Chinese art is auctioning for prices three to 30 times presale estimates in both Hong Kong and the United States. But there are problems–fake paintings, bidding by sellers or artists to push up prices, and high bids for mediocre art as a means to legally transfer bribes. Most damaging is nonpayment by high bidders. The auction house that sold a Chinese vase (Kovels Komments, November 2011) for $70 million ($85.9 million when buyer’s premium and value added tax is included) has collected only about $3 million so far. According to an NPR report, the Chinese Association for Auctioneers says that 40 percent of the bids that topped $1.5 million at Chinese auctions were not paid six months later.
Photo source: Bainbridge’s Auctions
Once again I want to congratulate you for pointing out that in the auction world apparently spectacular results are not always what they seem to be! There has recently been on British tv a very interesting programme about Chinese ceramics which highlighted the spectacular auction result for the reticulated vase you feature in your article without so far as I am aware mentioning that the auctioneers might be having difficulty collecting the money from the highest bidder!
I seem to remember that some time ago when famous pictures by Van Gogh and others fetched world record prices there were sometimes similar difficulties in collecting the money!
Unfortunately it has never been in the selfish interests of some of the world’s greatest auction houses to high light such difficulties and as a result the general public has been left nurturing the illusions rather than the reality!
There have always been “buyers” who were either fantasists or even crooks who bid incredible prices at auction and could not or did not pay the price but got clean away with it because certain auction houses were too embarassed to admit that they were conned or even negligent in investigating the credentials of the bidders. In these current difficult times added to the problems of the fantasists and the conmen we can add the problem of the instability of stock exchanges and other financial markets which can ruin people who were authentically rich virtually overnight so t5hat a bidder who genuinely thought he could afford the item for which he had successfully bid could after the bidding ended find that he no longer could.
I am aged 67 and in my lifetime as a collector I acquired personal knowlege of two fascinating stories:
the first involved a spectacularly wealthy family who mandated the art “expert” son of their trusted Swiss banker (and family friend) to buy fine and decorative art for them at worldwide auctions. Unfortunately he had some kind of a mental breakdown and went round the world buying up in some cases a very high proportion of the contents of some auctions at prices which were very high even at a time when art markets were peaking.When it was discovered that he gone completelky off his trolley there was hell to pay. The family in question acted with great honour but it was obvious to the auction houses involved that they would have to reach some accommodation with the sellers and the family to avoid highly embarassing publicity for all concerned. The problems were resolved by a range of “accommodations”!
The second interesting case involved a famous art dealer who had acquired privately a very large collection of paintings by a fairly famous artist. From time to time he arranged for a painting he already owned but had not openly displayed to be entered in an aucrtion through a proxy. He then bid for the picture and bought it at a “world record” price for the artist and basked in the resulting publicity Of course as is commonly the case he had through the proxy arranged with the auction house to pay a small or no seller’s commission and overtly on his own behalf to pay a much reduced buyer’s premium.The net result was that at very little cost he got lots of free publicity, inflated the apparent value of the picture in question but better still inflated the value of the rest of his stock of pictures by the same artist thus enabling him to raise selling prices and even more importantly to borrow more money from his bankers! One could perhaps not say that some auction houses colluded in these activities but since they invariably are not stupid and invariably know on what side their bread is buttered they would conveniently turn the famous Nelsonian “blind eye” upon the proceedings.
Thus as you have so candidly highlighted “all that glisters is not gold”.
At some time in the future I hope that you will address the question of that other notorious aspect of the auction world which is the ringing of bids! The auction houses do not do enough to suppress this practice and neither do police forces around the world.I have quite a number of dealer frriends who without admitting any personal involvement have readily confirmed the existence of dealer rings and described the techniques involved amd the “benefits” resulting to dealers. I remonstrated with one London dealer about the price he charged me for a Tang dynasty camel when a similar one sold at auction for a fraction of the price he charged me! He had the nerve to tell me that the one at auction had gone cheaply only because the item had been “ringed” at the auction by a dealer ring!
Once again I congratulate you for bringing to the attention of your readers with considerabe candour the need for care in separating truth from illusion! Kovel’s Comments are consistently illuminating and educational as well as thoroughly interesting and entertaining reading!Please feel free to use any of this in any way you see fit!
Kind regards and thanks!
Colin Harper.
This is a resend with some typos attributable to failing eyesight corrected!
Really? Fake paintings? Rigged bids? Bids for bribes? At an auction? No! Tell me it`s not true! Anyone who goes to an auction and expects an honest proceeding is sadly misinformed. The stakes are just too high and there is very little oversight. To be honest in the auction business would be the exception rather than the rule these days. There are just too many auction houses for the feds to keep up and nobody suspects a thing. There might be as many as 1500 auctions on any given day with many offering internet bidding. How do you police that? Only after the fact obviously. Who needs shills standing in the crowd when you can bid on the internet yourself? Remember, an auctioneer who buys something at his own auction does not have to pay the buyers premium and the commission, the difference could be as much as 50% off. I used to be able to spot the shill, used to be a game we played. We would go over and distract him. Chat him up. Watch him/her squirm. Great fun as most auctions were boring. Now, all bets are off. I`ve been around 25 years in this business and I just stay away from these auctions that have internet bidding like the plague. I`m sorry, but since corporate interests have taken over this business it has gone to the dogs. We all partake in it like ritual prayer. Pouring over it all like the gospel, memorizing it, quoting it, impressing our friends and cohorts with our knowledge. How much of it is actually real? 90%? 50%? 10%? I really do not know but this percentage probably correlates to the percentage of people who go to an auction with eyes wide open, knowing zip about the market, never suspecting a thing….