picture of the entrepreneur at home, on the telephone and stripped to tight black underpants, surrounded by his staff.5 ‘The Art World’s Patron Satan’ ran the headline, with the story of how he identified young artists, often through social media, bought their work in bulk and then resold quickly, racking up quick gains. He had a club of investor-buyers – Simco’s Club – who followed his advice and bought the same artists. According to a London-based dealer in emerging artists, investors would buy a young artist’s work in bulk for, say, $10,000 for ten works. One would then be consigned a year later to auction, bid up to and bought back for $100,000 by an interested party. The other nine works would then be offered around at a ‘discount’ of, say, $60,000 on the

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established auction price. Net profits could total some $500,000, after fees were taken into account. When I asked Simchowitz about this, he said: ‘I have never in my life done anything of the sort! I think I have been blamed for the bad behaviour of many.’ Yet he claimed that ‘What you describe happens at all levels of the market in one way or another. I would say there are fewer cases in the emerging market than in the highly opaque and complex big money, big game guarantee system where many parties have varying degrees of interest directly and indirectly in artists’ cultural assets. My business is transparent, open; we embrace outsiders and we experiment,’ he said. Tales of Simchowitz’s run-ins with artists and gallerists have been widely published. He was alleged to have taken advantage of Amalia Ulman, persuading her while she was penniless and traumatised by a bus crash, to cut up some of her canvases and sell them individually. He got into a major lawsuit with Ibrahim Mahama, who refused to sign off his works when he discovered that Simchowitz and his partners were set to make millions from a $150,000 ‘investment’ (see Chapter 1). He got blacklisted by a number of art galleries, who refused to sell him any work. For those opposed to his methods, no words were too harsh: art critic Jerry Saltz dubbed him the ‘Sith Lord’, while others called him the ‘Michael Milken’6 of the art market, comparing him with the junk bond king and epitome of Wall Street excess. Simchowitz, naturally, has another version of events. He says he has been ‘wrongfully demonised’ and, concerning Ulman, that he ‘was just trying to help out’ and that she suggested that the originally massive work could be made into smaller ones . . .’ the integrity of the work would not be affected by making it a series of smaller works.’ 7 He has often said that some young artists were happy to take his dime when they were on their uppers, but rejected him once their careers took off, although others have remained loyal. He has also blasted art galleries for refusing to sell to him. He doesn’t deny he is a speculator, but qualifies the term: ‘Anyone who buys something and sells it for a

154 Speculation profit can be defined as such.’8 His view is that the current gallery system is stultified and ripe for disruption. ‘I work in partnership with many galleries – I buy work so artists have adequate cash flows and mitigate their reliance on the unpredictable gallery system . . . I manage the distribution of artworks.’ Those who have bought from him include notable names from the worlds of art, philosophy, finance and entertainment: Anna Getty, Nicolas Berggruen, Orlando Bloom, Harvey Weinstein, Steve Tisch, Sean Parker, Katy Perry, Beth DeWoody and many others, he told me. Disruption, Simchowitz-style, is not only working without a gallery. It entails making extensive use of social media, both for finding artists and clients, for example through Instagram and Facebook where he constantly posts. Disruption is also his own persona; instead of the slick, groomed look of the vast majority of art dealers, Simcho- wicz projects an off-beat appearance, often wearing baggy harem-style trousers and battered trainers, with a beanie hat stuck on his close- cropped hair. ‘He has a head by Brancusi and a body by Botero,’ as one journalist described him.9 He doesn’t hold back his opinions either of the art world, making comments in the choicest language about the major players. His business model, though, does include more conventional services such as buying at auction for clients and help with shipping and storage. Indeed in 2016 he bought a number of ‘blue chip’ works at auction at triple-estimate prices, including Josef Albers paintings, a Robert Motherwell and a Joan Miró.10

* * * *

About the same time as flipping was much in the news, another collector was ruffling art world feathers. In autumn 2013, the Dutch entrepreneur and art collector Bert Kreuk ‘guest curated’ a show at The Hague’s Gemeentemuseum,11 comprising some 65 works from his own collection. Of these, 11 went up for sale in New York on 14 Novem- ber 2013 – just six weeks after the museum show ended. The short delay

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may have meant that negotiations for sale had started even before The Hague show came down, as such agreements generally need a couple of months for consigning, cataloguing and so on. Using a non-profit institution such as the Gemeentemuseum to boost the value of works – ‘show and sell’ – is generally thoroughly disapproved of by the art world. Further raising hackles, at the beginning of 2014, Kreuk presented another 29 works from his own collection in Just Now,12 a selling exhibition at Sotheby’s S|2 space in London. Kreuk curated it for the auction house; included were 25 artists who had figured in The Hague show. At the time the collector defended his position, telling The Art News- paper, ‘I sometimes sell quickly, but I also buy quickly. In my mind, a flipper doesn’t own much art, whereas I have around 800 pieces in my collection.’13 The whole affair, as well as outraging many in the art world, was the backdrop to a messy and unpleasant lawsuit between Kreuk, the Danish-Vietnamese artist Danh Vō and his dealer, Isabella Bortolozzi. Kreuk had commissioned Vō to produce a large-scale site-specific work for The Hague show for a sum that was subsequently put at $350,000. When this was not delivered – a smaller piece was sent – Kreuk took Vō and Bortolozzi to court, demanding €898,000 for breach of contract and damage to his reputation.14 The initial judgement saw Kreuk win, with Vō and Bortolozzi ordered to produce an artwork. In response Vō then offered to make one with the caption ‘SHOVE IT UP YOUR ASS, YOU FAGGOT’. Kreuk made a counter-offer for a different art work, but finally the case was settled in 2015, with each side bearing its own costs. As an unfortunate fall-out from the case, Vō and Bortolozzi had already parted ways.15 London dealer Cornelia Grassi has long noticed ‘flipping’ behav iour: ‘One has to be so careful. What you get sometimes are people buying things and you notice they never pick it up. And you realise it’s just parked with the gallery until it can be sent to auction.’ She continues: ‘We can get between 60 and 100 emails before every art fair from people we’ve never met asking us for a preview. So we say,

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“Here’s a list of artists we represent, please let us know who you’re interested in.” And 80 per cent of the time we never hear back. These are people working for an advisor, a consultant, they scan through names of the artists one represents – it’s not about the art. They don’t even know if the artist is a man or a woman . . .’ Another London dealer recounts that it was not rare, particularly as the speculative market was at its height, for works to be resold during the space of an art fair, while still hanging in the first gallery’s booth.

ZOMBIE FORMALISM

The phenomenon of flipping reached its peak between 2012 and 2014, when a group of male, largely New York-based artists started churning out abstract works in a style dubbed ‘zombie formalism’ by the veteran artist and journalist Walter Robinson. What is zombie formalism, or more politely, ‘process-based abstraction’? ‘Something that is rectangular, hangs on a wall and looks like a painting. It could have been burned, exposed to sun, dragged through the streets or treated by some secret chemical process, but the point is that, in the end, it was an abstract square and it was sold at a very high price,’ was how Art Basel director Marc Spiegler pithily described it in 2015.16 These works were being made by artists such as Parker Ito, Lucien Smith, Hugh Scott-Douglas and a number of less well-known names at the time of writing, including Ned Vena, Davis Rhodes, Wyatt Kahn and Ethan Cook. Their work was neutral, decorator-friendly, saleable (and easily stored), because of their non-figurative style and relatively small format. The ‘story’ was often the process – chewing gum, chocolate drops, even concrete, were used to make the work, which was being made, sold and resold fast – sometimes going from studio to auction in two years or less. One of its earlier practitioners was Jacob Kassay, whose shiny silver ‘paintings’ – in fact canvases soaked in chemicals and silver paint, then

157 money, money, money dried – became a sudden, almost overnight success in 2010, when a work made a stunning $86,500 at Phillips de Pury in New York.17 It had sold the year before in Kassay’s gallery Eleven Rivington for about $12,000. Buying fever ensued, with a huge waiting list at the gallery and auction prices soaring; three years later, Phillips set the record for Kassay with another silvered work at $317,000.18 Another example was that of New-York based Lucien Smith, who found a way of spraying paint out of a fire extinguisher, forming a film of droplets on the canvas surface. These ‘rain paintings’ could be produced in series – and over 300 were made.19 During a brief but heady speculative bubble, his prices exploded, going from about $10,000 in 2011 to a peak of £194,500 ($319,376), paid at Phillips Lon- don for a rain painting in February 2014.20 Investment-ready, ideal for speculation because of their blandness, uniformity, comparable sizes and even similar colourways, Smith’s rain paintings had their most intense auction season in 2014, when no fewer than 32 canvases went under the hammer. ‘During that period of five or so years where speculation was so rife,’ says London dealer Vanessa Carlos, who represented Oscar Murillo in his early career, ‘I could see it becoming the norm. You witnessed artists having strategising conversations about how to enter into the system, but they didn’t really understand what they were getting into. And then there were very predatory characters that seduced the artists into the mode of production by offering things like a studio or prod uction money. So it was a mixture of artists being a little bit greedy but also being naïve.’ Dealer and auctioneer Simon de Pury, who visits many artists’ studios, says, ‘Some wanted to cash in as fast as they could; they asked, “How much can I get away with?” Forget the romantic notion of the artist in his studio – they didn’t care about their place in art history, but just wanted to make as much money as possible.’21

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SELL YOU LATER

At the same time as Simchowitz was shaking up the art world, a young Los Angeles entrepreneur was attacking the system in an arguably more disruptive way, as well as further aligning the worlds of art and finance. In 2009 Carlos Rivera, a softly-spoken Argentine-born Californian, had abandoned his initial ambitions in the movie business to become an art dealer as well as starting a number of art funds. While the funds did well, the gallery was short-lived but, as Rivera explained, it put him on the path to his next project. ‘I wanted to know what makes a Christopher Wool worth $15 million and when I looked into the art world there were no metrics at all,’ he says. He wanted to find the vari- ables in other artworks that matched up to the nine he had identified.22 Working with two unnamed partners, a financial engineer and a data scientist, Rivera set about analysing how emerging artists’ works could be assessed in a way that did not just look at past performance: ‘The best investors in the world would immediately fire you if you went into a conference room and told them, “Apple is going up so we should buy more.” The idea that art collectors of the world were buying art based on momentum ideology analysis from [art data site] artnet.com seemed to me beyond antiquated.’ By crunching data including the number of hits on Instagram and other social media, auction results, market saturation and support, and museum representation, Rivera and his partners forged an algorithm that ranked artists, predicting their value, or lack of it. In 2014, in an already over-heated market, he launched a site initially entitled Sell You Later, with a logo cheekily resembling the Yves St Laurent brand. It grouped artists into a number of categories, including ‘Buy Now Under $10,000’, ‘Sell/Peaking’ and ‘Liquidate’. Most of the site was free to access, but by signing up and paying $3,500, a small group of users could get in early, and thus act on recommendations. ‘My investors are high risk, high yield. Like a good capital venture fund we are all looking for one unicorn. A piece that goes from $1 to $2 million.

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With that in mind we could also have the added tax benefit in case of donation to a museum,’ Rivera explained (see Chapter 8 for discussion of these tax implications). ‘I made an Instagram account and people found it, within a couple of days some of the world’s biggest collectors had signed up. I thought, “Wow!” I realised it’s not just me. We – I and my fund investors – were not the only ones to believe that momentum ideology was just stupid. The press was full of stories about how Simchowitz had made 3,000 per cent by investing in Oscar Murillo and people were diving in head- first to buy Israel Lund at $80,000; but they were buying all the wrong things at the top. I was telling people, “Hey, you are making a mistake!’’’ says Rivera. The initial name of the site was quickly changed to ArtRank™, and the most inflammatory category – ‘Liquidate’ – was in fact liquidated. ‘We stopped using the term because it wasn’t actionable. By the time we said liquidate it was already too late!’ says Rivera. ‘Undervalued Blue Chip’ was substituted in 2015, also reflecting the move towards established artists in the wake of the slump in emerging artists. As a marker for the success of the site, Rivera points to Nigerian- American artist Njideka Akunyili Crosby, whom he tipped as a ‘buy’ at $50,000 in 2015. Two years later, in a market tightly controlled by her dealer Victoria Miro, Crosby’s painting The Beautyful Ones (2012) achieved £2,517,000 ($3,075,774), over four times its high estimate of £600,000, in London.23 But as many of the transactions were made by dealers, who do not publicise prices, it is frustratingly difficult to evalu ate overall results for the venture.

AFTER THE FALL

The speculative bubble in emerging artists popped loudly after 2014, and by 2016, for instance, even Kassay’s star had dimmed. Four of seven comparable works offered at auction failed to find buyers, while the three that did sell went for prices between $30,000 and $60,000.24

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Worse was to come: in 2017, a Kassay diptych estimated at just £7,000– £9,000 at Phillips London sold for an ignominious £1,250.25 Lucien Smith’s rain paintings suffered the same fate: enthusiasm quickly fizzled out after the market cooled, with far fewer offered in 2015; only three came on the auction market in 2016, one selling at Phillips London for just £31,250 ($41,539).26 By 2016 ArtRank™ had yet to make its founders money – along with, it must be said, many other art-related internet ventures. It had 80,000 non-paying subscribers, along with ten ‘early access’ clients, but the site was only making $140,000 annually. ‘The enterprise itself is not profit able,’ Rivera admitted to me. Mieke Marple, a Los Angeles art dealer formerly with the trendy Night Gallery (which had worked with Simchowitz), had this to say: ‘Rivera took a very unromantic approach to art, but ultimately you couldn’t reduce everything to numbers – some things aren’t quantifiable. While art as an investment is here to stay, flipping has gone. I think both Simchowitz’s and Rivera’s moments have passed: they are so 2014!’27

WAS FLIPPING REALLY HAPPENING?

In 2014 the art advisory firm Tutela Capital and the art data firm Beautiful Asset Advisors – subsequently sold to Sotheby’s – produced reports looking at the buy/resell period of art between 1985 and 2014. The reports were commissioned by the New York Times and their conclu sions were that flipping was nowhere as prevalent as thought at the time. The data, said Tutela, showed that flipping of young artists (those under 40 years old) remained the exception overall, with only 2 per cent of works made in under three years prior to an auction being resold. Beautiful Asset Advisors concluded that the percentage of works resold within a five-year period had actually declined since 2008. These conclusions should be treated with some caution, not least because the reports came from firms who were involved in the market, so they were not entirely independent. It also needs bearing in mind

161 money, money, money that a lot of the ‘flipping’ was occurring on the private sales market, either through dealers or the auction houses’ own services, which, depending on who you believe, could represent at least double, if not three times, the public auction market. Most art dealers have dealt with the problem of flipping by black- listing speculators: in a 2017 keynote speech at the Talking Galleries, the major gallerist Thaddaeus Ropac explained: ‘People always speak about the blacklists, and I have to say, they do exist, they have to exist. Some collectors buy a piece of art and put it into auction within one or two years – I’m sorry, this person cannot purchase another piece of art from us.’ ‘It’s [a] phenomenon of the past 15 years where art has become a commodity and it’s purely bought to resell within a limited period of time for a profit,’ said Ropac. ‘This was very limited as a phenomenon 30 years ago because then, you couldn’t make an immediate profit with art.’ One collector who has seen this up close is the New Yorker Michael Hort, who told Marta Gnyp in 2013: ‘When we go to an art fair dozens of people will come over to us and they’ll say something like: what do you think of an artist. In the eighties, when they said that, they really sincerely wanted to know what we thought about it. Now all they really want to know is, do I think it has value or will go up.’28

Cooling Off

With the contraction in the art market after 2014 and the end of juicy profits derived from the ‘flip artists’, the disadvantages of speculation became clear. For a start, speculation only works in a rising market, and a few bad headlines about flippers losing money acted like a bucket of ice water. Also problematic was the difficulty of controlling the number of works produced, devaluing the existing ones – with the result that a ‘wait list’ of works destined for auction could build up (see Chapter 1). Finally, speculating in art by living artists – who could turn around and deny authorship, as in the case of Mahama

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(see p.39) – made the enterprise even more risky, even if this was a rare occurrence. Consolation should come, however, for those who acquired some of these ‘flip artists’. Carlos Rivera believes that the ‘zombie formalists’ will, in time, be seen as a significant period in art history. ‘A few of them will survive,’ he says, ‘just as there was initial disdain for the Abstract Expressionists or Pop artists. The progenitors are always going to be the ones that are most important. Wade Guyton, Tauba Auerbach and Lucien Smith: they will be remembered in ten years.’ Eugenio Re Rebau dengo, whose online venture Artuner deals in emerging artists, says that for many people who speculated in 2012–14, the damage wasn’t long-lasting. ‘What happened was that prices returned to the gallery level they started at. So maybe speculators missed out on a huge profit, but they still had the work of art at the end of the day.’ Whether they really appreciated it is, of course, another story entirely.

