Picasso Marks Sotheby's Comeback

N EW   Y O R K, May 8, 2004 -- History was made in a packed sales room in Sotheby's auction house when Pablo Picasso's Boy with a Pipe sold for more than $104 million — the highest amount ever paid for a single piece of art in an auction setting.

For Sotheby's, the record sale Wednesday marked something of a comeback. In January 2000, the U.S. government accused the American-owned auction house with conspiring with its longtime rival, British-owned Christie's, to fix commission rates. They agreed to pay $512 million to settle the charges.

In his new book, The Art of the Steal, in bookstores this week, Christopher Mason examines the scandal that threatened to topple two exclusive auction houses — centuries-old shopping malls for the rich and famous.

"You're talking about the most intimate part, the most private part of your business that you're sharing with your competitor. It's a shocking idea," Mason told ABCNEWS.

Authorities estimate that during the 1990s, Christie's and Sotheby's may have cheated their wealthy customers out of $400 million.

Profit and Power

Mason says the houses apparently had drawn up a secret agreement in 1995, calling for both sides to raise the fee they charged sellers from a flat 10 percent to a sliding scale of 2 percent to 20 percent, depending on the price of the object.

At the time, the two houses controlled more than 90 percent of the world's $5 billion high-end art market. Everything from Van Gogh masterpieces to Princess Diana's evening gowns to Eric Clapton's guitars were theirs for the selling. They were a virtual duopoly. So why fix prices?

Mason says the auction houses were motivated by a desire to boost profits at a time when sales were reeling from the economic crisis in Asia.

In addition to the need to survive, Mason says, the leaders of the exclusive auction houses were motivated by ambition.

"Really, it was about the thirst, the hunger for power and success," he said.

After conducting hundreds of interviews with experts in the art world, Mason contends that, while both auction houses were significantly damaged by the scandal, one bore the brunt of the blame: Sotheby's.

And one man paid the ultimate price: Alfred Taubman, the millionaire owner of Sotheby's.

Scapegoated?

The Michigan-born Taubman had made his fortune in shopping malls and saw his purchase of Sotheby's in 1983 as his crowning achievement, Mason says. He brought with him to the auction world a shrewd business sense and a desire to open the world of art to the masses. But his beauty queen wife and his Jewish heritage made him something of an outsider.

In The Art of the Steal, Mason contends Taubman was targeted, and ultimately brought down, by his one-time protégé, Sotheby's CEO, Dede Brooks, who agreed to testify against him.

Brooks may have been the one who brokered the deal with Christie's to fix prices, Mason said, but Taubman took the fall.

"You don't get a bigger fish than Alfred Taubman," Mason said. "This was a colossally rich guy and this was a major victory for the justice department to pursue him."

At the age of 76, Taubman was sentenced to a year in prison.

For her role in the scandal, Brooks, who once famously oversaw the auction of Jacqueline Kennedy Onassis memorabilia, was sentenced to house arrest in her palatial Manhattan apartment. She remains persona non grata in the art world.

Because Christie's is British-owned, its major players escaped U.S. prosecution. But Christie's, like Sotheby's, was forced to pay former customers millions of dollars in fines stemming from civil suits.

Making a Comeback

Today, four years later, the dark cloud that has hung over both auction houses appears to be lifting.

The newfound air of sunshine was especially apparent Wednesday night at Sotheby's.

As the Picasso painting, Lot No. 7 in the Whitney estate sale, was dramatically revealed to the appreciative audience, they responded with a chorus of "oohs" and "aahs."

Among those looking on with great interest was Alfred Taubman. From his box overlooking the sales room, the elderly Taubman, now out of prison and still owner of Sotheby's, watched the price boards.

When bidding reached $93 million, Taubman, dressed in a dark suit, could be seen snapping a photo with his own personal camera.

It was history in the making — both for Picasso and for the world of auction houses.