Oligarch's aide tells court how Sotheby's expertise had role in fraud

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Oligarch's aide tells court how Sotheby's expertise had role in fraud
The Russian billionaire Dmitry Rybolovlev looks out from his penthouse in Monte Carlo, Monaco, Sept. 18, 2018. (Benjamin Bechet/The New York Times)

by Graham Bowley



NEW YORK, NY.- An adviser to a Russian billionaire asserted in a Manhattan courtroom on Tuesday that he and his boss had been tricked by a Swiss art dealer into wildly overpaying for works of art and that a Sotheby’s expert’s opinions played a role in persuading them to pay the inflated prices.

“It was pretty important because Sotheby’s was the expert in all things related to art,” the representative, Mikhail Sazonov, testified in federal court in Manhattan in the case brought against Sotheby’s by Dmitry Rybolovlev, the oligarch and art collector.

Rybolovlev has accused Sotheby’s of helping the art dealer, Yves Bouvier, who bought artworks himself and resold them to Rybolovlev at markups worth tens of millions of dollars.

Bouvier, who has denied any wrongdoing, has said he was free to charge what he wanted as an art dealer. But Rybolovlev has said that Bouvier never revealed he had quietly bought the paintings himself, and instead posed as an art adviser who was helping to negotiate with fictitious sellers and, beyond that, charging 2% commission for his advice.

Bouvier purchased many of the artworks he later sold to Rybolovlev through Sotheby’s. In opening statements on Monday, lawyers for Rybolovlev focused on the role played in some of the transactions by Samuel Valette, a Sotheby’s expert.

“Together, Valette and Sotheby’s helped plunder many millions of dollars from the plaintiff,” said Daniel J. Kornstein, a lawyer for Rybolovlev. The evidence showed, he said, that “Sotheby’s was in on it.”

He added, “Sotheby’s had choices, but they chose greed.”

But Sotheby’s lawyers said that, while Rybolovlev and Sazonov had reason to be angry, they should blame themselves for failing to take reasonable measures to protect Rybolovlev from any price inflations. Sotheby’s, they said, knew nothing of the alleged fraud.

What Bouvier did with the art after he bought it was none of the auction house’s business, they told the jury, arguing that Sotheby’s was not aware that Bouvier was telling Sazonov of negotiations with sellers that never actually took place.

“Sotheby’s had no knowledge of any of those lies,” said Sara L. Shudofsky, a lawyer for Sotheby’s.

Only four of the pieces purchased by Bouvier through Sotheby’s are the subject of the trial, but they are four masterworks, including a depiction of Christ by Leonardo da Vinci, known as the “Salvator Mundi,” which fetched the highest price of any artwork ever sold at auction. That sale, in 2017, by Rybolovlev, drew a price of $450 million. But the Russian collector has taken issue with the fact that when he bought the work in 2013, he paid $127.5 million, not knowing that a day earlier Bouvier had bought it for $83 million.

Sazonov told the jury that he handled the purchases of the artworks for Rybolovlev’s family office and that he first met Bouvier during the acquisition of a Vincent van Gogh at the Geneva Free Port where Bouvier ran a large art shipping and warehousing company.

He continued to work with Bouvier on many more acquisitions, he said, because Bouvier promised that, through his business, he had privileged access to the world’s best art and could be trusted.

“He said he would play the role of a screen between us,” Sazonov told the court. “He would screen us from the seller and the seller from us to give this confidentiality which was in the seller’s interest and our interest.”

He understood this relationship to mean that Bouvier was acting solely as the Russian’s agent, and not as a dealer. He believed Bouvier was, he said, “someone who finds the work of art and negotiates the price for us, the best price.”

Bouvier, who is not a defendant in the current case, has strongly insisted there was no fraud and that, in fact, he was always clear that he was operating not solely as an adviser, but also as an independent dealer.

Bouvier’s lawyers have pointed to the legal actions Rybolovlev undertook against him in various jurisdictions around the world, including Monaco, Singapore, Hong Kong and Geneva — actions that ended without Rybolovlev securing the sanctions he sought — as evidence that their client did nothing wrong. Those court battles directly between Rybolovlev and Bouvier ended late last year after the parties reached a confidential settlement in Geneva.

On Tuesday, the court was shown contracts between Rybolovlev’s company and companies owned by Bouvier for four initial art purchases. Bouvier has put forward the sales contracts as proof that he was openly operating as a dealer who owned the art himself.

But Sazonov testified that he had not recognized the names of the different companies, which were located in various places including the British Virgin Islands and Hong Kong, and that he had no idea they were affiliated with Bouvier. He believed instead, at the time, that they represented other third party owners of the art, he said.

Sazonov said in later sales facilitated by Bouvier such contracts were dispensed with, as Bouvier became closer friends with Rybolovlev and insisted that formal contracts slowed them down in the chase for trophy art. As a result, the precise nature of their relationship — buyer and seller or buyer and agent — was never written down. Bouvier would send invoices for artworks from his own company and Sazonov would pay them. But Sazonov said he assumed all the money was being paid to another owner and Bouvier was getting no markup. That Bouvier was earning the commission only added to the misunderstanding, he said.

Sotheby’s has said that Rybolovlev, a savvy businessman with significant assets, acted unreasonably by relying on what Bouvier was telling him without putting the terms of their relationship in writing or asking for any documents as proof of the prices Bouvier said he was paying to acquire the art for him.

Rybolovlev had no basis “to accuse Sam Valette, or anyone else at Sotheby’s, of Bouvier’s misconduct,” Sotheby’s lawyer, Shudofsky, said on Monday.

On Tuesday, Sazonov described how Bouvier had forwarded notes he had received from Valette about the works Rybolovlev was buying. In the notes, the Sotheby’s expert praised the quality of artworks or discussed the pricing, which Sazonov said made him feel comfortable in going ahead with the deals. He was reassured, he said, about “the importance and the quality of the painting that justified a very high price.”

The trial is providing a rare window into the often secretive inner workings of the art trade. Rybolovlev has attended the proceedings this week, sitting beside his attorneys while he listened through a translator. His lawyers have said he will testify at the trial, which is expected to last about six weeks.

This article originally appeared in The New York Times.










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