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Story of #SalvatorMundi exposes true face of art business

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At a certain point, the story of the discovery of a long lost Leonardo masterpiece looks like a Hollywood movie - seemingly as if taken directly out of a Dan Brown book. And then there is the dirty and unpleasant part of the story, the one associated with the sale of the painting. The latter reveals the true face of the art business, where the dealer’s natural itch for money meets far less restrictions than elsewhere, and raises several significant questions. Who has a right to put a price on a 500-year-old da Vinci painting? What do auction houses owe to their consigners? Can you be an independent dealer and someone’s agent at the same time, asks Phillipe Jeune?

Salvator Mundi

Leonardo da Vinci, the legendary artist, scientist and inventor, was never the most prolific of old masters: he is only credited with less than 20 artworks. Salvator Mundi depicts Jesus with one hand raised in benediction and the other holding a crystal orb signifying mastery of the cosmos. It is believed to be created by Leonardo c. 1500 for the then King of France, Louis XII. Later it was presumably a part of King Charles I’s personal collection. It also survived the 1940 Nazi bombings in London even after the owners left it languishing in a basement. Finally, the Hendry family from Louisiana bought it for some $100 at a London auction in 1958. The enigmatic aura of the painting matches its patchwork provenance really well.

The modern history of Salvator Mundi begins in 2005, when Robert Simon, an American art dealer and expert, purchased it for less than $10,000 at a Hendry estate sale in Louisiana. The painting was horribly disfigured with age, wear and amateurish re-paintings. Initially, he didn’t even realize that he had stumbled upon a true rough diamond!

But there was definitely something that made the work different from dozens of similar Christ-themed paintings from the same period. Simon went on to consult with his colleague Dianne Modestini and other Leonardo experts. First, they assumed it was created by a da Vinci apprentice – a couple of dozen other Salvator Mundi copies have been well known to art scholars. But finally all doubts were erased: the author was no other than Leonardo himself. However, it took Simon and Modestini as much as six years to cleanse Salvator Mundi of the horrible re-paintings and whip it into shape.

With the help of fellow art dealers Alexander Parish and Warren Adelson, Simon hoped to sell Salvator Mundi to the Dallas Museum of Art in 2012, but the donors proved unable to raise $150 million, the trio’s asking price. It’s worth noting that selling the newly discovered Leonardo was no easy task at the time. Many still doubted it was real and very few considered paying $150m for what seemed to be the Cinderella story of the art world.

Simon’s hopes were raised again when a Russian billionaire expressed interest in Salvator Mundi. His representatives made an appointment to view the painting. Then the consortium of sellers was approached by Sotheby’s vice-chairman for private sales Samuel Valette, who told them that one of the house’s biggest clients wants to see the painting as well. That client turned out to be Yves Bouvier, a Swiss art dealer dubbed 'The Freeport King' for his ownership and operation of freeports (specialized hubs for transportation and storage of artworks) in Geneva, Luxembourg and Singapore. Yves Bouvier acted as an art agent and advisor to Dmitry Rybolovlev, AS Monaco football club president and former potash mogul, from 2003 to 2014. He was the billionaire interested in the painting all along. But knowing his fiduciary Yves Bouvier was on the job, he cancelled the meeting.

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The sellers were down to a single option. Hoping to receive at least $100m for the Leonardo, they sent Warren Adelson to Paris for final negotiations. Yves Bouvier didn’t show up and was represented by his close associate Jean-Marc Peretti, a Frenchman of Corsican origin who has been linked to illegal gambling and Corsican mafia. His final offer was $80m. Also present at the meeting was Sotheby’s Valette, who kept telling Adelson that the price was fair. The deal was closed.

What transpired afterwards was nothing short of shocking. Bouvier didn’t just hand over the Salvator Mundi to his employer, he actually re-sold it to the Russian adding a mark-up of $47.5m. Eventually he found out that Bouvier was scamming him all along. Pretending to be an agent working for a fixed commission, he actually purchased the works himself and flipping them to his employer adding mark-ups sometimes reaching to 80%. When the Russian became aware of Bouvier’s methods, he filed criminal complaints against him in several countries. He now believes the Swiss defrauded him of $1bn over the sale of 38 artworks that included Picasso, Modigliani, Klimt and others. The litigation is ongoing.

With the artwork already acquired, Bouvier wrote misleading emails to Rybolovlev’s assistants simulating 'hard-nosed' talks to justify the enormous mark-ups. Just like Peretti was pushing the price down while talking with the sellers consortium, Bouvier was driving the re-selling price up.

Bloomberg quotes an undated email, in which Bouvier wrote to the buyer that when he offered the sellers $100m for the Leonardo, it was "rejected without a moment’s hesitation". Driving the price down was “terribly difficult", he continued, but $127.5m is "a very good deal”. Imagine the reaction of Simon, Parish and Adelson when they learned that end-buyer paid $127.5m for “Salvator Mundi” right after Jean-Marc Peretti had told them that anything above $80m was not an option. They considered themselves cheated and quite rightfully so.

When they consigned Salvator Mundi to Sotheby’s, they probably thought the house would have their best interests in mind. Richard Lehun, an attorney specializing in art and fiduciary law, said to Bloomberg that when an auction house agrees to act on behalf of a seller, as a rule an "agency relationship” is created. That means the auction house is legally bound to act exclusively in the interests of the seller, including getting the best possible sale conditions and price. After all, that’s what you pay your money for when you consign an artwork to an auctioneer. But it turned out that Sotheby’s would gladly roll over the sellers to aid its most precious client, Yves Bouvier.

Moreover, the auction house was prepared that its business practices would come into question at some point and so filed a pre-emptive suit in the federal court in Manhattan claiming it had done nothing wrong. "It was clearly filed by Sotheby’s to spin their egregious behaviour in the face of media scrutiny rather than for any legal purpose,” the sellers of Salvator Mundi said in a statement.

The story of unlikely discovery of Salvator Mundi started off like an adventure movie but it all quickly became ugly when the likes of Bouvier and Peretti appeared, and Sotheby’s would appear to have prioritized their own interests over those of the sellers and the end-buyer.

Perhaps it has something to do with art market’s extreme opacity that makes an ideal environment for dubious characters looking for easy money. You just never know for sure which is which and who is who in the fine art business.

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