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Chapter 8 the dark side There are few public examples of art being used in money laundering. But it’s a growing problem. Meridith Savona, Special Agent, FBI1

Tax-exempt museums should focus on providing a public good and not the art of skirting around the tax code. Orrin G. Hatch, Chairman of US Senate Finance Committee2

Über-warehouses for the Ultra-Rich The Economist on art storage facilities, 23 November 20133 28 February 2017: Interest was acute in the run-up to the winter auctions of Impressionist, modern and contemporary art, held in February/ March in London. The previous year’s sale seasons had been bruising; auction totals had slumped by 26 per cent globally.4 So all eyes were on Christie’s as its global president, Jussi Pylkkänen, stepped up to the rostrum for the curtain-raising evening sale. The auction houses had blamed the shrinking market for a lack of vendors, not buyers, and sale dates had been pushed back from the previous early February slot because, said some, the specialists were having difficulty getting consignments. In fact it was to avoid clashing with the New Year in China, when the country shuts down for cele- brations and key Asian buyers would not be focusing on art. Christie’s had some big-ticket items in its sale, with four ‘brand name’ works: a Gauguin, a Picasso, a Rodin and a Magritte. They were vari- ously described as ‘from an important private collection’: Gauguin’s Te Fare (1982) and Magritte’s Le Domaine d’Arnheim (1938); ‘from a private European collection’: Rodin’s Le Baiser (1882); ‘property of an important collector’: Picasso’s Joueur de flûte et femme nue(1970). In line with widespread auction houses’ smoke-and-mirrors practices, the different designations in fact referred to the same source – a collection of 36 works of art belonging to the family trusts of Russian billionaire Dmitry Rybolovlev,5 bought for about $2 billion through the Swiss art storage and shipping mogul Yves Bouvier over about ten years, ending in 2014. On that February evening Christie’s saleroom was packed, as was customary for the glamorous evening sales. The firm’s CEO, Guillaume Cerutti – poached from Sotheby’s a year previously – watched atten- tively from the sidelines. The sale did well – making £136.8 million including fees, nudging the high end of expectations of £142.6 million without fees. Asian buyers were indeed present; Christie’s later said that Asian bidding had dominated the higher-priced lots. Astonishingly the

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four works from Rybolovlev bombed. All were carrying estimates less than the amounts he had paid for them, but even at these radically lowered prices, only three found buyers; the Rodin, bought by Rybo- lovlev for $10.4 million in 2011, failed to sell entirely. The others showed shocking drops below their purchase prices. The Gauguin, bought in 2008 for $85 million, sold for £20.3 million ($25.2 million). The Picasso made £4.6 million ($5.8 million); it had been bought for $35 million. And the Magritte fetched just £10.2 million ($12.7 million) – a far cry from the $43.5 million the Russian had acquired it for in 2011. Coupled with one more consignment sold the following week in the contemporary art auction, Rothko’s No. 1 (1949), which sold for £10.7 million ($13.1 million – bought for $36 million in 2008), the Rybolovlev trusts lost about $150 million in that costly week (see Appendix). And it wasn’t finished: a few months later, on 6 July 2017 El Greco’s Christ Taking Leave of his Mother (c.1578–80), from a ‘private collection, Europe’ according to the catalogue, was unsold at Christie’s London Old Master auction. It was estimated at just £4 million to £6 million, but had been bought by Rybolovlev from Bouvier, according to court documents, for €48 million in 2012, with a different title, Portrait de Jésus et Madonna (see Appendix).6

THE BOUVIER/RYBOLOVLEV AFFAIR

The sales were just the latest episode in a battle that had sent shock waves through the art world, revealing a murky episode in the market for high-end art, with its top-secret deals, multi-million-dollar mark- ups, offshore tax havens, tax-free freeports and accusations of the sale of stolen paintings. At the time of Christie’s sale, Rybolovlev and Bouvier were already engaged in a battle of titans over these deals, with Rybolov- lev attacking Bouvier via lawsuits in four different jurisdictions, and joining a case in Paris as a ‘civil party’ (partie civile). Much remains to be clarified in this high-profile feud, and many questions are still unanswered. What is known, at the time of writing,

168 The Dark Side is that everything started in 2002 or 2003 when Yves Bouvier met Dmitry Rybolovlev in a Geneva warehouse, one of the facilities his art shipping company Natural Le Coultre (NLC) used to store art. Rybolovlev had just spent €6 million on a Chagall, but was worried because he didn’t have a certificate of authenticity. Bouvier obtained it for him, and it was the beginning of what turned out to be a fateful relationship. Also present that day was the Bulgarian socialite Tania Rappo, the wife of Rybolovlev’s dentist and the person who helped the Russian and his wife Elena enter Switzerland’s high society when they moved to Geneva. In a further twist, Rappo, godmother to the Russian couple’s second daughter, was subsequently sucked into the case, accused of money laundering; she denies any wrongdoing. Rybolovlev is often referred to as ‘the fertiliser king’; he had control over Uralkali, the fertiliser and export company, which at one point accounted for a fifth of the global production of potash. In a mirroring of terms, Yves Bouvier is often called ‘the freeport king’. Compact, with a light dusting of straw-coloured hair above a receding hairline, he is the epitome of Swiss discretion: cautious, guarded; someone who does not stand out in a crowd. He built up his father’s business NLC into one of the world’s biggest art transporters, having spotted an opportunity as the art market exploded at the beginning of the twenty-first century. He also realised there was a need for expensive art to be safely stored, away from inquisitive eyes. His company was the biggest tenant in the Geneva freeport, in which it holds a 5 per cent stake.7 (In late 2017 he sold NLC to André Chenue.) Alongside this practical element of art shipping and storage, he was involved in manifold art-world projects. In 2004 he launched the Moscow World Fine Art Fair, which widened his connections with Russians. The most significant changes came in 2009, when Bouvier shifted his base to Singapore and created the Singapore freeport, which opened in 2010. This was followed by the opening of the Luxembourg freeport in 2013, where Bouvier was the majority shareholder. Added to this were other strategic investments, such as his 25 per cent share

169 money, money, money in La Pinacothèque Singapore, an offshoot of the controversial private Paris museum. The Asian branch opened in the heritage site Fort Canning in the city-state in 2015 and closed a year later, after the lawsuit with Rybolovlev exploded. The Paris Pinacothèque went into receivership in November 2015. Bouvier helped the Corsican Jean-Marc Peretti open an art gallery in the Geneva freeport, and also partly financed the Gradiva gallery in Paris,8 but probably his most ambitious project was to take over part of an island in the Seine, in western Paris, in order to establish an art storage/gallery area there. This plan was thwarted by the lawsuits, and Bouvier exited the project in 2016. In about 2008 Rybolovlev, according to a 2017 appeal court judgement in Singapore where he took Bouvier and Rappo to court, was facing possible seizure of his assets by the Russian government due to an ecological disaster in the potash factory. In the same year, his wife Elena started divorce proceedings in Switzerland and the Russian was anxious to protect his assets.9 He started pouring money into real estate: his trusts bought a Manhattan penthouse for $88 million in 2012; two Greek islands including Skorpios, where Jacqueline Kennedy married Aristotle Onassis; a Palm Beach mansion bought from Donald Trump for $95 million; a $20 million property on Kauai bought from Will Smith and a $100 million yacht.10 He had also been buying art. Since 2004, after that first encounter in Geneva, Bouvier had been building up a top-end art collection for him, conjuring up works by Picasso, Van Gogh, El Greco, Rothko and even the last painting by Leonardo da Vinci in private hands. Most sales were transacted privately, either directly with the proprietors or through Sotheby’s private treaty sale division. By the time the whole relationship had collapsed into bitter recriminations and criminal and civil lawsuits, Rybolovlev had spent around $2 billion buying 36 works of art and some high-end furniture through Bouvier. They were owned by companies linked to family trusts mainly in his daughter Ekaterina’s name – Xitrans Finance Ltd and Accent

170 The Dark Side

Delight International Ltd, both based in the British Virgin Islands. Rybolovlev’s lawyers subsequently claimed that Bouvier had ripped him off to the tune of some $1 billion when he put together this collection. Bouvier has always contended he was acting as an independent seller, buying the art himself and selling at the price Rybolovlew agreed to pay. Accounts differ on the catalyst to the souring of the relationship. According to the Singapore judgement, Bouvier said they fell out over the non-payment by the Russian of €140 million for Rothko’s No. 6 (see Appendix). The Russian said that he discovered that Bouvier was taking what he saw as huge rake-offs on the transactions during a conversation with Sandy Heller, the Manhattan art advisor to, among others, Steve Cohen, the collector, founder and owner of the hedge fund SAC Capital. The day after a lunch on St Barts island in late 2014, Heller revealed that Cohen had sold Modigliani’s Nu couché au coussin bleu (1917–18) for $93.5 million. Rybolovlev had paid a cool $118 million for the work – unknowingly, he says, giving Bouvier a $24.5 million mark-up. This confirmed, says Rybolovlev, his suspicions about the values of his purchases, since Bouvier was unable to resell some of the works at the prices the Russian had paid. Bouvier, on the other hand, contests this. In addition Heller also said he wouldn’t have recommended the purchase of Leonardo da Vinci’s Salvator Mundi, saying that there were doubts about the quality of the work according to a case filed by Bouvier in New York.11 Rybolovlev had bought it through Bouvier for €120 million, and subsequently discovered that it had been sold by a consortium of three art traders, Warren Adelson, Alexander Parish and Robert Simon, through Sotheby’s, for $80 million – $68 million in cash, and a Picasso valued at $12 million. Apparently angry as a (Russian) bear with a sore head, Rybolovlev moved quickly, and the story gathered pace. Early in January 2015 his lawyer Tetiana Bersheda went to the public prosecutor in Monaco (where Rybolovlev is a celebrity, as the majority owner and president of AS Monaco football club) and filed a criminal complaint. Within

171 money, money, money a month, Bouvier was asked to come to what he thought was a business meeting with Rybolovlev, and on 25 February he rang at the entrance to La Belle Epoque. One of the most expensive private resi- dences in the world, it was previously owned by the Brazilian-born billionaire Lily Safra, and now belonged to Rybolovlev. But instead of being buzzed in, Bouvier was immediately surrounded by police, handcuffed and driven away. Rybolovlev, he discovered during the following three days of detention and interrogation, had ambushed him by insisting on meeting in Monaco. Bouvier was accused of fraud and complicity in money laundering, the accusation being that he had misrepresented his role – being a seller, not an agent – and set grossly inflated prices on the works of art he had sold his Russian client over the past ten years. Tania Rappo was also accused of money laundering and taking secret commissions from Bouvier on paintings sold to Rybolovlev, charges which she denied. In an icy confrontation at the police station on the third day, Rybolovlev accused Bouvier of having price-gouged him, and he claimed that their agreement was that Bouvier was an agent, taking commission (often 2 per cent) on works he bought for the Russian. Bouvier countered that it was perfectly clear to both sides that he was acting as a dealer.12 He also claimed that Rybolovlev would never have been able to build up such a collection, without his contacts, persistence and information about where choice works could be sourced. After posting bail of €10 million, Bouvier was released from the Monegasque prison. But the accusation was just the first shot in what became all-out war. As the art scandal of the century became increasingly complex and legal fees piled up, each took on communications specialists. It then turned personal: an article in the French magazine Le Point made hair-raising allegations about Bouvier’s private life. It was withdrawn after Bouvier successfully sued for invasion of privacy.13 The initial dispute between the two men was commercial – about the nature of their business relationship. But recriminations turned

172 The Dark Side uglier still after Bouvier was then accused of selling stolen art to Rybo- lovlev in 2013. At issue here were two gouaches by Picasso of Jacque- line Roque, his second wife, that the artist’s stepdaughter Catherine Hutin-Blay claimed were stolen from her. Bouvier had bought them from an art dealer and shipper Olivier Thomas, who was also an investor and board member of Bouvier’s Luxembourg freeport. The two works, Tête de femme and Espagnole à l’éventail (both from 1957), were sold for €27 million to Rybolovlev. Due diligence conducted on their provenance with the Art Loss Register at the time of the transaction did not reveal any problems,14 as Hutin-Blay said she only realised they had disappeared two years later. She filed a criminal complaint in France saying they had been stolen from her; Accent Delight joined the case as a ‘civil party’. Bouvier posted bail of €27 million while the investigation continued; a year later Olivier Thomas was charged with fraud, breach of contract and possession of stolen goods,15 which he has denied.16

A TANGLED WEB

At the time of writing, numerous lawsuits were continuing in this tangled web. Rybolovlev took Bouvier and Rappo to court in Singapore, and briefly obtained a worldwide freeze on Bouvier’s assets up to $500 million, which was subsequently lifted. In early 2017 the Singapore Court of Appeal decided that Switzerland was a more appropriate forum for the case, since the art deals took place in Geneva and payments were made through Swiss bank accounts. Meanwhile in New York, the spotlight turned on the sale of the Leonardo in 2016. The three vendors of Salvator Mundi, who had sold it through Sotheby’s private sales division, went to court. They said they planned to sue Sotheby’s for fraud, claiming they had not known that when they sold it through the firm for $80 million, it would be resold by Bouvier for $127.5 million. Sotheby’s attempted to block the suit, saying it was unaware that Rybolovlev was the ultimate buyer –

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although the auction house had shown the painting to potential buyers in a luxury penthouse in Manhattan in 2013. In court papers, Sotheby’s said that its representative did not realise it was Rybolovlev’s apart- ment.17 Sotheby’s withdrew the declaratory action in September 2017.18 In late 2017, Salvator Mundi was scheduled for sale at Christie’s New York, in its 15 November contemporary art sale, carrying an estimate ‘in the region of’ $100 million. Meanwhile in Monaco, the investigating judge questioned Rybolov- lev about apparently close relationships between the Russian’s lawyer, Tetiana Bersheda, the Monaco police and Monaco’s director of judicial services – the equivalent of the Principality’s Minister of Justice. The minister, Philippe Narmino, took early retirement after revelations were published in Le Monde and dubbed ‘Monacogate’.19 Ms Bersheda said in an email: ‘No response will be made to these multiple and futile attempts . . . to distract the public from the fundamental issue, which is a giant fraud representing hundreds of millions of euros.’20 And further complicating an already multidimensional story, in September 2017 in Switzerland, Bouvier was accused of evading some CHF165 million in taxes. The Administration fédérale des contributions opened an investigation alleging that Bouvier had not paid tax on income from two of his companies which had sold art to Rybolovlev, one in Hong Kong and the other in the British Virgin Islands.21 A spokesman for Bouvier indicated that ‘there is a tax audit, which is nothing unusual, and that this is a result of a dispute between Bouvier and the tax administration concerning the interpretation of the tax code. The process is ongoing and will take its course,’ he said.22

THE SELL-OFFS

Even before these court battles, Rybolovlev had started selling off his collection. One of the most expensive works in the trove, Klimt’s sinuous and sensual Wasserschlangen II (1904–7), was sold for $170 million, down from the $183.8 million purchase price. Worse befell

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Gauguin’s Otahi (1893), which went for under $50 million, a 60 per cent drop from the €120 million the Russian had paid in 2013. A Rodin marble, L’Eternel printemps (c.1884–1903), was disposed of at auction for $20.4 million, well under the $48.1 million Rybolovlev had paid in 2011.23 These losses, coupled with the Christie’s sales in 2017, were further proof, said his spokesman, of Rybolovlev’s accusations that Bouvier had monstrously overcharged him; for instance, Picasso’s Joueur de flûte et femme nue, sold at Christie’s, was reportedly bought for just €3.5 million and sold to the Russian for €25 million.

SECRET DEALS

At its base, the Bouvier/Rybolovlev dispute was about the nature of their business relationship conducted within a market that has always thrived on secret back-room deals. By keeping vendors and buyers apart – they may never know who the other is – and insisting on discretion, agents, dealers, advisors can use this anonymity to their advantage. Various reasons can be put forward, from the need for security to the desire to avoid family quarrels or the taxman, to the risk of someone else bagging the work for sale. In the Bouvier/Rybolovlev case, one of Bouvier’s emails, about a Magritte, said: ‘I must carry out this [negotiation] with the greatest discretion, to avoid drawing attention to the painting and its owner; the risk is that we could lose it to auction.’24

THE OPACITY OF ART DEALS

The Bouvier/Rybolovlev case might be an extreme example, but deals undertaken under opaque terms, with secret commissions and the potential for blurring of relationships, are not rare in the market. A case dating from 2011 concerns a dispute over a $7 million Leon- ardo da Vinci drawing. The work, Madonna and Child with St Anne and a Lamb (c.1517), was sent for sale from Accidia, a Liechtenstein

175 money, money, money foundation, to the London dealer Daniella Luxembourg. She didn’t look for a buyer, but instead passed it on to the Old Master specialist Simon Dickinson. He did find a taker – an American banker – and sold it to him for $7 million. He then passed $6 million to Luxembourg, who took a $500,000 commission and gave $500,000 to the agent for Accidia. Accidia got $5 million for its drawing. All might have rested there – but the American buyer had doubts about authenticity, and returned the drawing to Dickinson, who reimbursed the $7 million. At this point Accidia learnt what had happened, and sued him for $1 million, arguing that it believed the price paid was $6 million, not $7 million. The judge found in Accidia’s favour; there was no appeal. In a comparable case, an American collector, Michael Schulhof, suc cessfully sued his art agent Lisa Jacobs in 2016 after she sold a work by Jean-Michel Basquiat, Future Sciences Versus the Man (1983). It turned out she had secretly pocketed $1 million on the sale, getting $6.5 million for it but only passing on $5.5 million to her client.25 The judge ruled that her contract with Schulhof meant she was not allowed to accept any fee beyond the one agreed – the judge dubbed her a ‘faithless servant’ when finding for Schulhof. At the time of writing, Jacobs was appealing the judgement.26 ‘I am seeing a rising number of lawsuits on this subject,’ says the London lawyer Adrian Parkhouse. ‘There are more and more complaints against dealers who are seen to be self-dealing, and I think the Accidia case and others have made people aware of the various chains, the secret profits.’ And, he continues, people are now looking back at deals done years before. ‘They are saying, “Did I get the full value?’’’ A case in point was a venomous dispute between super-wealthy London-based collectors Fatima and Eskander Maleki and their former advisor, Amir Shariat. They had known Shariat for some 20 years – ‘He was like a son,’ said Mrs Maleki in court. For nine years Shariat had bought and sold art for them. But in 2013, according to the Malekis, they discovered he was making ‘secret profits’ from these deals. They went to court, where among the 300 deals he had conducted for them, they cited

176 The Dark Side a pair of Arne Norell chairs he bought for €3,716 at an auction in Stock- holm in 2013. Shariat told the Malekis he had found the pair for €10,000 and told them they came from a German collector – which in court he admitted he had invented ‘because he wanted to keep the true source of the objects secret.’27 Shariat countersued, accusing the couple of engag- ing in a smear campaign against him, but after ten days the court battle came to a sudden end when the two sides settled confidentially.

THE PANAMA PAPERS AND ART

The Maleki case and many other high-profile scandals of the last few years have also thrown the spotlight on the use of offshore tax havens. Such tax havens are widely used, in many cases legally, to register ownership of works of art. However, these secretive entities had remained, well, secret. But in early 2015, an anonymous source leaked over 11.5 million confidential documents from law firm Mossack Fonseca, one of the world’s foremost facilitators of offshore tax havens, to the German newspaper Süddeutsche Zeitung. While they were mainly concerned with some prominent politicians and corrupt dictators stashing their ill-gotten gains out of the public eye, the leaks also revealed that shell companies were being used to hold billions of dollars’ worth of art. Dmitry Rybolovlev’s collection, for example, was parked in an offshore haven in the name of companies linked to two family trusts. The Panama Papers also contained explosive revelations about a number of art deals which had been previously shrouded in secrecy. One concerned a Modigliani, Seated Man with a Cane (1918), which had been the subject of a long tussle, continuing at the time of writing, between the claimant, Philippe Maestracci, and the Nahmad family of art dealers. The painting was bought by the Nahmads at auction in 1996, but when Maestracci claimed it was rightfully his, because it had been looted from his grandfather by the Nazis, the Nahmads initially responded by saying they did not own it, as it belonged to the Interna tional Art Center (IAC) in Geneva.28

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The Panama Papers proved what the art world already knew: that the Panamanian-registered IAC – based in the Geneva freeport, and thought to hold billions of dollars’ worth of art – belonged to the Nahmads. ‘David Nahmad, the family leader, has been the company’s sole owner since January 2014,’ reported the International Consor- tium of Investigative Journalists (ICIJ), noting: ‘Mossack Fonseca first set up the IAC for the Nahmads in 1995.’29 The papers produced further astonishing revelations about another sale – the famous Ganz collection auction which dated back to November 1997 in New York.30 It totalled $206.5 million, at the time the highest ever total for a single-owner sale, and saw a series of records racked up for works by Jasper Johns, Robert Rauschenberg, Frank Stella, Eva Hesse and Picasso – whose Les femmes d’Alger (Version O) (1955) sold for double its estimated $31.9 million. It emerged from the Panama Papers that, in fact, the estate of the lauded collector couple Sally and Victor Ganz was not the direct source of many of the key works that went under the hammer. The Ganzes’ works had previously been sold off to a company set up in the island of Niue – a speck in the South Pacific – called Simsbury Inter- national Corp, which was administered by Mossack Fonseca. Sims- bury, controlled by the British billionaire Joseph Lewis, was actually the owner of the works – his company had bought them for $168 million from Spink & Son, a company owned by Christie’s, six months before the sale. At the time Lewis was Christie’s largest shareholder; the deal was that the Simsbury-owned works would go into Christie’s auction and that Lewis and Spink would split the difference on any profits over the purchase price. While the catalogue for the sale did state that ‘Chris- tie’s has a direct financial interest in all property in this sale’, it wasn’t until the Panama Papers’ revelations that the truth about how the deal was mounted was finally known. Neither Lewis nor the Ganz family were prepared to comment to the ICIJ on these revelations.

