Hong Song-won of Seoul’s Gallery Seomi was arrested for her role in selling 10 artworks owned by the daughter of a Korean Chaebol head and wife of the current Chairman. The 10 works were sold before Korean courts could seize 330 works of art in a storage facility which authorities sought in a tax evasion and embezzlement case against the couple. But the more valuable information in this story is the way in which wealthy Korean families have been using art works to fund and facilitate illicit payments.
Here is where Hong Song -won’s story becomes relevant:
Korean chaebol owners often collect artwork using slush funds as the value of the pieces changes frequently, and it is easy to avoid tax.
Her name first came to the fore in 2008 when an independent counsel investigated the allegation that Hong Ra-hee, director of Leeum, Samsung Museum of Art, purchased Roy Lichtenstein’s 1967 painting “Happy Tears” and other pieces through Seomi using part of a slush fund raised by Samsung. The gallery head disclosed the painting, claiming she had bought it and it was kept at her storage facility.
Three years later, Hong returned to the spotlight after she filed a 5 billion won lawsuit against Hong Ra-hee. The Seomi director accused Hong Ra-hee and the Samsung Foundation of Culture of paying just 25 billion won of an outstanding bill of 78.1 billion won for 14 works of art purchased between August 2009 and February 2010. But she later dropped the case, saying “the misunderstanding was straightened out.”
In October 2011, