https://www.economist.com/culture/2024/01/31/the-sothebys-trial-revealed-the-art-markets-unsavoury-practices

 Skip to content

  * Menu
  * Weekly edition
  * The world in brief
  * Search

Log in

  * Opinion

      + Leaders
      + Letters to the editor
      + By Invitation
      + Current topics

          o Israel and Hamas
          o War in Ukraine
          o US elections 2024
          o The World Ahead 2024
          o Climate change
          o Coronavirus
          o The world economy
          o The Economist explains
          o Artificial intelligence
  * Current topics

      + Israel and Hamas
      + War in Ukraine
      + US elections 2024
      + The World Ahead 2024
      + Climate change
      + Coronavirus
      + The world economy
      + The Economist explains
      + Artificial intelligence
  * World

      + The world this week
      + China
      + United States
      + Europe
      + Britain
      + Middle East & Africa
      + Asia
      + The Americas
      + International
      + A-Z of international relations
      + A-Z of military terms
  * In depth

      + Science & technology
      + Graphic detail
      + Special reports
      + Technology Quarterly
      + Briefing
      + Essay
      + Schools brief
  * Business & economics

      + Finance & economics
      + Business
      + Big Mac index
      + A-Z of economics
      + Economic & financial indicators
  * Culture & society

      + 1843 magazine
      + Culture
      + Obituary
      + The Economist reads
      + Christmas Specials
  * More

      + Podcasts
      + Newsletters
      + Films
      + The Economist app
      + Subscriber events
      + Economist Education courses
      + Group subscriptions

Included in your subscription

  * Podcasts
  * Newsletters
  * Films
  * Live virtual events
  * The Economist app

  * My Economist
  * Saved stories
  * Log out

  * Saved stories
  * Account
  * Log out

Search
[                    ]
Try our new AI-powered searchbeta

Culture | Secrecy and sketchiness in art

The Sotheby's trial revealed the art market's unsavoury practices

But the outcome suggests not much will change

Silhouetted staff members look at the painting 'Salvator Mundi' by
Leonardo da Vinci before it is auctioned.Beautiful art, shadowy
charactersimage: Getty Images
Jan 31st 2024|NEW YORK
Share
Listen to this story. Enjoy more audio and podcasts on iOS or Android
.

Your browser does not support the <audio> element.

The horror of it dawned on Dmitry Rybolovlev in paradise, of all
places. Over lunch in St Barts in 2014, conversation turned to a
painting by Amedeo Modigliani, an Italian artist, that the Russian
billionaire had bought several years before in a private sale. At the
table happened to be an art adviser for the previous owner, who
revealed Mr Rybolovlev paid around $25m more than what the seller had
made.

It turned out that a Swiss middleman named Yves Bouvier, whom Mr
Rybolovlev thought was acting as his adviser, pocketed the
difference, plus an agreed-upon commission. The staggering markup fit
a pattern. Over 38 sales Mr Bouvier allegedly made more than $1bn. On
many occasions Mr Rybolovlev says he was told falsely that Mr Bouvier
was haggling with the sellers to get better prices, only to inflate
them.

Cue a nearly decade-long legal battle in Hong Kong, Monaco,
Singapore, Switzerland and now America. On January 30th the
art-filled drama concluded in a courtroom in Manhattan, with a
disappointing result for Mr Rybolovlev. The trial concerned whether
Sotheby's, an auction house, aided and abetted Mr Bouvier's alleged
fraud. A jury found it did not. (Mr Bouvier was not a defendant; he
and Mr Rybolovlev settled their dispute confidentially in Switzerland
last December.)

Mr Bouvier denied wrongdoing and said that he acted not as an adviser
but as a dealer, who is entitled to markups. He bought trophy
paintings in private sales at Sotheby's, then flipped them to Mr
Rybolovlev. The trial centred on pricey works by Leonardo da Vinci,
Gustav Klimt, Rene Magritte and Modigliani. Mr Rybolovlev alleged
that Sotheby's helped Mr Bouvier justify markups by providing
inflated appraisals in a bid to keep Mr Bouvier's business, which
Sotheby's denied.