178 The Dark Side FREEPORTS

The subject of freeports has appeared frequently in these pages. Estab- lished in Switzerland over a century ago, they were originally bonded warehouses to temporarily house commodities and goods in transit for businesses of all kinds. As the number of UHNWIs have increased this century,31 they have acquired more and more tangible assets such as art. Freeports, in effect armoured strongboxes, have been mushrooming around the world, in response to the growing demand for safe places to store precious assets, from gold and wine to art and vintage cars. Yves Bouvier started his spectacular climb to fortune and then mis- adventure through developing these ‘Über-warehouses for the Ultra- Rich’ as the Economist has called them. Bouvier’s two purpose-built units boast state-of-the-art security, even down to the fire prevention system – which sucks the oxygen out of the space and replaces it with inert gas, so avoiding the use of water which would damage the art. ‘New ones are going up all the time because the old ones are full, and in any case the rise in the price of art and other assets means that there is a need for better, purpose-built facilities instead of the old “mom and pop” repurposed warehouses,’ says David Arendt, former CEO of the Luxembourg freeport.32 It is not just the seven-tonne steel doors that attract clients. Items stored in these strongboxes are also tax-free and customs-duty free, as long as they stay there. Art dealers can even rent a viewing room on a more permanent basis, creating what is in effect a private art gallery. Clients can come and see an artwork, which is pulled out of a vault for viewing. Works can be bought or sold, if necessary over and over, with no tax payable. A piece can even be sent on a tax suspension basis to an art gallery elsewhere – as long as it returns to storage no duty is payable, even if it has changed hands – ideal for a work bought purely as investment. The geographical location of freeports is key: as most are sited within airport perimeters, visitors don’t even have to exit

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when visiting – they can fly in, visit the warehouse, conduct their business and fly out without even having to show their passport. Switzerland has ten freeports; Bouvier founded and financed the Luxembourg and Singapore ones; Monaco has one, and further such facilities are planned or already under construction in Beijing and Shanghai. As for the US, while its tax situation is different, with each state levying different rates of sales or use tax rather than an overall Value Added Tax (VAT), it has also seen demand for ‘Foreign Trade Zones’ (FTZ). The specialised storage company ARCIS was poised to open a warehouse in mid 2017 in New York’s Harlem, with FTZ status, meaning that anything moved into it would attract no taxes or fees as long as it was not moved outside the facility, and could be re-exported free of duty. As such, it will be similar to freeports in Europe, Asia and elsewhere. This secretive side of freeports has attracted the most criticism, but their operators vehemently reject the notion that they are lawless zones. They say that the description of these ‘safe deposit boxes’ as areas used for money laundering, tax avoidance and concealment of stolen art is completely false, pointing out that operations are regulated by the laws of the country and clients are thoroughly checked.33 The Luxem- bourg freeport has an on-site office for customs officials with careful records kept of everything that arrives and leaves. ‘A freeport is the last place you would want to hide art,’ Bouvier told me more than once.34 Another reproach of freeports is that operators use them for art dealing, and the fact that they are used for shipping and storage as well as trading art could represent a conflict of interest. Bouvier has always denied that he mixed these two parts of his business. However one art dealer told me, with reference to a Swiss freeport, that in the past he was able to call a contact to hear what the latest arrivals were, so gaining the inside track on eventual dealing. ‘It was like a restaurant menu, I had a mobile phone number – I could be told, “I’ve got a Picasso, a Dufy and a Derain just in.”’ He joked, ‘It was like, “Knock three times and ask for Ramón!”’

180 The Dark Side

Those times might be past, as faced with growing criticism of freeports as facilitators of tax evasion and money laundering, the Swiss authorities tightened up considerably by bringing in new regulations in 2015, notably demanding registration of the identities of the owners of goods coming in and of buyers of goods going out.35 Nonetheless, recently, there have been sensational raids on these storerooms, for instance when Italian and Swiss police prised open 45 crates at a Geneva freeport in January 2016 and found tens of thousands of antiquities in the possession of disgraced antiquities dealer Robin Symes. Among them were two sixth-century BCE Etruscan sarcophagi looted from Tuscany as well as bas-reliefs, pottery, frescos and marble busts.36 Each had been carefully wrapped in dated newspapers and inventoried: the police estimated their value at about €9 million. In 2017 an extraordinary marble Roman sarcophagus dating from 150–180, CE depicting the twelve labours of Hercules, was returned to Turkey, from where it had been looted, after spending 25 years in a freeport vault belonging to the Aboutaam family, which runs Phoenix Fine Art. Despite the family claiming ownership, a Swiss judge ordered its repatriation to Ankara.37 In each case the suspicion was that the works had been illegally dug up and exported from the source countries, and then kept in freeports. Meridith Savona of the FBI states that ‘There is nothing illegal in storing something in a freeport, and there are many valid reasons to do so. However, they do lend themselves to ill-gotten gains and ill-gotten artwork being stored there; something can sit there for years until the statute of limitations has run out – so they could be a facilitator for criminal activity. They are extremely opaque and there can be multiple transactions within. So you can basically launder the provenance,’ she says. Operators protest that freeports are completely above board – as the majority of their users probably are – but their very nature and secrecy make them potential ‘black holes’ for art transactions. These may well include legal ways of avoiding tax, without evading it. As one London dealer told me, ‘The business of VAT is incredible, it’s extra-

181 money, money, money ordinary. The richer collectors don’t ever pay it. Works that they buy are shipped directly to a freeport; no tax. It’s legal, it’s all legal.’ And at a panel discussion in London, Ropac Gallery’s executive director Polly Robinson Gaer commented, ‘Tax is a big, big part of closing any deal today. You have to understand its complexities. We talk about this all the time with clients.’38

TAXING TIMES

The practice of not paying tax on art purchases or sales has probably been most developed in the US, but not exclusively. The use of offshore tax havens to own art – such as in the Ganz sale – is certainly linked to the desire to keep profits of transactions from the taxman’s reach. Ongoing at the time of writing was the Wildenstein case, in which Guy Wildenstein, heir to the great Wildenstein fortune built up over four generations of art dealing, was accused, along with his nephew Alec, and Alec’s stepmother Lioba Stepakova, of under-declaring the stupendous value of his late father’s estate to the tune of hundreds of millions of euros. The prosecutor’s case was that, after the death of Guy’s father Daniel, the family reported receiving just €40.9 million, paying €17.7 million in tax. The true value of their inheritance, alleged the court, was a whopping €616 million – but the family had used secretive trusts to shift $250 million worth of art from a freeport in Switzerland to New York, just before Daniel died. Another trust in the Bahamas held further millions of dollars’ worth of art. The court found Guy and his co-defendants not guilty; the court president said that while there had been a ‘clear attempt’ at concealment, he couldn’t change French law and these trusts were legal when they were set up. The French authorities were, at the time of writing, appealing the verdict.39 However, it is in the US that finding ways of avoiding or deferring paying tax on art has reached new levels of complexity, with various ploys such as ‘like-kind’ exchanges and the use of private museums. For

182 The Dark Side a start, classifying a collection as an investment can save on tax if a work is resold, explains Diana Wierbicki, Global Head of Art Law at Withers Bergman. ‘With a capital gains rate on collectibles of 28 per cent plus a 3.8 per cent tax on investment income for certain individuals, the federal tax rate on gains from the sale of an artwork can be up to 31.8 percent,’ she says.40 But there is the possibility of postponing tax: the case of ‘like-kind’ exchanges, also known as 1031, ‘ten-thirty-ones’. These were originally set up in the 1920s, with the aim of not penal- ising farmers who were selling and buying land or cattle. The rules at the time stipulated that the ‘like-kind’ even extended to sex – you couldn’t exchange a bull for a heifer, for example. But they have been seized on by investors in real estate – and art – to defer paying tax. The tax is deferred when an investor sells, identifies a new work (within 45 days of selling the old one) and completes that purchase within 180 days. He or she can do this over and over, and the process is only interrupted when the owner sells and doesn’t buy a new work, in which case the tax would fall due, or dies, when the tax would be due on the estate. For anyone investing in art, this has enabled them to free up cash for purchases which would otherwise go on tax, something supporters of the system argue that is bolstering the art market and encouraging collecting. Wierbicki explains: ‘If I use like-kind exchanges I am not depleting my buying power, which allows me to continue to be competitive as an art investor on a global scale.’ However, she continues: ‘A 1031 exchange alone does not eliminate income tax, it simply defers it. When someone doesn’t want to reinvest any more in art and sells the art they have for cash, they will have to pay tax on the gain based on the original price of the first artwork that was purchased.’ Deferring tax with 1031 – which has even morphed into a verb, ‘to ten thirty-one something’ – gets buyers very excited, said art advisor Lisa Schiff at the same panel discussion as Robinson Gaer mentioned above: ‘It’s become rampant, I’ve done so many over the years. But sometimes the fact of “saving” tax can lead owners into wanting to exchange a good piece for an inferior one, just because they will defer the tax.’

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There is a constraint; in theory you have to exchange the art you own for ‘like-kind’ art, but there is some confusion about what that means – it may mean that if you are selling a painting, you have to replace it with a painting, not a sculpture – leading some investors to have two separate accounts, one for painting, one for sculpture. ‘No one really knows exactly what is acceptable,’ says Jason Kleinman, tax partner at Herrick Feinstein of New York. ‘The rules have been defined for real estate, which is the major user of 1031, but there is no clear guide for art. Nevertheless, the whole art investment industry in the US has been built around the assumption that it is do-able, and while ex-President Obama had indicated that it might be removed, the real estate industry would defend it vigorously.’41 In the meantime, the tax man appears to frown on keeping such ‘investment property’ as part of a 1031 exchange at home – which has the effect of further filling the storage units we have already discussed. This is not the only way tax liability can be minimised. Another hot topic in the last decade has been the foundation of private museums worldwide – the billionaire’s new trophy possession. ‘If you donate art to a private foundation you have created that uses art as part of its mission, you can get a tax deduction equal to the fair market value of the art. This means that if you bought a work for $100 decades before, and it is worth $100,000 in the year you donate it, your deduction is equal to $100,000,’ explains Wierbicki. That’s not all – owners can also move insurance, conservation and storage and other expenses onto a foundation – or, sometimes, provide employment for family members. Any art purchases for a foundation are not liable for sales or use tax; donations by the owner are also exempted from capital gains tax.

SKIRTING THE RULES

Unsurprisingly there has been disquiet about such foundations, particularly those sited close to the owners’ homes, with some suspecting they could be used as a way of gaining tax benefits as well as for private

184 The Dark Side enjoyment. One unproven suspicion is that works from a foundation could migrate into the owner’s home, for example for a dinner party, and then be returned later.42 The Glenstone Museum in Potomac, Maryland, belongs to financier Mitchell Rales and his art historian wife Emily Wei Rales. It displays their massive and costly collection of post-war art, valued at over $702 million.The museum was one of half a dozen such establishments that drew the attention of the Senate Finance Committee in 2015, with concerns raised that the public should benefit from them, and that they should not just be a means of ‘skirting around the tax code’, in the words of the committee’s chairman, Orrin Hatch. ‘These organiza tions have a duty to promote the public interest, not those of well-off benefactors, plain and simple,’ he said.43 However it is clear that the cost of building some of the museums – such as the $140 million lavished on The Broad Museum in Los Angeles, built by real estate mogul Eli Broad and his wife Edythe – must far outweigh any tax benefits. And once the art is in a foundation, it stays there, even after the death of the founder. ‘These foundations have perpetual existence unless they run out of funds,’ says Christine Steiner, counsel at Withers. ‘But that does occasionally happen. Entities can sunset [i.e. close]; in that case they can donate the art or sell it.’44 One final way some US taxpayers have found to reduce their tax bill is by putting a work on show in a museum outside their home state. Previously a little-known loophole, the break became far better known after the case of Elaine Wynn and her record-breaking Francis Bacon. Wynn, former wife of the Las Vegas casino owner Steve Wynn, bought Bacon’s Three Studies of Lucian Freud (1969) from Christie’s New York for $142.4 million.45 She immediately sent it to the Portland Museum of Art in Oregon, where it went on show for four months. The loan – which, of course, was greatly to the benefit of the enterprising Portland Museum – might also have enabled Wynn to avoid paying an estimated $11 million in tax. Portland is situated in Oregon, which doesn’t have a ‘use tax’ whereas her home state of Nevada does, at 7.85 per cent. By the

185 money, money, money time the Bacon reached its owner it had been ‘used’ and was therefore not liable for tax. However, Steiner warns that the rule in question in just a presumption: ‘What is called the “Norton Simon” rule is just a presumption that tax will not be payable – and if it’s only to avoid tax, it could be challenged by the authorities,’ she says. (The rule is named after the wealthy industrialist who used this tax break system.) Tax avoidance doesn’t stop there. Not paying sales tax landed the luxury broker-turned-real estate developer Michael Shvo in front of a Manhattan court in 2016, accused of evading some $1 million in tax. He allegedly put art purchases in his offices and homes in New York State, rather than shipping them to addresses outside the US. The indictment also alleged that he had used New York resale certificates – which exist for dealers to buy art intended for resale, and are therefore not liable for tax.46 Shvo, who pleaded not guilty and had not gone to trial at the time of writing, was the latest person involved in a crackdown by the New York attorney general on alleged tax abuses in 2016. Earlier in the same year another real estate developer and art investor, Aby Rosen, agreed to pay $7 million to the tax man on a ‘no wrongdoing’ basis. He was accused of using resale certificates over a ten-year period, during which time he had bought or commissioned some $80 million in art, allegedly without paying sales tax.47 A final note on the use of art donations to museums: in Canada, a case in 2017 saw debate as to whether the donation of more than 2,000 prints by famed photographer Annie Leibovitz to the small Art Gallery of Nova Scotia was actually a potential tax dodge. The works had been bought in 2013 for US$4.7 million by a company controlled by the Toronto-based Mintz family; they paid half this purchase price to Leibovitz, with the rest to come after the group’s US$20 million valuation was accepted by the Canadian Cultural Property Export Review Board. If the valuation had been accepted, the Mintz family could have received US$6.9 million as a tax credit/refund. However the Canada Revenue Agency considered the valuation ‘questionable’,48 and, at the time of writing, the case had not been resolved.

186 The Dark Side

MONEY LAUNDERING

One of the most nefarious uses of art is in money laundering, if you believe the manifold headlines, for example: ‘Laundering Drug Money with Art’, Forbes in 200349 and ‘Valuable as Art, but Priceless as a Tool to Launder Money’, the New York Times in 2013.50 There have been numerous conferences and panels addressing this problem, including ‘Art and Money Laundering: Responsible Art Market Practice Guide- lines’, a conference organised by the verification and testing company SGS in Geneva in January 2017. Writings on the subject include Money Laundering Through Art: A Criminal Justice Perspective by a Brazilian lawyer, Fausto Martin De Sanctis.51 It is undisputable that there is a real need for companies, dealers and auction houses to protect themselves from the danger of unwittingly handling works of art that have dirty money behind them. The problem is, however, that almost all the cases mentioned at the conferences, written up in articles or even traced in De Sanctis’s book, are the same. Mention is invariably made of Basquiat’s Hannibal (1982), which was seized by customs investigators in New York. Its value was put at just $100, but it turned out that the false shipping declaration was an attempt to launder the ill-gotten gains of the Brazilian banker Edemar Cid Ferreira, who was convicted in 2006 by a US court of crimes against the Brazilian national financial system and money laundering.52 The Basquiat, along with works by Roy Lichtenstein and Joaquin Torres- Garcia, were part of a 12,000-strong art collection Ferreira had built up through funds looted from his bank.53 These two were returned to the Brazilian authorities, and the Basquiat was quietly auctioned off by Sotheby’s London in 2016,54 where it made £10.6 million; unsurprisingly, no mention was made in the catalogue of its tainted past. The same articles tend to cite the conviction of Helly Nahmad for running illegal gambling clubs, along with 33 others, as part of an organised crime ring. Among the initial accusations against him was that he had used a Raoul Dufy painting, Carnaval à Nice (1937), to

187 money, money, money transfer funds illegally, and the work was forfeited by the authorities as part of his plea bargain. Court documents disclosed how art could be used in such schemes, but also revealed even more trickery. One of the accused, Nicholas Hirsch, put Nahmad in touch with a model who had failed to pay tax on her income of $477,000, which was stashed in a Bahamian offshore bank. She transferred the money into a Swiss account ‘associated with Nahmad’, according to court documents.55 Then Nahmad paid her $100,000, taking an agreed $77,000 for doing so. As to the remaining $300,000, he gave the model a painting from the Nahmad collection – but in fact overvalued it by $50,000, splitting the difference with Hirsch.56 Hirsch pleaded guilty to wire fraud, and Nahmad to the gambling charges as part of his plea bargain.57

ART AND THE BIGGEST FINANCIAL FRAUD EVER?

