Proceedings in the ongoing legal spat between Russian billionaire Dmitry Rybolovlev and Sotheby’s have often been drawn out and detailed to the point of tedium, with hours-long questioning about the timing and content of emails seeming to fail to lead to even a substantive assertion, let alone wrongdoing. However, gems about the inner workings of the upper echelons of the art market and how eight- and nine-figure trophy deals get done do sometimes seep out.
Today was one of those days.
As most art world followers now know, Rybolovlev alleges the auction house “aided and abetted” a larger alleged fraud by Swiss dealer Yves Bouvier, who the billionaire eventually realized had overcharged him by roughly $1 billion on 38 art deals going back more than a decade. After years of legal wrangling in various jurisdictions around the world, Rybolovlev and Bouvier ultimately settled their differences late last year. Now, Sotheby’s is defending itself in court in New York.
Today marked the third day on the witness stand for Samuel Valette, Sotheby’s senior vice president, vice chairman, and head of private sales for Europe, the Middle East, and Africa. For years, Valette played a key role as a liaison to Bouvier. Rybolovlev and his lawyers are trying to prove that Valette and other Sotheby’s executives were in on Bouvier’s scheme.
So far, that argument is not landing.
Valette has been composed, forthright, and even talkative on the witness stand, often going into greater detail than requested to explain the intricacies of wheeling and dealing in the art market. And despite having said more than once that Bouvier was a “great client,” it appears the gloves have come off when it comes to Sotheby’s shining a spotlight on Bouvier’s role in the case.
Valette was presented with an email today showing that Bouvier was working with Rybolovlev’s right hand man for art investments, Mikhail Sazonov, to secure $43.5 million for a surreal Rene Magritte painting, The Domain of Arnheim—a whopping $19.4 million markup from the $24.1 million sale agreement he himself had struck with Sotheby’s. Further, he was relaying the $43.5 million price to Sazonov even days before he had finalized and seen through the lower agreed-on price with Sotheby’s.
“I tried but $42 [million] is Mission Impossible,” Bouvier wrote to Sazonov in a November 2011 email, in an effort to turn up the heat.
Asked about this email, which he was not copied on, Valette emphatically said there was no such discussion or negotiation. “It’s a complete fiction. It didn’t happen. We never offered the seller $43.5 million. Ever.” Sotheby’s confirmed that it sold the painting to Bouvier via his holding company Blancaflor for $24.1 million.
Shortly after, Rybolovbov bought the work for the $43.5 million price that Bouvier falsely said the seller demanded.
Later in today’s questioning of Valette, lead attorney Marcus Asner brought up a a major Modigliani nude that was owned by mega-collector and Mets owner Steven Cohen. In late 2011, Sotheby’s executives caught wind that the painting, which they hoped to get “a shot” at, as Valette put it, was already on its way to a Geneva freeport for a viewing and possible sale at an asking price of around $100 million. At the time, Bouvier was president of and owner of a major free port—a temporarily tax exempt storage space for art in transit—in Geneva.
When Valette immediately called Bouvier to ask about the Modigliani, including whether it was indeed being shown to a buyer there, Bouvier told him he had no idea what he was talking about. Later, it emerged that Bouvier acquired the painting for a price around $93 million, but then flipped it to Rybolovlev for $118 million.
In an email to Valette, Sotheby’s then CEO Bill Ruprecht said, it seems to me like Sam, “you are getting left at the altar…by the same buyer.”
Asner asked Valette whether Bouvier was being truthful when he told Valette he had “no idea” what he was talking about. “In hindsight, no” replied Valette. Asner followed up by asking if Valette had indeed been left at the altar. “In hindsight, yes,” Valette said.
This particular Modigliani flip also ultimately proved to be the beginning of the end for Bouvier and Rybolovlev’s more than decade-long friendship and business relationship. It was the spark that Rybolovlev said unraveled the alleged fraud.
Last week on the stand, Rybolovlev recalled meeting advisor Sandy Heller (who is scheduled to be on the witness stand next week) at a lunch at St. Bart’s in the Carribbean in late 2014. It was Heller, who works as an advisor to Cohen, who revealed in conversation the price that Bouvier had paid for the Modigliani, unveiling the massive price hike passed on to Rybolovlev. That led the billionaire to question whether other works he bought via Bouvier had been as wildly marked up.
On the witness stand last week, Rybolovlev said upon learning this, he turned so pale and was so shocked that friends accompanying him to the lunch believed he was having a heart attack.
In a statement to Artnet News, representatives for Bouvier said “the allegations being made against Mr. Bouvier in the New York proceedings have already been rejected by authorities all around the world.” Bouvier was “was a seller and not an art adviser,” a fact that was “was not contradicted by a single judicial authority during nine years of legal fight in five different countries,” according to the statement.
Rybolovlev attorney Daniel Kornstein said in an emailed statement: “Sam Valette, Sotheby’s salesman, admitted that he was well aware the opinions he expressed about the valuations of art works would be passed on to third parties.”
“The evidence shared by Mr. Rybolovlev’s legal team has not shown any complicity by Sotheby’s in Mr. Bouvier’s alleged fraud,” according to a statement from Sotheby’s. The auction house said it is being “challenged for selling art to a dealer in accordance with company policy and art market best practices.”
The trial continues Monday, with the dealer Sandy Heller, an appraiser from Winston Art Group, and Alex Bell, head of Sotheby’s Old Master department, slated to take the stand.
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