The case was challenging to win. Proving fraud requires showing
intent; the evidence presented at trial was circumstantial. The
saga's main player, Mr Bouvier, never testified. That the alleged
swindle took place on a yacht and in a penthouse apartment along
Manhattan's "billionaire's row" near Central Park probably did not
elicit much sympathy from the jury.

Another wrinkle in Mr Rybolovlev's case was the fact that he actually
made out extremely well in at least one instance. In 2013 he bought
"Salvator Mundi", a painting by da Vinci (pictured), from Mr Bouvier
for $128m. Mr Bouvier charged a 54% markup and congratulated him on a
"great deal for this unique masterpiece". That was shifty. But four
years later Mr Rybolovlev sold "Salvator Mundi" for $450m--a record
for any artwork and more than triple what he paid.

After the verdict Mr Rybolovlev's lawyers said that the case shone a
"light on the lack of transparency that plagues the art market", but
"secrecy made it difficult" to win. Private sales, both through
auction houses and art dealers, are notoriously opaque. Much like the
derivatives market on Wall Street, which was revealed after the
global financial crisis of 2007-09 to take advantage of "dumb-money"
pension funds, middlemen can manipulate prices for art. This trial
highlighted the shamelessness of profit-hungry players.

But there is more that Mr Rybolovlev should have done to protect his
interests. For example, he never delineated in writing the nature of
his relationship with Mr Bouvier: was he a dealer or an agent with a
fiduciary duty? Lawyers for Sotheby's hammered Mr Rybolovlev on why,
as a shrewd businessman, he failed to draw up contracts or request
invoices straight from the auction house. At the outset this could
have cleared up the disagreement or at least mitigated the fallout,
says Judd Grossman, an art lawyer.

To Mr Grossman this lesson recalls another art-world dispute decided
in New York in 2010. That case also involved an agreement never put
into writing between a miffed collector and David Zwirner, a
blue-chip dealer. "Some in the art world desire a market that is
neither open nor honest," wrote the judge in his ruling. Collectors,
he added, in this "seemingly refined bazaar should heed the
admonition 'caveat emptor'". #

For more on the latest books, films, TV shows, albums and
controversies, sign up to Plot Twist, our weekly subscriber-only
newsletter

This article appeared in the Culture section of the print edition
under the headline "Painted into a corner?"

Culture February 3rd 2024

  * Authors are collaborating with AI--and each other
  * A row over the Hong Kong Heritage Museum is a window on China
  * The violence of "Power Slap" is part of its allure
  * The Sotheby's trial revealed the art market's unsavoury practices
  * Martha Graham's life tracked the jumps and dips of modern dance
  * A new "Mr & Mrs Smith" is about more than action, money and sex

How to end the Middle East's agony

From the February 3rd 2024 edition

Discover stories from this section and more in the list of contents

Explore the edition
Share
Reuse this content

More from Culture

[20240210_CUP501]

The meaning of the hysteria over Taylor Swift

It reflects the overlap of politics, conspiracy and celebrity

[20240210_CUD001]

When is it too soon to write history?

Early accounts can stand the test of time, but they have to be
riveting

---------------------------------------------------------------------
[20240203_BLP528]

How do you replace a coach like Jurgen Klopp?

Liverpool must heed the lessons of Manchester United

---------------------------------------------------------------------

  * Subscribe
  * Group subscriptions
  * Reuse our content
  * Help and contact us

Keep updated

  *  
  *  
  *  
  *  
  *  
  *  
  *  
  *  

Published since September 1843 to take part in "a severe contest
between intelligence, which presses forward, and an unworthy, timid
ignorance obstructing our progress."

The Economist

  * About
  * Advertise
  * Press centre

The Economist Group

  * The Economist Group
  * Economist Intelligence
  * Economist Impact
  * Economist Impact Events
  * Working Here
  * Economist Education Courses
  * Executive Jobs

  * Terms of Use
  * Privacy
  * Cookie Policy
  * Manage Cookies
  * Accessibility
  * Modern Slavery Statement
  * Sitemap
  * Your Data Rights

Copyright (c) The Economist Newspaper Limited 2024. All rights
reserved.