At the time of writing, another immense scandal was unfolding in the US. At its heart was the accusation that over $3.5 billion had allegedly been laundered through art, property and even film-making. Spread across ten countries, the scandal may turn out to be one of the biggest financial frauds ever. The money had, according to US prosecutors, been siphoned out of a state investment fund, 1Malaysia Development Berhad (1MDB), and spent by a number of people including Malaysian financier Low Taek Jho – generally known as Jho Low. Attempts to obtain a direct comment from Low through his investment company Jynwel Capital were unsuccessful at the time of writing but IMDB and he have denied any wrongdoing,58 and he has not been accused of any crime. Before the accusations began, Low, known for his partying lifestyle, had bought major assets, including New York’s Park Lane Hotel, a $107 million interest in EMI Music Publishing, a $35 million Bombar- dier jet and a $30 million penthouse at Time Warner Center in New York, as well as allegedly funding the Hollywood film The Wolf of Wall Street. In 2015 he was named as one of Artnews’s top 200 art

188 The Dark Side

collectors; the prosecutor’s contention is that this art was bought by Low, through intermediaries, with laundered money. In 2017 model Miranda Kerr and Hollywood star Leonardo DiCaprio surrendered to the US authorities gifts they are believed to have received from Low – jewels worth £6 million for Kerr, and a $3.2 million Picasso and a $9 million Basquiat for DiCaprio, along with a ‘Best Actor’ statuette. Neither Kerr nor DiCaprio is accused of any wrongdoing.59 An indication of Low’s extravagant tastes can be found buried in court documents, which say that in November 2013 a skybox (one of the screened-off upper rooms reserved for big-spending clients) at Christie’s was reserved for 12 people, with a Christie’s employee noting in an email: ‘It better look like Ceasar Palace [sic] in there . . . The box is almost more important for the client than the art.’60 At that sale Low spent $5.5 million, via an associate, on Van Gogh’s La Maison de Vincent à Arles (1888).61 At other auctions Low bought – again through an associate – five works for a total of $58.4 million, notably the record-setting Basquiat, Dustheads (1982), at Christie’s for $48.8 million.62 Attendees in the saleroom – I was among them – remember the whoops from the skybox as the hammer came down. Other purchases were two Alex- ander Calder works and, at a sale two days before, works by Edward Ruscha and Mark Ryden. Through SNS Fine Arts – a company belonging to art dealer and advisor Stephane Connery – Low also bought Monet’s Venetian view, San Giorgio Maggiore at Dusk (1908), for $35 million, and acquired the artist’s Nymphéas avec reflets de hautes herbes (1914–17) at Sotheby’s London for £33.8 million.63 Low used some of these acquisitions as collateral to get a $107 million loan from Sotheby’s financial services, a sum that was sent to a company he owned in the Cayman Islands.64 In an email to the dealer from whom he bought the Monet, he said: ‘All in Geneva freeport. Speed is the most important and one with a fairly quick and relaxed kyc process.’ The ‘kyc’ is the key, referring to the process known as ‘Know Your Client’ which financial institutions use in order to filter

189 money, money, money

out potential money laundering by ensuring they have checked up on the source of the funds. Some of those works were then sold off at steep discounts, with the Basquiat going for $35 million in a private transaction, while Picasso’s Tête de femme sold for $27.5 million, roughly $12 million less than he paid for it in 2013; in 2016, Sotheby’s told investigators that the loan had been repaid.65 FBI special agent Christopher McKeogh, whose background is in white-collar crime investigations, says: ‘What is called “shadow banking” is not regulated by the bank secrecy act. Banks are required to file suspicious activity reports, but when an auction house or other finance company lends money against art it is not governed by those same parameters. So in the case of an auction house they’ll offer 40 per cent to 60 per cent of the value of your art. Let’s say you give a lender $100 million worth of art – you can get 50 per cent of that, now you have $50 million. It’s a great way to launder money; the lender is not looking at the source of the artwork . . . So now you have $50 million,’ contin ues McKeogh, ‘and the lender is holding your art – you can then say, “I’m going to default on the loan, just sell the art.” But you’ve got the money already, which you have sent away, and it was clean cash. The lender is left holding the bag. They will get what they can for the art.’ Asked whether the use of art to launder money has been greatly exaggerated, particularly since so few cases have actually surfaced, Merid- ith Savona said: ‘There are few public examples of art being used in money laundering. But it’s a growing problem.’

GREATER REGULATION

Notably because of the art-for-investment industry, there have been growing calls for more transparency in what, until now, has been a lightly regulated market. Calls for more stringent regulation are generally batted away by the trade itself; some within it would like to keep things the way they are now – as well as being aware of the difficulties inherent in the undertaking.

190 The Dark Side

Making a living in the art business still mainly relies on the personal nature of the trade; knowing the ‘right’ person, getting a work at a ‘good’ price and taking a profit on resale. Vendors regularly demand and obtain anonymity for often valid reasons. While the internet has, to an extent, brought more transparency to this process by making prices available at the click of a mouse, the increasing number of private deals – including those brokered by auction houses – escape scrutiny completely, as do works sold online. Christie’s, which has a strong online presence, along with most other firms that auction over the internet, does not publish the final prices made in online auctions with a few exceptions such as charity sales. As the volume of internet sales grow, so will this ‘dark hole’ in auction transparency. The big stumbling block has always been the heterogeneous nature of the market itself. How can you regulate a business that ranges from small antique dealers to the multi-billion-dollar auction houses? A business that handles objects that are rarely comparable, and whose price and even condition can be a matter of differing opinions? For Clinton Howell, president of CINOA, the International Confedera- tion of Art and Antique Dealers’ Associations, ‘The greatest threat to transparency is top-down government regulation. Without the support of dealer input, governments will make inappropriate decisions about how to “regulate” the art trade – these include things like import and export regulations, making decisions based on popular support (ivory and antiquities are both emotional issues that are severely overblown by government) and, most importantly, cultural nationalism, as for example disputes over national heritages.’66 What is surprising is the lack of impact the art market scandals have actually had, as lawyer Donn Zaretsky told me: ‘I haven’t seen much change after Knoedler [see Chapter 5]. Everyone thought that there would be more forensic testing, more due diligence, but I still see people doing deals on a handshake. The fact is,’ he continues, ‘the art market is a market but also a social world. If people are buying Tribeca real estate they will do all the necessary research, bring in

191 money, money, money lawyers, stitch up contracts, and yet if they buy a picture for $3 million they will hardly do anything. It’s all part of this social world, meeting the artist, going to the parties. And buying art is an entrée to this world. You need to understand this in order to understand why these things happen, and why the market will be so hard to regulate. Confiden tiality is so important. Look at all the regulations that already exist and are all ignored. You are supposed in New York to post price lists in galleries – it doesn’t happen. Get a certificate for multiples. Doesn’t happen. Keep artists’ funds segregated from the gallery funds. No one does that. All the indications are that if you try to regulate, there will be a lot of resistance.’ Two crucial issues are enforcement and cost. Who would enforce compliance, and how would it be paid for? While the art market has grown considerably in the last decade, its value, which fluctuated around the $50 billion level between 2006 and 2016, is small beer compared to other industries such as luxury goods, which is a $253 billion a year market.67 Governments are unlikely to want to devote energy and resources to this, but self-regulation inevitably poses problems of conflict of interest. One other reason for a lack of tighter regulation has been the feeling that it is not good use of government time and money to protect one wealthy person from another. But for Meridith Savona of the FBI, this is no longer true. ‘It’s not just wealthy art collectors being wronged,’ she says. ‘The majority of our victims are very middle-class people, they are getting more involved in the art market, and having an appre- ciation for art, not on the multi-million-dollar scale, but at a much lower level.’ And she warns: ‘Art crime trickles down and affects our banks and a lot of different victims – and don’t forget it covers up other crimes . . .’

192 postscript

This book has painted a rather dark picture of the art market over the last few years, and it is important to emphasise that the excesses I describe only concern a small number of individuals and are concentrated at the top end, where prices have flown the highest. The excesses have been triggered by these huge price rises and changes in the struc- tures for selling art – coupled with the highly opaque nature of the business – as well as globalisation and alterations in the nature of wealth and how it is spent. Nevertheless, many art market players, particularly those with lengthy experience, have expressed to me their continued concern about many of the aspects I have covered in this book, and about the ruthlessness of today’s market. I have a number of worries, as illustrated in this book. One is the way art has been turned into a commodity and notably an investment opportunity, with the result, as we saw in these pages, that so many major works of art and artefacts sit in storage, hidden away. While it is customary to reproach museums for keeping much of their holdings out of sight, in fact most of that is minor material or duplicates; there are no Leonardo da Vinci paintings tucked away unseen in the Louvre’s reserves. It would be counter-intuitive to not showcase an institution’s most celebrated works, as it is these very masterpieces that ensure higher visitor figures. At the same time there is so much art produced by so many artists that storage becomes inevitable. As William Powhida told me: ‘The ultimate condition of contemporary art at this point is to end up in

193 dark side of the boom

store.’ Dealers privately fear that the sheer amount of art being produced will cause problems further down the line by depressing prices if too much comes onto the market at one time. They are also concerned by the quality of the art created to satisfy demand. Couple this with the number of mid-market dealers closing their physical spaces – could the end game be that more and more dealers end up selling directly in the warehouses, to people who keep the art right there, sometimes along with a tax break? And yet I find it difficult to believe that most artists started out creating artworks to be purely investment products, gaining value while sitting in crates. Another concern is the way the art market seems to be growing ever closer to the luxury goods industry, increasingly producing works ‘made for the market’. The orchestrated run-up to Hirst’s Treasures from the Wreck of the Unbelievable resembled the build-up to a new product launch, complete with teaser videos sent out in advance. If this is the way art is going – with no attempt to create anything new, innovative or challenging, but rather just making a marketable product – then what is the point of curation, scholarship, art criticism or art history? It is important not to judge the whole market on the basis of the Hirst show, but it cannot be ignored either. Art is increasingly being used to promote manifold products, from real estate to cars, watches and fashion, as well as creating events. ‘Branding’ of artists’ names, of galleries and of auction houses has become increasingly important, and it is not for nothing that fashion moguls are major collectors – as in the case of François Pinault, involved in multiple ways in the market, as a collector, luxury goods magnate and owner of two, soon three, museums as well as the world’s leading auction house. This leads on to another concern, which is that the market is increasingly leading the non-commercial world. Public institutions are being drawn into the commercial sphere, putting on shows, sanctioning acqui sitions because that is what their trustees – who may have a strong financial interest – demand. The market is reaching into every corner

194 Postscript of the art world, and tending to influence those who are meant to be detached arbiters. It would be worrying indeed if the art history that is studied in the future is the result of the forces shaping the market today. Does art risk losing itself by becoming overwhelmed by the needs of the commercial world? As advisor Lisa Schiff told me: ‘Today, pretty well everything is a sales platform. Whether in a museum, gallery [or] biennale, contemporary art is almost invariably for sale.’1 Again, there is a blurring of aims, and the question must be asked: when a major museum holds a show of a contemporary artist, is it for purely curatorial reasons or because a trustee or commercial gallery is supporting it? For now, the truth probably lies somewhere in between but the risk is that with public subsidies for museums declining, private money will increasingly hold sway in our most important museums. Art’s status as an alternative currency, with the accompanying temptations of tax avoidance and manipulations, seems to me deeply worri- some. The question is, will its non-commercial qualities – social, symbolic, intellectual and challenging – endure, or will art gradually become homogenised to the tastes of a global elite? Or should we recognise that the market has changed, that it has become corporatised, and that this has led to an evolution of the very notion of ‘art’ itself? Or perhaps we should not hanker after the past. It is difficult to imagine a return to the days when, as Judith Stein wrote about art dealer Richard Bellamy in the 1950s, ‘You bought art because you loved it, pure and simple.’2

195

appendix

Art acquired by Dmitry Rybolovlev’s trusts through Yves Bouvier Date Acquisition Title acquired price Sold

Picasso, Les Noces de Pierrette 2004 $43.8m Modigliani, Nu couché aux bras levés 2006 $26.75m Picasso, Mousquetaire à la pipe 2006 $12.5m Modigliani, Jeune fille blonde en buste 2007 €17.5m Modigliani, Madame Hébuterne aux épaules nues 2007 €17m Modigliani, Nu dolent 2008 €18m Picasso, La soeur de l’artiste 2008 €37.5m Degas, Danseuse en rose 2008 €25m Gauguin, Te Fare 2008 €54m £20.3m Modigliani, Vénus (Nu debout, nu médicis) 2008 $39m Rothko, No. 1 2008 $24m Monet, Nymphéas (1897–8) 2008 €46.5m Monet, Nymphéas (1914–17) 2008 €42m Toulouse-Lautrec, Le Baiser 2009 €18m Van Gogh, Paysage avec un olivier 2009 €18m Picasso, Joueur de flûte et femme nue 2010 €25m £4.6m Renoir, Jeunes filles au bord de l’eau 2010 $45m El Greco, St Sebastian 2010 €39.2m Picasso, L’homme assis au verre 2011 $107.5m Maillol, La Méditerranée 2011 €8.4m Rodin, Le Baiser 2011 €7.5m Unsold at auction £3.8m Matisse, Nu au châle vert 2011 $85m

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Rodin, L’Eternel printemps 2011 £30m $20.4m Giacometti, Femme de Venise IX 2011 CHF45m Magritte, Le Domaine d’Arnheim 2011 $43.5m £10.2m Modigliani, Nu couché au coussin bleu 2012 $118m Rodin, Eve 2012 $26.25m El Greco, Portrait de Jésus et Madonna* 2012 €48m Klimt, Wasserschlangen II 2012 $183.8m $170m Toulouse-Lautrec, Au lit, le baiser 2013 €13.75m £10.8m Picasso, Tête de femme and Espagnole à l’éventail (two works)** 2013 €27m (combined) Leonardo, Salvator Mundi 2013 $127.5m Gauguin, Otahi 2013 €120m <$50m Rothko, No. 6*** 2014 €140m

* Offered for sale in London in July 2017, estimate £4m to £6m: unsold. See p.168 **Subject of ownership dispute, see p.173 *** Payment not completed, see p.171

198 notes

Introduction 1 McAndrew, 2017, p.27; see also p.15 of this book. 2 Ibid., p.96. 3 Ibid., p.154. 4 Julia Halperin, ‘Art of today dominates US museums’, The Art Newspaper, April 2017, p.1. 5 www.hiscox.co.uk/online-art-trade-report/, p.2. 6 Yayoi Kusama: Infinity Mirrors, Hirshhorn Museum, 23 February– 14 May 2017. 7 Yayoi Kusama: Infinity Mirrors, The Broad, Los Angeles, 21 October 2017–1 January 2018. 8 Transcending Boundaries, Pace Gallery, 26 January–11 March 2017. 9 Punta della Dogana and Palazzo Grassi, Venice, 9 April–3 December 2017. 10 Tefaf Art Market Report, 2016, TEFAF, Maastricht, p.156.

Prologue 1 Geneva Freeport, La Praille, Geneva, opened in May 2010. 2 https://www.cia.gov/library/publications/the-world-factbook/geos/lu.html. 3 Email correspondence with Nicolas Mackel, 8 September 2016. 4 https://www.ft.com/content/018d3a86-b0f2-11e3-9f6f-00144feab7de. 5 http://www.knightfrank.com/resources/wealthreport2015/ wealthpdf/02-wealth-report-attitudes-chapter.pdf. 6 Robert Frank, ‘A Multimillion-Dollar Markup on a Modigliani’, the New York Times, 4 April 2015. http://www.nytimes.com/2015/04/05/ business/a-multimillion-dollar-markup-on-a-modigliani.html.

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Chapter 1: SUPPLY 1 Stéphane Custot, interview with the author, September 2016 (and subsequent quotes). 2 Q Confucius, Rockbund Art Museum, Shanghai, 15 October 2011– 29 January 2012. 3 Enid Tsui, ‘Chinese artist Zhang Xiaogang determined to put Bloodline series to Bed’, South China Morning Post, 9 October 2016, http://www.scmp.com/culture/arts-entertainment/article/2026094/ chinese-artist-zhang-xiaogang-moves-symbolism-surreal. 4 Sotheby’s Hong Kong Spring Sale, 5 April 2014. 5 Lind and Velthuis, 2012, pp 153–63. 6 Ibid., p.158. 7 Adam, 2014, pp 61–3. 8 Gnyp, 2015, p.268. 9 Christian Viveros-Fauné, conversation with the author, September 2016. 10 Stéphane Custot, interview with the author, November 2016. 11 Michael Savage, correspondence with the author, December 2016. 12 Martin Warnke, Cranachs Luther: Entwürfe für ein Image (Fischer, Frankfurt am Main, 1984), p.6. 13 www.theturnersociety.com. 14 Damien Hirst’s studio, email correspondence, 27 January 2017. 15 Sotheby’s London, 15–16 September 2008. 16 Robin Pogrebin, ‘Damien Hirst Alienated Collectors. Will his New Work Win Them Back?’ the New York Times, 21 February 2017, https://www.nytimes.com/2017/02/21/arts/design/ damien-hirst-alienated-collectors-will-his-new-work-win-them-back. html. 17 Adam Sheffer, conversation with the author, January 2017. 18 Vanessa Carlos, interview with the author, September 2016 (and subsequent quotes). 19 Cornelia Grassi, interview with the author, September 2016 (and subsequent quotes). 20 Wade Guyton OS, Whitney Museum of American Art, 4 October 2012–13 January 2013. 21 Christie’s New York, 12 November 2013

200 Notes

22 Carol Vogel, ‘At Christie’s Auction an Experiment Proves Fruitful’, the New York Times, 13 May 2014, https://www.nytimes. com/2014/05/13/arts/design/at-christies-auction-an-experiment-proves- fruitful.html. 23 Sotheby’s New York, 14 May 2014, $5,989,000 24 Phillips New York, 18 May 2017. 25 Simon de Pury, conversation with the author, January 2017 (and subsequent quotes). 26 Case filed: 2:15-cv-04539. 27 Civil Occupation, White Swan, Dublin, 5 December 2014– 10 January 2015. 28 Pangaea II: New Art from Africa and Latin America, Saatchi Gallery, London, 11 March–17 September 2015. 29 Author interview, November 2016, Simchowitz, who could not comment further; Mahama did not reply to two emailed requests for comment. 30 Untitled (2006), Phillips New York, 16 May 2008. 31 Tim Ackermann, ‘Kunstmarkt: Ein ziemlich befreiendes Gefühl’, Die Welt, 6 February 2014, https://www.welt.de/kultur/kunst-und- architektur/article124561226/Ein-ziemlich-befreiendes-Gefuehl.html. 32 Anselm Reyle: Keramik, Contemporary Fine Arts, Berlin, 29 April– 25 June 2016. 33 Edward Winkleman, interview with the author, January 2017. 34 Tom Christopherson, interview with the author, November 2016 (and subsequent quotes). 35 Yes, Rasta: Photographs by Patrick Cariou (Powerhouse Books, New York, 2000). 36 William Robinson, ‘Richard Prince Loses Copyright Lawsuit’, Artnet, 21 March 2011, http://www.artnet.com/magazineus/news/artnetnews/ richard-prince-loses-lawsuit-3-21-11.asp. 37 Case filed: 11-1197-cv. 38 Matthew Israel, ‘Your Instagrams are Richard Prince Artworks’, Huffington Post, 1 December 2014, http://www.huffingtonpost.com/ matthew-israel/your-instagrams-are-richa_b_5908264.html. 39 Richard Prince, New Portraits, Gagosian Gallery, New York, 19 September–25 October 2014. 40 Case filed: 1:15-cv-10160.

