Uber-Confident Art Dealers Lose Face As Cases Go To Court

Art dealers have been getting a hard time of it recently, their profession’s reputation shaken by a succession of high-profile cases. Only a few days ago, the French American dealer Guy Wildenstein was charged in Paris with tax evasion and money laundering; this may be the first of several convictions, as he awaits trial for the horde of long-lost artwork that was found in a storage room in his Paris art institute. Meanwhile, in January, a fourth lawsuit was brought against the now-defunct Knoedler Gallery, based on further allegations of million-dollar forgeries. Last year, on the other side of the world, the formerly well-respected Australian dealer Ronald Coles was charged with 87 offences for his role in an elaborate investment racket. Larry Gagosian, of course, is currently vigorously fighting allegations that he “took advantage of his position of trust” and convinced Ronald Perelman to accept an unfair deal.

These scandals are wounding the reputation of dealers in the art market – TH

These scandals are wounding the reputation of dealers in the art market, at a time when most can least afford to have their integrity doubted. It is worth bearing in mind – though it is easy to forget – that the big, glitzy names – some of whom have been entangled in super-expensive legal wranglings – are only a very small proportion of the thousands of art dealers who are out there, working hard to share the work of the artists they are passionate about. There are estimated to be up to 400,000 internationally-listed private antique and art dealers.

And this army of smaller businesses and enthusiasts is embroiled in extremely difficult times. Their role is being eroded in part by the large auction houses, in part by the big brand galleries that increasingly dominate the terrain. Market share is divided around 50:50 between auction houses and dealerships, which may seem a sign of a thriving and balanced market. But although there are 25,000 auction houses listed around the world, sales and turnover are dominated by a small handful of gargantuan firms like Sotheby’s and Christie’s. Similarly, among the dealerships, around half the sales by value are done by between two and five per cent of the total number of enterprises.

In such a tough climate, what can smaller dealers draw on in the battle for survival? You, reader, already know the answer to this old question: it is that more personal touch, that sincere passion, that genuine relationship with the artist, and that specialist, long-fermented knowledge. These are the qualities a smaller dealer can offer to prospective clients, that the big auction houses and, to a lesser extent, the grand and glitzy dealerships can’t.

Barbara Gladstone, the American dealer who gave up teaching art history at the age of 40 to open a tiny gallery and has since risen to an influential position in the Anglo-American art world, captured these unique selling points in an interview with The Wall Street Journal back in 2011. Of the business side of the dealer’s role, she said: “In the art world, we do everything with a handshake. It’s the last bastion of old-fashioned values. Someone can buy something for $3 million and not one piece of paper changes hands, no lawyer is involved. One’s word is one’s bond.”

But she equally emphasised the importance of the dealer’s relationship with the artists they represent: “There’s a relationship between being an art dealer and raising a family. Being a parent, a mother, means that you’re responsible for helping someone develop to the best of their potential. The artist-gallery relationship also involves a dependency on the part of the artist to trust the person who represents this most precious thing, the art. And that’s not something to take lightly.”

And that is the key word: trust. But trust is precisely what is eroded in entertaining but damaging court cases such as those listed above. It is further destroyed by the kind of statements made by Robert Gould during his law court clash with his former partner Geoffrey Smith. Gould admitted that the average mark-up on paintings was “at least 50 per cent but possibly two-and-a-half times.” He added that it “helps enormously” if you can prevent anyone from knowing what you paid for the painting in the first place; to this end, at auctions he would bid subtly with his glasses, conspiring with auction staff who would pretend the bids came from a telephone. As a seasoned Melbourne art dealer said at the time of the trial, “It’s horrifying. It has ramifications for the industry in giving art dealers a bad name. The art industry is unregulated and this makes every dealer look shady.”

This lack of regulation is of course problematic, although it is also an aspect valued by many in the trade, such as Barbara Gladstone above. There are organisations – the Art Dealers Association of America (ADAA), Cinoa, and many more specific to certain countries – that seek to impose basic standards through an accreditation process. On its website the ADAA promises it will “investigate all such claims” that a member has violated its guidelines: “violation of any provision of this Code may be grounds for censure, suspension or expulsion from the ADAA.” But this relies on a specific complaint being made; there is no proactive regulation. And the vague words of warning and inchoate threats of expulsion quoted above hardly inspire confidence in the strength of the organisation’s grip on the behaviour of its members. Perhaps now is the time for smaller dealers, finally, to push for more stringent regulation in order to bolster ailing levels of public trust.

At the very least, if you experience a slight thrill of schadenfreude at the sight of uber-confident individuals being brought down in spectacular court cases, spare a thought for the smaller dealers whose business becomes more burdensome as a consequence.

Words: Toby Hill © ArtLyst 2013 Photo: ArtLyst ©2012


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