201 dark side of the boom 41 Kim Willsher, ‘Jeff Koons Plagiarised French Photographer for Naked Sculpture’, Guardian, 9 March 2017, https://www.theguardian.com/ artanddesign/2017/mar/09/jeff-koons-plagiarised-french-photographer- for-naked-sculpture. The Centre Pompidou did not reply to a number of requests as to whether the verdict would be appealed. 42 Jeff Koons, Centre Pompidou, Paris, 26 November 2014 – 27 April 2015. 43 ‘Jeff Koons sculpture removed from Pompidou Centre amidst plagiarism allegations’, Artlyst, 24 December 2014, http://www.artlyst. com/articles/jeff-koons-sculpture-removed-from-pompidou-centre- amidst-plagiarism-allegations. 44 Quoted in Georgina Adam, ‘The Art Market: Basel and Some London Blockbusters’, Financial Times, 12 June 2010, https://www.ft.com/ content/2ab0c47e-74e1-11df-aed7-00144feabdc0. 45 Richard Combes, February 2016, http://www.santarelli.com/en/ newsflash-klasenmalka-case. 46 Proceeds go to MOCA after wholesale/production costs. Email from MOCA, 5 September 2017. 47 Case filed: 1:12-cv-02551-DAB. 48 Felix Salmon, ‘Why is Jonathan Sobel Suing William Eggleston?’, Reuters, 6 April 2012, http://blogs.reuters.com/felix- salmon/2012/04/06/why-is-jonathan-sobel-suing-william-eggleston/. 49 Alain Servais, email correspondence with the author, 25 May 2016. 50 Neon: The Charged Line, Grundy Art Gallery, Blackpool, 1 September 2016–7 January 2017. 51 Tony Harrison, correspondence with author, 2016–17. 52 Bernard Buffet: Retrospective, Musée d’Art Moderne de la Ville de Paris, 14 October 2016–26 February 2017. 53 Bernard Buffet: An Intimate Portrait, Musée de Montmartre, Paris, 18 October 2016–5 March 2017. 54 Sotheby’s Hong Kong, 14–24 September 2016. 55 Christie’s London, 22 June 2016. 56 Bernard Buffet: Paintings from 1956 to1999, Venus, New York, 5 April–27 May 2017. 57 Gunter Sachs Collection, 22 May 2012.

202 Notes

Chapter 2: Demand 1 Greg Hilty, Curatorial Director of Lisson Gallery, speaking at the London gallery, 20 January 2017. 2 Yang Jian, ‘Xuhui Plays Around with a Grand Plan for Developing its Waterside’, Shanghai Daily, 11 November 2016, p.A4. 3 ‘Mad about Museums’, Economist, 6 January 2014, http://www.economist.com/news/special-report/21591710-china- building-thousands-new-museums-how-will-it-fill-them-mad- about-museums. 4 Chinese Museums Association, email correspondence, 8 March 2017. 5 Pearl Lam, interview with author, September 2016 (and subsequent quote). 6 ‘Mad about Museums’, Economist, 6 January 2014, op.cit. 7 Huang Yong Ping: Batôn Serpent (II), Red Brick Art Museum, 26 September 2015–16 February 2016. 8 Madeleine O’Dea, conversation with the author, March 2017. 9 Lisa Movius, conversation with the author, January 2017. 10 Barbara Pollack, ‘Adrian Cheng’, Artnews, 16 July 2014, http://www.artnews.com/2014/07/16/adrian-cheng/. 11 Jennifer Thompson, ‘Expansion on the Agenda of Chow Tai Fook to Counter Tougher Times’, Financial Times, 29 September 2015, https://www.ft.com/content/3a4cd422-4bd7-11e5-b558-8a9722977189. 12 http://hk.k11.com/en/About-K11/About.aspx. 13 Douglas Kotwall, WeChat message, 9 February 2017. 14 Truth, Beauty, Freedom and Money, Shanghai K11 Art Mall, 25 May–28 July 2013. 15 Master of Impressionism: Claude Monet, Shanghai K11 Art Mall, 8 March–15 June 2014. 16 Dalí, Shanghai K11 Art Mall, 5 November 2015–15 February 2016. 17 Georgina Adam, ‘Art in Shopping Malls, It’s All Product After All, The Art Newspaper, 2 February 2016, http://theartnewspaper.com/ market/analysis/art-in-shopping-malls-it-s-all-product-after-all/. 18 Tefaf Art Market Report, 2016, TEFAF, Maastricht, p.25. 19 Jiayang Fan, ‘The Emperor’s New Museum’, New Yorker, 7 November 2016, http://www.newyorker.com/magazine/2016/11/07/ the-emperors-new-museum.

203 dark side of the boom 20 Patti Waldmeir, ‘Lunch with the FT, Wang Wei’, Financial Times, 29 January 2016, https://www.ft.com/content/5781c56a-c4f5-11e5- 808f-8231cd71622e. 21 Source did not wish to be identified. Conversation, June 2016. 22 Sotheby’s Hong Kong, 8 April 2014. 23 Christie’s New York, 17 March 2015. 24 Christie’s New York, 9 November 2015. 25 Nothingness is not Nothing at All, Long Museum, West Bund Gallery, 20 March–26 June, 2016. 26 Yan Lugen, email correspondence, 18 January 2017. 27 Georgina Adam, ‘Yan Lugen: Picasso in the Portfolio’, Financial Times, 17 March 2017, https://www.ft.com/content/328e8ef4-fe7f-11e6-8d8e- a5e3738f9ae4. 28 Follow the Heart. The Art of Sean Scully: 1964–2014 London, New York, CAFA Art Museum Beijing 13 March– 23 April, 2015; Shanghai Himalayas Museum, 23 November 2014– 25 January 2015. 29 Sean Scully: Resistance and Persistence. Paintings 1967–2016, Nanjing University of the Arts, 8 April–8 May 2016, Guangdong Museum of Art, Guangzhou, 6 September–9 October 2016, Hubei Museum of Art, Wuhan, 10 January–12 March 2017. 30 Philip Dodd, interview with the author, January 2017. 31 http://www.bain.com/publications/articles/luxury-goods-worldwide- market-study-fall-winter-2016.aspx, 28 December 2016. 32 Christie’s Hong Kong, 1 June 2015. 33 Christie’s Hong Kong, 26 September 2013. 34 Source did not wish to be identified. 35 David Keohane, ‘So You Want to Get Your Money out of China’, Financial Times, 3 March 2016, https://ftalphaville.ft.com/2016/03/03 /2155170/so-you-want-to-get-your-money-out-of-china-cut-out-and- keep-edition/. 36 Jane Cai, ‘Revealed: The Sneaky Ways Chinese Are Moving Money Across the Border’, South China Morning Post, 29 May 2017, http://www.scmp.com/news/china/economy/ article/2096032/chinas-watchdog-tracks-underground- cash-trail. 37 http://wikimapia.org/26675490/The-District-Mall.

204 Notes

38 Andrea Marechal, ‘Dressed to Sell’, The London Magazine, 21 September 2016, http://www.thelondonmagazine.co.uk/property- experts/expert-opinions/dressed-to-sell.html. 39 Carol Vogel, ‘Hirst, in an Underwater Fantasy’, the New York Times. 6 April 2017, https://www.nytimes.com/2017/04/06/arts/design/ damien-hirst-francois-pinault-palazzo-grassi.html.

Chapter 3: What’s the Price? 1 Edward Dolman, interview with author, September 2016 (and subsequent quotes). 2 Information supplied by Almine Rech. 3 Julia Halperin and Brian Boucher, ‘Jeff Koons Radically Downsizes His Studio, Laying Off Half His Painting Staff’, Artnet, 20 October 2017, https://news.artnet.com/art-world/ jeff-koons-radically-downsizes-his-studio-laying-off-half-his-painting- staff-998666?utm_. 4 Christie’s New York, 12 November 2013. 5 Halperin and Boucher, 2017, op.cit. 6 Adam, 2014, p.26. 7 Christie’s New York, 13 May 2014. 8 Charlotte Burns and Pac Pobric, ‘. . . While Christie’s Breaks Everybody’s Records’, The Art Newspaper, December 2014, p.9. 9 Christie’s New York, 12 November 2014. 10 Sotheby’s New York, 4 November 2014. 11 Christie’s New York, 11 May 2015. 12 Case filed: Gagosian Gallery Inc. vs Pelham Europe Ltd. 16-cv-00214. US District Court, Southern District of New York. 13 Picasso and Marie-Thérèse: L’amour fou, Gagosian Gallery, New York, 14 April–15 July 2011. 14 Katya Kazakina, ‘Picasso Bust Pits Qatar Against Apollo CEO in Ownership Spat’, Bloomberg, 4 February 2016, https://www.bloomberg. com/news/articles/2016-02-04/picasso-granddaughter-leon-black-sued- in-sculpture-dispute. 15 Case filed: 1:16-cv-00214. 16 Scott Reyburn and Doreen Carvajal, ‘Gauguin Painting is Said to Fetch Nearly $300 Million’, New York Times, 5 February 2015, http://

205 dark side of the boom www.nytimes.com/2015/02/06/arts/design/gauguin-painting-is-said-to- fetch-nearly-300-million.html. 17 Rudolf Staechelin, email correspondence with the author, 7 December 2016. 18 Staechelin did not want to comment before the end of the case. Email correspondence with the author, 19 July 2017. 19 Simon de Pury, email correspondence with the author, 17 July 2017. 20 Olav Velthuis, interview with the author, November 2016 (and subsequent quotes). 21 Luisa Kroll, ‘Forbes 2016 World’s Billionaires: Meet the Richest People on the Planet’, Forbes, 1 March 2016, http://www.forbes.com/sites/ luisakroll/2016/03/01/forbes-2016-worlds-billionaires-meet-the-richest- people-on-the-planet/#165b35ee41cb. 22 James Roundell, conversation with the author, December 2016. 23 Sotheby’s New York, 18 May 2017. 24 Simon de Pury, speaking at Talking Galleries, Barcelona, 17 January 2017 25 Adam, 2014, pp 35–9. 26 Katya Kazakina, ‘Before Paddles Are Even Raised, $1 Billion of Art Already Has Buyers’, Bloomberg, 29 October 2015, https://www. bloomberg.com/news/articles/2015-10-29/before-paddles-are-raised-1- billion-of-art-already-has-buyers. 27 Sotheby’s New York, 4 November 2015. 28 Christie’s New York, 10 November 2015. 29 Peter Brant, conversation with the author, April 2017. 30 Katya Kazakina, ‘Auction Houses Told to Improve Transparency in Reporting Prices’, Bloomberg, 17 October 2016, https://www.bloomberg. com/news/articles/2016-10-17/auction-houses-told-to-improve- transparency-in-reporting-prices. 31 There are 77 cases listed under his name in the US district court records. 32 Robert Frank, ‘The Feud That’s Shaking Gallery Walls’, New York Times, 10 October 2014, https://www.nytimes.com/2014/10/19/business/ the-feud-thats-shaking-gallery-walls.html. Case filed 6531/89/2012. 33 Case filed: 1:2012-cv-02313, Domenico De Sole vs Knoedler. 34 Donn Zaretsky, interview with the author, April 2017 (and subsequent quotes).

206 Notes

35 Kenny Schachter, conversation with the author, April 2017. 36 William Powhida, interview with the author, April 2017. 37 12 April 2017. Colin Gleadell, ‘The problem with selling contemporary art at auction: The Artist Pension Trust withdraws 18 lots from Sotheby’s’, Daily Telegraph, 18 April 2017, http://www.telegraph.co.uk/luxury/art/ problem-selling-contemporary-art-auction-artist-pension-trust/. 38 Olav Velthuis, Talking Prices: Symbolic Meanings of Prices on the Market for Contemporary Art (Princeton University Press, Princeton, 2005), p.166. 39 Ibid., p.177.

Chapter 4: The problems with authentication 1 Claudia Andrieu, speaking at Keeping the Legacy Alive Conference, Institute for Artists’ Estates, Berlin, 14–15 September 2016. 2 James Butterwick, interview with the author, October 2016. 3 Colin Gleadell, ‘Art Sales: the Francis Bacon mystery grows’, Daily Telegraph, 19 April 2016, http://www.telegraph.co.uk/luxury/art/art- sales-the-francis-bacon-mystery-grows/. 4 http://www.francisbaconitaliandrawings.com/about.php. 5 Information supplied by art lender who requested anonymity, September 2016. 6 Martin Harrison, Francis Bacon: Catalogue Raisonné (The Estate of Francis Bacon, 2016). 7 Court judgement HMC 16362, 31 May 2012. 8 Martin Harrison, email correspondence with the author, 16 July 2017. 9 Estate of Francis Bacon, email, 4 September 2017. 10 Martin Bailey, ‘Are These Drawings Really by Francis Bacon?’, The Art Newspaper, December 2011, p.9. 11 Patricia Cohen, ‘In Art, Freedom of Expression Doesn’t Extend to “Is it Real”?’, New York Times, 19 June 2012, http://www.nytimes. com/2012/06/20/arts/design/art-scholars-fear-lawsuits-in-declaring- works-real-or-fake.html?_r=0. 12 Alice Herrick, conversation with the author, October 2016. 13 Cristiano Locatelli Ravarino, email correspondence with the author, 18 July 2017 and email from GSC AVVOCATI 18 July 2017. 14 Nicholas O’Donnell, interview with author, November 2016. 15 Source did not wish to be identified, October 2016.

207 dark side of the boom 16 Judith Prowda, Visual Arts and the Law (Lund Humphries and Sotheby’s Institute of Art, 2013), Chapter 5. 17 Daniel McClean, email correspondence with the author, 14 November 2016. 18 Case filed: 1:15-cv-4827 United States District Court Southern District of New York. 19 Eileen Kinsella, Judge Throws out lawsuit over $1.4 million Cady Noland Artwork after the artist disavows it, Artnet, 13 December 2016, https://news.artnet.com/art-world/judge-dismisses-cady-noland- lawsuit-782264. 20 Case filed: 1:17-cv-05452. 21 Case filed: 650316/12, Supreme Court of the State of New York. 22 Tracy Zwick, ‘Sotheby’s Wins in Dispute with Jancou Gallery over Cady Noland Artwork’, Art in America, 27 June 2013. http://www. artinamericamagazine.com/news-features/news/sothebys-wins-in- dispute-with-jancou-gallery-over-cady-noland-artwork-/. Eileen Kinsella. Judge Throws out lawsuit over $1.4 million Cady Noland Artwork after the artist disavows it, Artnet, 13 December 2016, https:// news.artnet.com/art-world/judge-dismisses-cady-noland-lawsuit-782264. 23 The record for a Peter Doig work stands at almost $26 million, although a teenage work such as this, even if genuine, would be worth a fraction of that amount. 24 Oozewald (1989), $6,578,500, Sotheby’s New York, 9 November 2011. 25 Alix Kirsta, ‘The Renoir Wars’, Telegraph, 5 May 2005, http://www. telegraph.co.uk/culture/3664946/The-Renoir-wars.html. 26 Charlotte Burns, ‘Heirs of Brazil’s Leading Artist at War over Estate’, The Art Newspaper, 1 July 2015, http://theartnewspaper.com/market/ art-market-news/heirs-of-brazil-s-leading-artist-at-war-over-estate/. 27 Nikolai Forstbauer, ‘Oskar Schlemmer Retrospektive, Der Finger ist gestreckt’, Stuttgarte Nachrichten, 9 February 2009, https://web.archive. org/web/20140106042757/http://content.stuttgarter-nachrichten.de/ stn/page/1753282_0_2147_oskar-schlemmer-retrospektive-der-finger- ist-gestreckt.html. 28 Ursel Berger, ‘Es gibt auch einen Skandal um Maillol’, Frankfurter Allgemeiner Zeitung, 25 June 2012, http://www.faz.net/aktuell/feuilleton/ kunstmarkt/falsche-bronzen-es-gibt-auch-einen-skandal- um-maillol-11795498.html.

208 Notes

29 George Stolz, ‘Authenticating Picasso’, Artnews, 1 February 2013, http:// www.artnews.com/2013/01/02/authenticating-picasso/. 30 Patricia Cohen, ‘Foundation Fights Fees for Artist’s Trustees’, New York Times, 21 August 2013, http://www.nytimes.com/ 2013/08/22/arts/design/rauschenberg-friends-seek-60-million-from- estate.html. 31 The Artist as Philanthropist, Vol.I – Findings, Overview of the Field, The Aspen Institute, 5 November 2010, p.xii. 32 Tompkins, 2016, p.61. 33 Eileen Kinsella, ‘Basquiat Committee to Cease Authenticating Works’, Artnews, 24 January 2012, http://www.artnews.com/2012/01/24/ basquiat-committee-to-cease-authenticating-works/. 34 Case filed: 07-CV-6423 The plaintiff, Joe Simon-Whelan, withdrew his claim in November 2010. 35 Case filed: 1:14-cv-01085. The judge dismissed the claim, and the judgement was affirmed on appeal. 36 Laura Gilbert, ‘Court Decides Former Dedalus Foundation Board Member was not Fired for being a Woman’, The Art Newspaper, 20 December 2016, http://theartnewspaper.com/news/news/victory- for-dedalus-new-york-court-decides-former-board-member-was-not- fired-because-she-was-a-woman/. 37 Source did not wish to be identified, November 2016. 38 Christy MacLear, email correspondence, 2 November 2016. 39 Würtenberger, 2016, p.191 40 Marc Spiegler, ‘Modigliani, The Experts Battle’, Artnews, January 2004, pp 124–9. 41 Case filed: 655489/2016. 42 William Cohan, Did Degas Make This Plaster? An Expert Now Says Yes’, New York Times, 16 September 2016, http://www.nytimes. com/2016/09/13/arts/design/did-degas-make-this-plaster-an-expert- now-says-yes.html?_r=0. 43 Sotheby’s London, 24 June 2015. 44 Tim Schneider, interview with the author, November 2016. 45 Dr Noah Charney, interview with author, October 2016 (and subsequent quotes). 46 Secrest, 2004, p.227. 47 Sotheby’s New York, 28 January 2010.

209 dark side of the boom 48 Adrian Parkhouse, interview with the author, November 2016. 49 Georgina Adam and Riah Pryor, ‘The Law vs Scholarship’, The Art Newspaper, December 2011, p.1.

Chapter 5: A TSUNAMI OF FORGERY 1 Jones, 1990, p.13. 2 Michael Hodges, ‘The Art Crime of the Century’, Daily Mail, 2 May 2015, http://www.dailymail.co.uk/home/event/article-3062397/ How-British-forensic-investigator-trapped-Wolfgang-Beltracchi.html. 3 Nicholas Eastaugh, interview with the author, September 2015 (and subsequent quotes). 4 http://www.imdb.com/title/tt3212568/companycredits?ref_=ttspec_ql_5. 5 Jilleen Nadolny, ‘Recipes for Deceit: Documentary Sources for the Production of Painting Forgeries, c.1400–1900’, in Sources on Art Technology: Back to Basics. ICOM-CC Working Group on Art Technological Source Research (ATSR) 6th International Symposium, Rijksmuseum, Amsterdam, The Netherlands, 16 – 17 June 2014, S. Eyb-Green et al. (eds) (Archetype Publications, London, 2016), pp 51–64. 6 https://en.wikipedia.org/wiki/Cupid (Michelangelo). 7 Jones, 1990, p.13. 8 Dr Tim Hunter, conversation with the author, September 2016. 9 Dr Noah Charney, interview with author, October 2016 (and subsequent quotes). 10 Claudia Andrieu, speaking at the Keeping the Legacy Alive Conference, Institute for Artists’ Estates, Berlin, 14–15 September 2016. 11 Complaint by Francis Hamilton White against Ann Freedman, Glafira Rosales, Knoedler Gallery and others, United States District Court Southern District 13-CV-1193. 12 In a subsequent lawsuit it emerged that Lagrange received $6.4m from Knoedler; the painting was part owned by Canadian investor David Mirvish but it was not revealed how much he paid up. 13 Brian Boucher, ‘Eleanore De Sole Breaks Into Tears During Knoedler Forgery Trial’, Artnet, 30 January 2016, https://news.artnet.com/ market/knoedler-trial-tearful-testimony-eleanore-de-sole-416930. 14 https://archives.fbi.gov/archives/newyork/press-releases/2013/art-dealer-

210 Notes

pleads-guilty-in-manhattan-federal-court-to-80-million-fake-art-scam- money-laundering-and-tax-charges. 15 United States of America vs José Carlos Bergantiños Diaz, Jesús Angel Bergantiños Diaz, Pei-Shen Qian, Case number 14 CRIM 217, United States District Court, Southern District of New York. 16 Email from J. A. Sánchez Goñi, 26 September 2016. 17 Eileen Kinsella and Sarah Cascone, ‘Top 9 Takeaways from Knoedler Trial’, https://news.artnet.com/exhibitions/top-takeaways-from- knoedler-forgery-trial-426086. 18 Cait Monroe, ‘Ab Ex Scholar Hired by Knoedler Gallery Admits He Can’t Tell Two Rothko Paintings Apart’, Artnet, 2 February 2016, https:// news.artnet.com/market/knoedler-forgery-trial-fake-rothko-418661. 19 Laura Gilbert, ‘Former Knoedler Director Settles Lawsuit with Casino Billionaire over Fake Rothko’, The Art Newspaper, 19 October 2016, http://theartnewspaper.com/news/former-knoedler-director-settles- lawsuit-with-casino-billionaire-over-fake-rothko/. 20 David Baum, email correspondence with the author, 22 July 2017. 21 Case filed: 14 CV 2259, Frank J. Fertitta III and Eykyn Maclean, LP, vs Knoedler Gallery and others, 1 April 2014. 22 Laura Gilbert, ‘Lawsuit against Art Historian over Fake Rothko Settled out of Court’, The Art Newspaper, 11 April 2017, http://theartnewspaper. com/news/lawsuit-against-art-historian-over-fake-rothko-settled-out- of-court/. 23 David Baum, email correspondence with the author, 14 July 2017. Swiss Basel court case: V140711089 dated 23 June 2015. 24 Spies was found not guilty in a French appeal court of intending to include one of the Beltracchi fakes in his Ernst catalogue raisonné. Harry Bellet, ‘L’historien d’art Werner Spies innocenté dans l’affaire du faux Max Ernst’, Le Monde, 10 December 2015, http://www. lemonde.fr/culture/article/2015/12/10/l-historien-d-art-werner- spies-innocente-dans-l-affaire-du-faux-max-ernst_4828813_3246. html#VKzEDPUME5aDofB7.99. 25 Patricia Cohen, ‘Note to Forgers, Don’t Forget the Spell Check’, New York Times, 11 June 2014, http://www.nytimes.com/2014/06/12/arts/design/ note-to-forgers-dont-forget-the-spell-check.html?ref=design&_r=0. 26 Bill Pallot, The Art of the Chair in Eighteenth-Century France (ACR-Gismondi Editeurs, Courbevoie, Paris, 1989).

211 dark side of the boom 27 Confirmed to the author by Pallot’s lawyer Emmanuel Pierrat, 2 September 2016. 28 Dominique Perrin, ‘Bill Pallot, Gentleman Arnaqueur’, GQ, 13 April 2017, http://www.gqmagazine.fr/pop-culture/gq-enquete/ articles/bill-pallot-gentleman-arnaqueur/52117. 29 Laurent Kraemer, conversation with the author, September 2016. 30 Vincent Noce, ‘The Man at the Centre of the Old Master Fakes Scandal’, The Art Newspaper, 6 October 2016, http://theartnewspaper. com/news/news/the-man-at-the-centre-of-the-old-master-fakes- scandal/. 31 https://www.vangoghmuseum.nl/en/news-and-press/press-releases/ response-to-vincent-van-gogh-the-lost-arles-sketchbook-drawings-not- by-van-gogh-and-notebook-unreliable. 32 Martin Bailey, ‘Amsterdam Museum Rejects Van Gogh’s lost Sketchbook, The Art Newspaper, 16 November 2016, http:// theartnewspaper.com/news/news/amsterdam-museum-rejects-van- gogh-s-lost-sketchbook-/. 33 Seuil, email correspondence, 13 April 2017. 34 Meridith Savona, interview with author, April 2017 (and subsequent quotes). 35 Laura Gilbert, Bill Glass, ‘Bizarre Pollock Forgery Scam Targets Unwary Collectors in the US’. The Art Newspaper,23 August 2017, http://theartnewspaper.com/news/news/bizarre-pollock-forgery-scam- targets-unsophisticated-collectors-in-the-us/. 36 https://www.justice.gov/usao-sdny/pr/michigan-art-dealer-sentenced- more-3-years-prison-defrauding-collectors-145-million. 37 Christopher McKeogh, interview with author, April 2017 (and subsequent quotes). 38 Anindita Ghose, ‘The Resurrection of F.N. Souza’, Live Mint, 3 April 2010, http://www.livemint.com/Leisure/ NffpJ2a8pMW3WgRWUuCNHK/The-resurrection-of-FN-Souza.html 39 ‘Faking it!’, https://politicsofart.wordpress.com/2014/09/04/faking-it/ comment-page-1/#comment-15. 40 Sekel Media, Asia. 41 Patricia Chen, email correspondence with the author, 11 July 2017. 42 Andreas Arditya, ‘Tracing Art Forgeries’, Jakarta Post, 12 May 2014, http://www.thejakartapost.com/news/2014/05/12/tracing-art-forgeries.html.

212 Notes

43 Presentation by Ms Chen at Authentication in Art Congress, The Hague, March 2016; conversation at that congress. 44 David Barboza, Graham Bowley and Amanda Cox, ‘Forging an Art Market in China’, New York Times, 28 October 2013, http://www. nytimes.com/projects/2013/china-art-fraud/. 45 Sotheby’s New York, 19 September 2013. 46 Henry Howard Sneyd, conversation with the author, June 2015. 47 Diligence and Intelligence: Song and Yuan Dynasties Calligraphy and Paintings from Private Collections, Long Museum, Shanghai, 29 October 2016–31 March 2017. 48 Cait Monroe, ‘Former Librarian is in the Hot Seat at Knoedler Fraud Trial’, World News, 16 February 2016, http://www.world-news. pro/2016/02/former-librarian-is-in-the-hot-seat-at-knoedler-fraud-trial/. 49 ‘Faker Who Flooded Art World Jailed for 6 Years, Guardian, 16 February 1999, https://www.theguardian.com/uk/1999/feb/16/5. 50 Don Hrycyk, interview with the author, December 2016. 51 Jones, 1990, p.16.

Chapter 6: INVESTMENT 1 Quoted in Pogrebin, 2017, op.cit., https://www.nytimes. com/2017/02/21/arts/design/damien-hirst-alienated-collectors-will-his- new-work-win-them-back.html. 2 Stefan Simchowitz, interview with the author, November 2016. 3 Source did not wish to be identified, conversation, April 2017 4 Art and Finance 2016, Deloitte Tax & Consulting, Luxembourg, 2016. 5 Flynn, 2016, p.5 6 Horowitz, 2011, pp 154–5. 7 Eric Hodgins and Parker Lesley, ‘The Great International Art Market’, Fortune, December 1955, p.152. 8 Ibid., p.152. 9 Adriano Picinati di Torcello, interview with the author, February 2017. 10 Anders Petterson, interview with author, February 2017 (and subsequent quotes). 11 Horowitz, 2011, Appendix C. 12 Deloitte, 2016, p.111. 13 Ibid., p.112.

213 dark side of the boom 14 One exception is the Tiroche DeLeon Collection, which publishes its holdings, acquisitions and sales on a quarterly basis. 15 Horowitz, 2011, pp 180–1. 16 Case 1:07-cv-01446; the case was terminated with judgement entered against Taub and Fernwood for the sum of $1.625 million. Daniel Grant, ‘$8 million Embezzlement Suit Targets Fernwood CEO’, Artnews, 17 April 2007, http://www.artnews.com/2007/04/17/ 8m-embezzlement-suit-targets-fernwood-ceo/. 17 McAndrew, 2017, p.17. 18 Julia Halperin and Eileen Kinsella, ‘The “Winner Takes All” Art Market: 25 Artists Account for Nearly 50% of All Contemporary Auction Sales, Artnet, 20 September 2017, https://news.artnet.com/ market/25-artists-account-nearly-50-percent-postwar-contemporary- auction-sales-1077026. 19 Anonymous collector, email exchange, 16 December 2016. 20 Christie’s London, 28 February 2017. 21 Sotheby’s London, 23 May 2012. 22 Alan Cristea, conversation, March 2017. 23 Christie’s London, 11 February 2010. 24 Sotheby’s London, 1 July 2014. 25 Tim Schneider, ‘Market Monday: Economy Class’, The Gray Market, 23 May 2016, http://www.thegray-market.com/blog/2016/5/23/ market-monday-economy-class. 26 Deloitte, 2016. The report conducted research among 94 ‘important art collectors’. 27 The Wealth Report, 10th edition, Knight Frank, March 2016, p.13. http://content.knightfrank.com/research/83/documents/en/wealthreport-2016-3579.pdf. 28 McAndrew, 2017, p.254. 29 Gnyp, 2015, p.136. 30 Ibid., p.114. 31 Sotheby’s London, 1 March 2017. 32 Christie’s London, 28 November 1994. 33 Source did not wish to be identified, February 2017. 34 Beautiful Mider Intense Cathartic Painting (with Extra Inner Beauty) (2008), sold at Sotheby’s London, 15 September 2008, then through Phillips London, 8 March 2017.

214 Notes

35 Phillips New York, 8 November 2010. 36 Sotheby’s Hong Kong, 2 April 2017. 37 Christie’s London, 1 June 2015. 38 MacDougalls London, 10 June 2010. 39 Phillips New York, 16 May 2013. 40 Christie’s London, 7 March 2017. 41 Thompson, 2008, p.259. 42 Tim Schneider, conversation with the author, November 2016. 43 Arthur Korteweg, Roman Kräussl and Patrick Verwijmeren, ‘Does It Pay to Invest in Art? A Selection-Corrected Returns Perspective’, 18 October 2013, file:///C:/Users/Georgina/AppData/ Local/Microsoft/Windows/INetCache/Content.Outlook/KQF0PXK5/ RFS%202016. 44 Roman Kräussl, interview with the author, March 2017. 45 Deloitte, 2016, p.80 46 Art Business Conference, London, 1 September 2015. 47 Alasdair Whyte, ‘Find Art Finance: Art Lenders and Financiers’, Private Art Investor, 16 June 2015, http://www.privateartinvestor.com/ art-finance/art-lenders-and-financiers/. 48 Athena, email correspondence, 8 March 2017. 49 Melanie Gerlis, interview with the author, March 2017. 50 Alain Servais, ‘Art in the Shadow of Art Market Industrialisation’, SFAQ, 10 November 2014, http://sfaq.us/2014/11/art-in-the-shadow-of- art-market-industrialization-moving-toward-a-sustainable-ecosystem/. 51 My Art Invest, dissolved in December 2015 according to Companies House. 52 Hugh Schofield, ‘Were Investors Conned into Buying Rare Manuscripts?’, BBC Magazine, 15 March 2016, http://www.bbc.co.uk/ news/magazine-35802891. 53 Christie’s New York, 4 October 2002. 54 Le Quotidien de l’Art, 12 April 2017, pp 7–8. 55 Christine Bourron, conversation with the author, February 2017.

Chapter 7: SPECULATION 1 Thaddaeus Ropac, speaking at Talking Galleries, Barcelona, 16–17 January 2017.

215 dark side of the boom 2 Gary Baum, ‘First Look: ICM Partners’ Soaring New Century City Offices Escalate the Agency Art Wars’, Hollywood Reporter, 23 November 2016, http://www.hollywoodreporter.com/news/ first-look-icm-partners-soaring-930919. 3 Tim Schneider, ‘The Tao (and Dow) of Stefan’, The Gray Market, 2 April 2014, http://www.thegray-market.com/blog/the-tao-and-dow- of-stefan. 4 Katya Kazakina, ‘Art Flippers Chase Fresh Stars as Murillo’s Doodles Soar’, Bloomberg, 6 February 2014, https://www.bloomberg.com/ news/2014-02-06/art-flippers-chase-fresh-stars-as-murillo-s-doodles- soar.html. 5 Christopher Glazer, ‘The Art World’s Patron Satan’, New York Times, 30 December 2014, https://www.nytimes.com/2015/01/04/magazine/ the-art-worlds-patron-satan.html. 6 Ibid. 7 Stefan Simchowitz, email correspondence with the author, 7 July 2017. 8 Stefan Simchowitz, interview with the author, November 2016 (and subsequent quotes). 9 Dan Duray, ‘Stefan Simchowicz vs the Art World’, New York Observer, 5 July 2014, http://observer.com/2014/05/stefan-simchowitz-vs-the-art-world/. 10 Colin Gleadell, ‘$6 Million Jean Dubuffet Leads Impressive Leslie Waddington Auction at Christie’s’, Artnet, 4 October 2016, https:// news.artnet.com/market/leslie-waddington-auction-680600. 11 Transforming the Known: Works from the Bert Kreuk Collection, Gemeentemuseum, The Hague, 8 June–29 September 2013. 12 Just Now, Sotheby’s, London, 3 January–30 March 2014. 13 Melanie Gerlis, ‘Flipping, Filthy Lucre or Sound Business Plan?’, The Art Newspaper, 15 October 2014, http://old.theartnewspaper.com/ articles/Flipping%E2%80%88filthy-lucre-or-sound-business-plan/35937. 14 Alexander Forbes, ‘Art Flipper Bert Kreuk Sues Artist Danh Vō for $12 Million’, Artnet, 5 September 2014, https://news.artnet.com/market/ art-flipper-bert-kreuk-sues-artist-danh-vo-for-12-million-93788. 15 The correspondence is available here: https://conversations.e-flux. com/t/troubling-legal-precedent-set-in-kreuk-vs-vo-bortolozzi- ruling/2021. 16 Marc Spiegler, talk at Talking Galleries, Barcelona, 2 November 2015. 17 Phillips de Pury New York, 9 November 2010.

216 Notes

18 Phillips New York, 11 November 2013. 19 Christian Viveros-Fauné, ‘UES Show, Lucien Smith Leads the Charge of the Opportunist Brigade’, Village Voice, 4 June 2014, http://www. villagevoice.com/arts/at-ues-show-lucien-smith-leads-the-charge-of- the-opportunist-brigade-7189906. 20 Phillips London, 10 February 2014. 21 Simon de Pury, conversation with the author, January 2017. 22 Carlos Rivera, interview with the author, November 2016 (and subsequent quotes). 23 Christie’s London, 7 March 2017. 24 Data from artnet.com. 25 Untitled (2011), Phillips London, 6 April 2017. 26 Phillips London, 28 June 2016. 27 Mieke Marple, conversation with the author, December 2016. 28 Gnyp, 2015, p.132.

Chapter 8: THE DARK SIDE 1 Meridith Savona, Interview with author, 7 April 2017. 2 Patricia Cohen, ‘Tax Status of Museums Questioned by Senators’, New York Times, 29 November 2015, https://www.nytimes.com/2015/11/30/ business/tax-status-of-museums-questioned-by-senators.html. 3 ‘Über-warehouses for the Ultra-Rich’, Economist, 23 November 2013, http://www.economist.com/news/briefing/21590353-ever-more- wealth-being-parked-fancy-storage-facilities-some-customers-they-are/ comments?page=1. 4 The Art Market 2017, Art Basel UBS Report, p.94. 5 For simplicity, ‘Rybolovlev’ in the text will also refer to the family trusts and companies linked to them. 6 Rybolovlev’s spokesman did not want to comment, citing confidentiality. Email correspondence with the author, 24 July 2017. Bouvier’s representatives did not want to comment. Court documents with an illustration confirm that this is the same painting. 7 Vincent Noce, ‘Beleaguered Bouvier Defends Himself and Freeport System’, The Art Newspaper, 10 October 2016, http://theartnewspaper. com/news/beleaguered-swiss-businessman-defends-himself-/. 8 Hili Perlson, ‘Thomas Bompard Leaves Paris Gradiva Gallery, Funded

217 dark side of the boom by Yves Bouvier, For Sotheby’s’, Artnet, 11 September 2015, https://news. artnet.com/market/thomas-bompard-gradiva-bouvier-sothebys-331910. 9 Judgement, Singapore Court of Appeal [2017] SGCA 27. 10 Vicky Ward, ‘Did This Billionaire Get Swindled Out of Millions in an Elaborate Art World Scheme?’, Town and Country, 17 November 2015, http://www.townandcountrymag.com/society/money-and-power/ a4327/billionaire-defrauded-art-world-scheme/. 11 Case filed: 1:15-mc-00312, US District Court, Southern District of New York. 12 Hervé Gattegno, ‘Le piège de l’oligarque’, Vanity Fair, September 2015, p.130. 13 Ibid., p.206. 14 Confirmed by the Art Loss Register, March 2017. 15 Noce, 2016, op.cit. 16 Melanie Gerlis, ‘The Art Market: Oh You Pretty Things’, Financial Times, 16 July 2016, https://www.ft.com/content/a6e116f0-4921-11e6- 8d68-72e9211e86ab. Thomas’s lawyer did not reply to further requests for comment. 17 Graham Bowley and William Rashbaum, ‘Bought and Flipped: the Deal of the Art’, New York Times, 29 November 2016, https://www. nytimes.com/2016/11/28/arts/design/sothebys-tries-to-block-suit-over-a- leonardo-sold-and-resold-at-a-big-markup.html. 18 Email from Sotheby’s, 22 September 2017. 19 Gérard Davet and Fabrice Lhomme, Le milliardaire russe Dmitri Rybolovlev au centre d’un « Monacogate, Le Monde, 14 September 2017, http://www.lemonde.fr/police-justice/article/2017/09/14/ le-milliardaire-russe-dmitri-rybolovlev-au-centre-d-un- monacogate_5185432_1653578.html#STzLcmq9669m86AV.99. 20 Email from Tetiana Bersheda, 20 September 2017. Full text (author’s translation): ‘Mr Rybolovlev, Tetiana Bersheda and the companies that have brought lawsuits in the Bouvier-Rappo case deplore the multiple irregularities and violations of their procedural rights during the legal procedure which started in January 2015. The seizure and publication of data covered by professional secrecy and the confidentiality of the investigation are a worrying new episode at a time when the court is ruling on these methods.

218 Notes

‘The attempt to divert attention, by those who have been accused and charged in Monaco, have only one aim, to exert unacceptable pressure on the magistrates who are overseeing these cases. ‘No response will be made to these multiple and futile attempts, in court and in the media, to distract the public from the fundamental issue, which is a giant fraud representing hundreds of millions of euros.’ 21 Alexandre Haederli, Le fisc fait irruption dans l’affaire Bouvier’, La Tribune de Geneve, 4 September 2017, https://www.tdg.ch/economie/ fisc-reclame-165-millions-yves-bouvier/story/29175285 22 Email, 3 October 2017. 23 Katya Kazakina, and Hugo Miller, ‘A $100 Million Mystery: A Russian, His Art, and His Big Losses’, Bloomberg, 23 February 2017, https://www.bloomberg.com/news/features/2017-02-23/a-100-million- mystery-a-russian-his-art-and-his-big-losses?cmpid=socialflow-twitter- business. 24 Vanity Fair, September 2015, p.135, author’s translation. 25 Laura Gilbert, ‘Art Advisor Ordered to Pay $1m She Made in Private Sale of Basquiat Painting’, The Art Newspaper, 8 March 2017, http:// theartnewspaper.com/market/art-market-news/art-adviser-ordered-to- pay-1m-she-made-in-private-sale-of-basquiat-painting/. 26 Case filed: 157797/2013 in US Supreme Court. 27 Cristina Ruiz, ‘Collectors vs Art Advisers: the Trouble with Verbal Contracts’, The Art Newspaper, 1 September 2015, http:// theartnewspaper.com/market/analysis/collectors-vs-art-advisers-the- trouble-with-verbal-contracts/. 28 Rachel Corbett, ‘Nahmads: We Don’t Own Contested Modigliani’, Artnet, 5 March 2012, http://www.artnet.com/magazineus/news/ artnetnews/helly-nahmad-gallery-modigliani.asp. 29 Jake Bernstein, ‘The Art of Secrecy’, ICIJ, 7 April 2016, https:// panamapapers.icij.org/20160407-art-secrecy-offshore.html 30 Christie’s New York, 11 November 1997. 31 187,500 in 2016, for UHNWIs with net assets over $30 million. The number has grown by 60 per cent in ten years. http://www. knightfrank.com/wealthreport/2016/wealth-distribution/uhnwi- growth-2016. 32 David Arendt, conversation with the author, March 2017. 33 http://www.lefreeport.lu/8-misconceptions-about-le-freeport/.

219 dark side of the boom 34 Yves Bouvier, conversations with the author during visits to Singapore and Luxembourg freeports, 2011 and 2015. 35 Henri Neuendorf, ‘Switzerland’s Tough New Stance on Freeports Will Shake the Art World’, Artnet, 19 November 2015, https://news.artnet. com/market/switzerland-freeport-regulations-367361. 36 Association for Research into Crimes against Art, 23 March 2016, http://art-crime.blogspot.co.uk/2016/03/do-you-know-where-your-art- has-been.html. 37 ‘Ancient Smuggled Sarcophagus Coming Home to Turkey’, Hurriyet Daily News, 27 March 2017, http://www.hurriyetdailynews. com/ancient-smuggled-sarcophagus-coming-home-to-turkey. aspx?pageID=517&nID=111255&NewsCatID=375. 38 Panel discussion, The Arts Club, London, 25 May 2017. 39 Harriet Agnew, ‘Guy Wildenstein Cleared of Tax Fraud Charges in Paris’, Financial Times, 12 January 2017, https://www.ft.com/content/ c8e383d8-d8b8-11e6-944b-e7eb37a6aa8e. 40 Diana Wierbicki, interview with the author, November 2016. 41 Jason Kleinman, conversation with the author, May 2017. 42 Patricia Cohen, ‘Writing off the Warhol Next Door’, York Times, 11 January 2015, https://www.nytimes.com/2015/01/11/ business/art-collectors-gain-tax-benefits-from-private-museums. html?ref=business&_r=1. 43 Patricia Cohen, ‘Tax Status of Museums Questioned by Senators’, New York Times, 29 November 2015, https://www.nytimes.com/2015/11/30/ business/tax-status-of-museums-questioned-by-senators.html. 44 Christine Steiner, interview with the author, November 2016. 45 Christie’s New York, 12 November 2013. 46 Shayna Jacobs, ‘Luxury Real Estate Developer Michael Shvo Scammed the Government Out of $1M in Taxes Since 2010’, 8 September 2016, New York Daily News, http://www.nydailynews.com/new-york/nyc- crime/real-estate-developer-michael-shvo-indicted-alleged-tax-scam- article-1.2783282. 47 https://ag.ny.gov/press-release/ag-schneiderman-announces-7-million- settlement-art-collector-aby-j-rosen-failing-pay. 48 Letter from Canada Revenue Agency available at https://assets. documentcloud.org/documents/3892134/Letter-From-CRA.pdf. 49 Martha Lufkin, ‘Laundering Drug Money with Art’, Forbes,

220 Notes

4 August 2003. 50 Patricia Cohen, ‘Valuable as Art, but Priceless as a Tool to Launder Money, The New York Times, 12 May 2013. 51 Fausto Martin de Sanctis, Money Laundering Through Art (Springer, 2013). The book is of such limited use that I do not include it in the bibliography. 52 Case filed: 1:08-cv-01511-RJS (S.D.N.Y.) 53 http://star.worldbank.org/corruption-cases/node/18495. 54 Sotheby’s London, 7 October 2016. 55 Case filed: 1:13-cr-00268, Southern District of New York. 56 P.58 of the indictment. 57 https://www.fbi.gov/contact-us/field-offices/newyork/news/press- releases/art-gallery-owner-helly-nahmad-sentenced-to-one-year-and- one-day-for-being-a-leader-of-an-international-multi-million-dollar- illegal-sports-gambling-business. 58 Bernard Lagan and Ben Hoyle, ‘Supermodel Surrenders £6m Jewels’, The Times, 28 June 2017, https://www.thetimes.co.uk/article/ supermodel-miranda-kerr-surrenders-6m-jewels-rxzb23sxh. 59 Ibid. 60 Case filed: 2:16-cv-05362 District Court of California. 61 Christie’s New York, 5 November 2013. 62 Christie’s New York, 13 May 2013. 63 Sotheby’s London, 5 February 2013. 64 Case filed: 2:16-cv-05362. 65 Kelly Crow and John Letzing, ‘In the 1MDB Net, an Art-World Whale’, Wall Street Journal, 21 June 2016, https://www.wsj.com/articles/ in-the-1mdb-net-an-art-world-whale-1469091601. 66 Clinton Howell, email correspondence, 21 April 2017. 67 Bain & Co., http://www.bain.com

Postscript 1 Lisa Schiff, email correspondence with the author, 1 May 2017. 2 Stein, 2016, p.63

221

bibliography

Abbing, Hans, Why Are Artists Poor? (Amsterdam University Press, 2002) Adam, Georgina, Big Bucks: The Explosion of the Art Market in the 21st Century (Lund Humphries, London, 2014) Charney, Noah, The Art of Forgery: The Minds, Motives and Methods of Master Forgers (Phaidon, London, 2015) Dempster, Anna (ed.), Risk and Uncertainty in the Art World (Bloomsbury, London, 2014) Flynn, Tom, The A-Z of the International Art Market (Bloomsbury, New York, 2016) Gerlis, Melanie, Art as an Investment? A Survey of Comparative Assets (Lund Humphries, 2014) Gnyp, Marta, The Shift: Art and the Rise to Power of Contemporary Collectors (Art and Theory Publishing, Stockholm, 2015) Hackforth-Jones, Jos and Iain Robertson (eds), Art Business Today (Lund Humphries, London, 2016) Horowitz, Noah, Art of the Deal: Contemporary Art in a Global Financial Market (Princeton University Press, Princeton, 2011) Jones, Mark (ed.), Fake? The Art of Deception (University of California Press, Berkeley, 1990) Lind, Maria and Olav Velthuis (eds), Contemporary Art and Its Commercial Markets: A Report on Current Conditions and Future Scenarios (Sternberg Press, Berlin, 2012) McAndrew, Clare, The Art Market 2017 (Art Basel and UBS, 2017) Obermaier, Frederik and Bastian Obermayer, The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money (Oneworld, London, 2017) O’Dea, Madeleine, The Phoenix Years: Art, Resistance and the Making of Modern China (Allen & Unwin, Crow’s Nest, Australia, 2016)

223 dark side of the boom Salisbury, Laney, and Aly Sujo, Provenance: How a Conman and a Forger Rewrote the History of Modern Art (Penguin, London, 2009) Schneider, Tim, The Great Reframing: How Technology Will – and Won’t – Change the Gallery System Forever (Amazon Media EU, 2017), Kindle only Secrest, Meryle, Duveen: A Life in Art (University of Chicago Press, Chicago, 2004) Shaxson, Nicholas, Treasure Islands, Tax Havens and the Men who Stole the World (Vintage, London, 2012) Spencer, Roland D. (ed.), The Expert versus the Object: Judging Fakes and False Attributions in the Visual Arts (Oxford University Press, New York, 2004) Stein, Judith E., Eye of the Sixties, Richard Bellamy and the Transformation of Modern Art (Farrar, Straus and Giroux, New York, 2016) Thompson, Don, The $12 million Stuffed Shark: The Curious Economics of Contemporary Art (Aurum Press, London, 2008) Tompkins, Arthur (ed.), Art Crime and Its Prevention (Lund Humphries, London, 2016) Velthuis, Olav, Talking Prices: Symbolic Meanings of Prices on the Market for Contemporary Art (Princeton University Press, Princeton, 2007) Vincent, Christine (dir.), The Artist as Philanthropist, Volumes I and II (The Aspen Institute, Washington, 2010). Downloadable at https:// dorutodpt4twd.cloudfront.net/content/uploads/2010/11/AEF_V2.pdf Würtenberger, Loretta and Karl von Trott (eds), The Artist’s Estate: A Handbook for Artists, Estates, and Heirs (Hatje Cantz, Berlin, 2016) Watson, Peter, From Manet to Manhattan: The Rise of the Modern Art Market (Hutchinson, London, 1992)

224 index

Artworks are listed under the artist’s name. A&F Markets 145 Artists’ Pension Trust (APT) 87 ABN-AMRO fund 134 Artnet magazine 136, 138 Aboutaam family 181 ArtRank 160, 161 Abstract Expressionism show (Royal Academy) Artspace 47 73 ARTSTAQ 146 Accidia 175–6 Artsy 46 Adelson, Warren 171 Artvera’s Gallery, Geneva 110 advisory services, art 142–3 artwork collections 22, 82 Agnes Martin Authentication Board 103 asset class, art as an 144–6 Aguttes, Claude 147 Assets Under Management (AUM) Ai Weiwei 37 134 Akunyili Crosby, Njideka, The Beautyful Ones assistants, artist’s 35, 36, 40 160 Athena Art Finance Corp 143, 144 Al-Thani dynasty 77, 119 Atkins, Dylan 39 Albers, Josef 155 auction houses 10–11, 34, 80–4, 140, Almine Rech Gallery, London 73 167 An Laishun 56 authenticity 88, 91–106, 114, 120 Andrieu, Claudia 93, 112 authorship, disclaimed 95–7 Andy Warhol Art Authentication Board 100, 101 Bacon, Francis 91–3, 105 appropriation 12, 41–5 Three Studies of Lucian Freud 185 ARCIS (storage company) 180 Baldaccini, César 99 Arendt, David 179 Banach, Joan 101 Aristophil collection 146–7 banking sector 142–4, 190 Art Agency, Partners 10 Banksy 42 Art Basel Bartlow, Peter 96 Miami Beach Fair 34, 38, 65–6, 109, Basquiat, Jean-Michel 114 Dustheads 189, 190 reports 135, 139 Fuego Flores 100 art dealers 38, 94 Future Sciences Versus the Man 176 ‘art districts’ 64–5, 131 Hannibal 187 art fairs 10, 36–7, 169 Untitled 80, 140 Art Gallery of Nova Scotia 186 Baum, David 118 Art Law Committee 105 Bauret, Jean-François 45 Art Loss Register 173 Beale, Arthur 104 Art Newspaper, The 11, 75, 156 Beautiful Asset Advisors 161 art room9, Munich 111 Beijing 56, 57 Art Theft Detail (LAPD) 125–6 Bellamy, Richard 195 ART021 Fair, Shanghai 55 Beltracchi, Wolfgang 109–11

225 dark side of the boom

Bridge on the Seine with Barges 110 Chi K11 museum 58–9 The Forest (2) 109 China 123 Red Picture with Horses 110 China Museums Association 56 Bennett, Guy 77 Chinese art, traditional 59–60 Berger, Ursel 99 Chipperfield, David 55 Bernardaud (porcelain manufacturer) 46 Chow Tai Fook 58 Bersheda, Tetiana 171, 174 Christie’s billionaires 21, 60, 66, 75, 78–9 authenticity 114 Birkin bags 63, 81 guarantees 82–4 Birnbaum, Daniel 37 Hong Kong 49, 62 Black, Leon 77 London 11, 141, 167–8 Blanch, Andrea 45 management of 10–11 Blavatnik, Len 66 New York 37, 75–6, 174, 185, 189 Bortolozzi, Isabella 156 online auctions 191 Boucher, François, Reclining Girl 73–4 Christopherson, Tom 42, 43, 45 Bourron, Christine 147 Ci Kim 54 Bouvier, Yves 20, 21–2, 167, 168–75, 179, Clark, Lygia 98 180 Clore, Melanie 11 ‘brand-stretching’ 46–8, 194 Cohen, Steve 75, 171 branding 49, 62–4, 159, 167 collectors, private 33, 131–2, 139 Brant, Peter 74, 83 commission costs 77, 85, 117, 137, 172, 176 British Rail Pension Fund 133 conflicts of interest 103–5 Broad, Edythe 185 Connery, Pissarro, Seydoux (art advisors) Broad, Eli 75, 185 77 Broad Museum, Los Angeles 13, 75, 185 Connery, Stephane 189 Brueghel, Pieter the Elder, Adoration of the Contemporary Fine Arts, Berlin 41 Magi in the Snow 35 contracts on future sales (CFS) 147 Brueghel, Pieter the Younger 35 copyright infringements 42–6 Buffet, Bernard 48–9 Cranach, Lucas the Elder 35 Les Clowns Musiciens, le saxophoniste Creed, Martin 54 49 criminal practices, financial 23 Burns, Joe 65 Cristea, Alan 137 Busuttil, Stéphanie 99 Crousel, Chantal 38 Butterwick, James 100 Crozier warehouse, Chelsea, New York 131–2 Capitain, Gisela 38 currency devaluation 63–4 Cappellazzo, Amy 10 Custot, Stéphane 34, 132 Cardi Gallery, London 73 Cy Twombly Foundation 102 Cariou, Patrick 42–3 Carlos, Vanessa 36, 158 Dalí, Salvador 59 Carlyle Group 144 David, Jacques-Louis, The Intervention catalogues raisonnés 35, 91, 102–3, 110, 114, of the Sabine Women 74 124 Day Jackson, Matthew, Bucky 138 Cayman Islands 84, 189 De Chirico, Giorgio 95 celebrities 10, 44, 189 De Kooning, Willem 133 Centre Pompidou 45, 55 De Pury, Simon 38, 78, 80, 158 Cerutti, Guillaume 167 De Sanctis, Fausto Martin 187 Cézanne, Paul, The Card Players 77 De Sole, Domenico 114, 116 Chagall, Marc 169 De Sole, Eleanore 114–15, 116 Charney, Dr Noah 104–5, 112–13, 118, 124, deals, secret 168, 175 125 Dedalus Foundation 101, 114 Chen Dongsheng 11 Degas, Edgar 104, 105 Chen, Patricia 122–3 Femme nue, de dos, se coiffant 82 Cheng, Adrian 58, 59 Degas Sculpture Project Ltd 104

226 Index

Department of Consumer Affairs (DCA), Flanagan, Barry 37 New York 84 Flescher, Dr Sharon 121 Diaz brothers 115 ‘flipping’ 152–5, 157–60, 161–3 DiCaprio, Leonardo 189 Fondation Beyeler, Zurich 117 Dickinson, Simon 176 Forbes (magazine) 79 Diebenkorn, Richard 85 ‘Foreign Trade Zones’ (FTZ) 180 digitisation, art 42 forensic testing 125–6 Dodd, Philip 62 forgeries 88, 92, 101, 109–11, 111–23 Doig, Peter 96–7 Fortune (magazine) 133 Dolman, Edward 75, 79, 82, 139, 145 Foster + Partners 66 Drewe, John 124 foundations and estates, artists’ 58, 99–102, Duchamp, Marcel 114 Bottle Rack 74 Foxy Production 32 Fountain 41 France 46, 95, 119–20, 131, 146–7 Dufy, Raoul, Carnaval à Nice 187–8 Frandsen, Erik A. 57 Duveen, Joseph 79, 104–5 Freedman, Ann 85, 113–14, 115–16 ‘freedom of expression’ 45, 46 Eastaugh, Dr Nicholas 110, 112, 122, 125, freeports 19–20, 169, 170, 173, 178, 179–82 126 Frieze Week, London 73 Economist 56–7, 179 funds, art 100, 122, 132–5 editions, extending 46–8 Edlis, Stefan 74 Gagosian Gallery, New York 44, 73, 76–7 Edwards, David 92 Gagosian, Larry 32, 43, 44, 77, 84–5 Edwards, John 92–3 Galerie Cazeau-Béraudière, Paris 109 Eggleston, William 46–7 Ganz collection 178 El Greco, Christ Taking Leave of his Mother Ganz, Sally 178 168 Ganz, Victor 178 Eleven Rivington, New York 158 Gauguin, Paul Eliasson, Olafur 61 Nafea faa ipoipo (When Will You Marry?) Ellis King, Jonathan 39–40 77–8 Embiricos, George 77 Otahi 175 Ernst, Max 109 Te Fare 167, 168 estates and foundations, artists’ 58, 99–102, Gemeentemuseum, The Hague 155–6 114 Geneva freeport 170, 181 Eykyn Maclean, London 117–18 Gentileschi, Orazio 119–20 Gerbier, Balthazar 133 Faena Forum art centre 66 Gerlis, Melanie 132, 144–5, 146 Faena Hotel, Miami Beach 66 Giacometti, Alberto fakes 88, 92, 101, 109–11, 111–23 Chariot 76 faking, art 109–11 L’homme au doigt 76 Farto, Alexandre 19 Giacometti, Diego, Buste de Diego 137 Federal Bureau of Investigations (FBI) Gilbert & George 37 101, 121 Giotto, The Arrest of Christ 74 Feral Horses 146 Glenstone Museum, Potomac 185 Fernwood Art Investment Fund 135 Glimcher, Arne 103 Ferreira, Edemar Cid 187 Gnyp, Marta 34, 140, 162 Fertitta III, Frank J. 117–18 Gorvy, Brett 10 Filipacchi, Daniel 109 Gouzer, Loïc 37 film (media) 41 Gradiva gallery, Paris 170 Fine Art Fund (FAF) 134, 135 Graham, Donald 44 Firmenich, Andrea 110 Grassi, Cornelia 37, 156–7 Fischli & Weiss, Der Lauf der Dinge (The Grundy Art Gallery, Blackpool 47 Way Things Go) 47 guarantees, auction house 38, 81–4 Flam, Jack 101 Guerrilla Girls 73

227 dark side of the boom

Gunter Sachs Collection 49 institutions, public 33, 56, 67, 194–5 Guyton, Wade International Art Center (IAC), Geneva Untitled 37, 38 177–8 Untitled (Fire, Red/Black U) 37 International Confederation of Art and Gyorgy, Suzanne 143 Antique Dealers’ Associations (CINOA) 191 Hahn family 104–5 International Consortium of Investigative Hals, Frans 120 Journalists (ICIJ) 178 Hamilton White, Francis 118 International Foundation for Art Research Hammer, Michael 115 (IFAR) 121 Haring estate 101 inventories 33, 101 Harrison, Martin 91–2, 93 investment, art as 21, 81, 132–43, 143–8 Harrison, Tony 47 Jacobs, Lisa 176 Hatch, Orrin 185 Jancou, Marc 96, 97 Hauser & Wirth 32, 33, 54 Jho Low 188–90 He Juxing 53, 54 Jianping Mei 134 Hedberg, Gregory 104 Joannou, Dakis 75 heirs, rights of 94–5, 97–9 John Silberman Associates 100 Heller, Sandy 171 Johns, Jasper, Disappearance I 82 Henry Moore Foundation 99 Jones, Mark 111, 126 Herrick, Alice 91, 92–3 Herrick Gallery, London 91 K11 Art Foundation 58 Hilty, Greg 55 Kamel Mennour Gallery, Paris 73 Hirsch, Nicholas 188 Kapoor, Anish 37 Hirschl & Adler Galleries, New York Kassay, Jacob 157–8, 160–1 104 Katz, Alex 12 Hirshhorn Museum, Washington Keating, Tom 113 13 Kerr, Miranda 189 Hirst, Damien 36, 140 Killala Fine Art (company) 114 Gone but Not Forgotten 66 Kim, C.I. 54 Treasures of the Wreck of the Klasen, Peter 46 Unbelievable 13, 67, 194 Kleinman, Jason 184 Hiscox report 12 Klimt, Gustav Hong Kong 59, 62–3 Bauerngarten 140 Hook, Philip 48, 49 Wasserschlangen II 174 Hornby, Simon 131–2 Knoedler Gallery, New York 85, 101–2, 113–18, Horowitz, Noah 134 124 Hort, Michael 162 Koolhaas, Rem 66 Howard Sneyd, Henry 123 Koons, Jeff 12, 43, 46, 141 Howell, Clinton 191 Balloon Dog (Orange) 74, 75 Hrycyk, Don 125 Coloring Book 66 Huang Yong Ping 57 ‘Gazing Ball’ series 73–4 Hufkens, Xavier 32 Jim Beam Observation Car 141 Hunter, Dr Tim 112 Naked 45 Hutin-Blay, Catherine 173 Kosuth, Joseph, Neon 47–8 Kotwall, Douglas 58, 59 ICM Partners 151–2 Kraemer, Laurent 119 illiquidity, of art market 136–7, 152 Kraussl, Roman 142 India 122 Kreuk, Bert 155–6 Indiana, Robert, Numbers 137 Kunstmuseum Basel 77–8 Indonesia 122–3 Kusama, Yayoi 12, 37 Indonesian Art Lovers Association Infinity Mirrors 13 (PPSI) 122 Instagram 38, 44, 80, 159, 160 Lagrange, Pierre 114

228 Index

Lam, Pearl 56, 63 Maezawa, Yusaku 75, 80 lawsuits 100–5 Magritte, René 175 and Bacon 91–2 Le Domaine d’Arnheim 167, 168 Bouvier/Rybolovlev affair 168–75 Mahama, Ibrahim 39–40, 95, 154 Knoedler Gallery 114–17 Maibaum, Walter 104 and Koons 45–6 Maillol, Aristide 99 and Noland 96–7 Maleki, Eskander 176–7 Perelman vs Gagosian 84–5 Maleki, Fatima 176–7 and Picasso 76–8 manipulation, price 84–5 Prince vs Cariou 42–4 Marconi, Gió 38 Simchowitz vs Mahama 39–40 Marissa Newman Projects 96 and Vō 156 Marple, Mieke 161 Le Freeport, Luxembourg 19–20 materials, art 111, 112–13, 115 Le Monde 174 Matisse, Henri, Odalisque à la culotte bayadère Le Point 172 137 Le Quotidien de l’Art 147 Max Ernst Museum, Germany 109 Leibovitz, Annie 186 Mayor Gallery, London 103 Lempertz (auction house) 110 Mayor, James 103 lending, art-secured 143–4 Mei Moses Art Indices 137–8 Leonardo da Vinci 104–5 Miami Beach Fair 34, 38, 65–6, 114 La Belle Ferronière 105 Michael Janssen Gallery, Berlin 96 Madonna and Child with St Anne and a Michelangelo 111 Lamb 175–6 Mintz family 186 Salvator Mundi 173, 174 Miró, Joan 155 Lerner, Ralph 102 Miro, Victoria 160 Levin, Todd 153 Mitchell, Joan 124 Lewis, Joseph 178 modernism, Italian 66 Lhéritier, Gérard 146–7 Modigliani, Amedeo limited editions 46, 47 Nu couché au coussin bleu 22, 61, 171 Lindemann, Adam 49 Seated Man with a Cane 177 Liu Yiqian 53, 59–61, 80, 123 Monet, Claude 59 Loeb, Dan 10 Nymphéas avec reflets de hautes herbes 189 Loll, Colette 100 San Giorgio Maggiore at Dusk 189 Long Museum, Shanghai 53, 60, 123 money laundering 115, 147, 169, 172, 187–90 Louvre, The 119 Montebello, Philippe de 11 Lovatelli Ravarino, Cristiano 91–3 Moses, Michael 134 Lucie-Smith, Edward 91 Mossack Fonseca 177, 178 Lugen, Yan 61 Motherwell, Robert 101, 113, 114, 155 Lujiazui financial centre, Shanghai 55 Movius, Lisa 57 Lund, Israel 160 Mueller, Scott 96 Luther, Martin 35 Mugrabi family 84–5, 85 Luxembourg 20–21 Murakami, Takashi 146 Luxembourg, Daniella 176 Miss Ko2 140–1 Luxembourg freeport 19–20, 169, 173, 178, Murillo, Oscar 158, 160 180 Museum 21 (Simchowitz collection) 151 Luxembourg, Henri, Grand Duke of 19 museums, private 33, 56–9, 66–7, 184–5 luxury goods industry 12, 34, 44, 58, 62–3, MutualArt 87 81 My Art Invest 146 Myatt, John 124 McClean, Daniel 45, 95 Mackel, Nicolas 20 Nadolny, Dr Jilleen 111 McKeogh, Christopher 121, 124, 126, 190 Nahmad, David 91, 178 MacLear, Christy 12, 102 Nahmad family 85, 177–8 Maestracci, Philippe 177 Nahmad, Helly 187–8

229 dark side of the boom

Nanjing 56 Joueur de flûte et femme nue 167, 168, 175 Narmino, Philippe 174 Les femmes d’Alger (Version O) 76, 178 Natural Le Coultre 169 L’espagnole à l’éventail 173 Neeson, Gael 74 Tête de femme 173, 190 New York Times 85 Picinati di Torcello, Adriano 134 New York Times magazine 153 Pickvance, Ronald 120 Noland, Cady Pictet Group 144 Cowboys Milking 96, 97 pigments 112–13, 114, 125 Log Cabin Blank with Screw Eyes and Café Pinacothèque de Paris 170 Door 96, 97 Pinault, François Norell, Arne 177 collector 40, 67, 74, 75, 194 luxury goods 63 O’Dea, Madeleine 57 Venice ‘museums’ 13, 138 O’Donnell, Nicholas 93–4, 97 Pirosmani, Niko 141 Oei Hong Djien, Dr 122 plagiarism 41–2 Old Master paintings 112, 119–20, 168, 176 Polcari, Stephen 117 Olivier Malingue Gallery, London 73 politics, global 141 1Malaysia Development Berhad (1MDB) 188 Pollock, Jackson 113, 121 online auctions 12, 191 Untitled 114 Oppenordt, Alexandre Jean 119 Poly Group 60 Oursler, Tony 57 Pompidou, Centre 45, 55 over-production 34–7 Porter, Marc 11 Portland Museum of Art, Oregon 185 Pace Gallery, London 13, 103 Pottorf, Darryl 102 Pallot, Bill 119, 123–4 Power Station of Art, Shanghai 55 Panama Papers 177–8 Powhida, William 86, 193–4 Pangaea II (Saatchi Gallery show) 39 Pricing Guide 87 Parish, Alexander 171 Pownall, Rachel 134 Parkhouse, Adrian 105, 176 primary market 33 Parreno, Philippe 73 Prince, Richard 41 Parrish, Martha 116 Canal Zone series 42–4, 85 Pasero, Ursula 33 New Portraits 44 Passion Protect 147 projects, public 33 Peake, Eddie 138 property, residential 65–6 Peau de l’Ours (art fund) 133 provenance 110, 114–16, 118, 120, 124–5, 173 Pechstein, Alexander 110 public projects 33 Pechstein, Max 110 Pudong Art Museum, Shanghai 55 Pelham Europe 77 Pylkkänen, Jussi 167 Peppiatt, Michael 92 Perelman, Ronald 84–5 Qatar 77 Peretti, Jean-Marc 170 Qian, Pei-Shen 115 Petterson, Anders 134, 135, 144, 148 Petzel, Friedrich 38 Racketeer Influenced and Corrupt Peyton-Jones, Julia 11 Organizations (RICO Act) 115 Phillips 11 Rales, Emily Wei 185 London 158, 161 Rales, Mitchell 185 New York 140, 141, 158 Ramos, Mel, A.C. Annie 49 photography 41, 42–6, 131 Rappo, Tania 169, 170, 172 Pi-eX 147 Rauschenberg estate 99, 102 Pia, Francesca 38 Raza, Syed Haiden 122 Picasso family 98, 99, 112 Rebaudengo, Eugenio Re 163 Picasso, Pablo 35, 171 Rech, Almine 73, 74 Bust de femme (Marie-Thérèse)76–7 Red Brick Museum, Beijing 57 Homme assis 63 rediscovery, of artists 48–9

230 Index regulation 190–2 Schlemmer, Oskar 98 Renoir family 98 Schneider, Etienne 19 reports, Art and Finance (Deloitte) 132, 134–5, Schneider, Tim 104, 139, 141, 153 139, 143 Schulhof, Michael 176 reproductions 47, 73–4, 125–6 Schwartzman, Allan 10 Restellini, Marc 103 Scully, Sean 62 Reyle, Anselm 40–1 Sean Kelly Gallery, New York 47 Richter, Gerhard 95 secondary market 33, 73 Riedl, Rosi 151 Secrest, Meryle 105 rigging, price 84–5 Sell You Later 159–60 rights, legal 94–5 Servais, Alain 47, 86, 145 rights, moral 95, 99 Seuil (publishers) 120 Riley, Bridget 48 Sgarbi, Vittorio 91 Rivera, Carlos 159–60, 161, 163 ‘shadow banking’ sector 143–4, 190 Robinson Gaer, Polly 182, 183 Shanghai Biennale 55 Rockbund Art Museum, Shanghai 29, 57 Shanghai Museum 123 Rodin, Auguste Shanghai Night (club) 54 Le Baiser 167, 168 Shariat, Amir 176–7 L’Eternel printemps 175 Sharpe ratio 141–2 Rogers, Art 45 Sheffer, Adam 36 Ropac, Galerie Thaddaeus 11 Shenzhen 56 Ropac, Thaddaeus 162 Shvo, Michael 186 Roque, Jacqueline 173 Simchowitz, Stefan 39–40, 141, 151–2, 153–5, Rosales Collection 113, 117 160, 161 Rosales, Glafira 113, 114, 115, 117, 124 Simon, Robert 171 Rosen, Aby 186 Simons, Raf 32 Rothko, Christopher 117 Simsbury International Corp 178 Rothko, Mark 80, 85, 113, 133 Singapore freeport 169 No. 1 168 Skarstedt Gallery, London 73 No. 6 171 Smith, Lucien 158, 161 Roundell, James 79 Smith, Tad 10 Royal Academy of Art 73 SNS Fine Arts 189 Ruby, Sterling 12, 31–2 Soavi, Giorgio 91 Ruiz-Picasso, Bernard 73 Sobel, Jonathan 46 Ruiz-Picasso, Claude 99 social media 12, 44, 59, 155, 159 Russia 141 Sotheby’s Rybolovlev, Dmitry 21–2, 75, 80, 85, 168–75, authenticity 114, 120 177 financial services 189 Rybolovlev, Ekaterina 170 guarantees 82–3 Rybolovlev, Elena 169, 170 Hong Kong 49, 140 London 187, 189 Saadiyat Island, Abu Dhabi 64–5 luxury goods 63 Saatchi Gallery, London 39 management of 10–11 Sachs, Gunter 137 and MutualArt sale 87 Salamé, Tony 44 New York 38, 82, 96 Salazar, Ashley 44 online auctions 12 Salida, Thomas 102 prices 76, 84 Salmon, Felix 47 private sales division 173–4 Saltz, Jerry 154 S|2 gallery 156 Sanig, Karen 105 speculation 151–63 Savage, Michael 35 Spiegler, Marc 157 Savona, Meridith 121, 181, 192 Spies, Werner 109, 110, 118 Schachter, Kenny 86 Spink & Son 178 Schiff, Lisa 183, 195 SplitArt 145–6

231 dark side of the boom

Spoutz, Eric 121, 125 Vierny, Dina 99 Sprüth Magers 32, 47 Visual Artists Rights Act (VARA) 40, 94, 96 Staechelin, Rudolf 78 Viveros-Fauné, Christian 34 Stair Sainty, Guy 104 Vō, Danh 156 Star Museum, Shanghai 53 Vrain, Jean-Claude 147 Stein, Judith 195 Steiner, Christine 185, 186 Walter, Marie-Thérèse 76 Still, Clifford 133 Wang Wei 53, 59–61 storage, art 131–3, 137, 193 Wang Zhongjun 76 Sturtevant, Elaine 41 Warhol, Andy 35 Su Shi, Gong Fu Tie 123 Flowers 41 Süddeutsche Zeitung 177 Four Marilyns 82 supply, and artwork size 32–5 Warnke, Professor Martin 35 Symes, Robin 181 WeChat 59, 61 Taikang Life 11 Weiss, Mark 120 Taka Ishii 32 Weissman, Julian 114 Taub, Bruce 135 Welsh-Ovcharov, Bogomila 120 Taubman, Alfred 82 West Bund Art and Design Fair 53–4 tax 174, 179–86 West Bund Art Museum, Shanghai 55 tax evasion 99, 174, 177, 185–6 Western art 61–4 teamLab (collective) 13 Westphal, Cheyenne 11 Tek, Budi 53, 54, 61 Whitechapel Gallery, London 73 Terenzio da Urbino 111 Wick, Oliver 117–18 Thomas, Olivier 173 Widmaier Picasso, Maya 76–7, 99 Thompson, Don 141 Wierbicki, Diana 183, 184 3D printing 125–6 Wildenstein family 182 Timothy Taylor Gallery, London 62 Wildenstein, Guy 182 Tinterow, Gary 104 Wildenstein Institute 103 Tornabuoni Art 65–6 Winkleman, Edward 42 Turbine Hall, Tate Modern 73 Withers Bergman 183, 185 Turner, J.M.W. 35 Wyndham, Henry 11 Tutela Capital 161 Wynn, Elaine 185–6 Tuymans, Luc 41, 43, 45 Twitter 80 Xhixha, Helidon 66 Twombly, Cy, Leaving Paphos Ringed with Xu Beihong 123 Waves 84 Yuz Museum 53, 54, 61 Ulman, Amalia 154 Uniform Commercial Code (UCC) 144 Zaretsky, Donn 85, 100, 105, 191–2 United Features Syndicate 45 Zervos, Christian 35 United Talent Agency 152 Zhang Huan 29–31 To Add One Metre to an Anonymous Vallotton, Félix, Femme au manchon 137 Mountain 30 Value Added Tax (VAT) 180, 181–2 Family Tree 30 Van Gogh, Vincent 120 Hero 29 La Maison de Vincent à Arles 189 Q-Confucius No. 2 29 Still Life, Vase with Daisies and Poppies 76 12m² 30 Vasarely, Victor 48 Zhang Xiaogang 30–1 Velthuis, Olav 78–9, 81, 82–3, 87–8 Bloodline: Big Family No. 3 31 Venice Biennale 39, 67 Zhibing, Qiao 54 Vernon, Los Angeles 31 Zhou Tiehai 53 Versailles, Palace of 119 zombie formalism 85–6, 140, 148, 153, 157–60, Very Bankable Artists (VBAs) 85–6 161–3 video market 41, 47 Zwirner, David 54

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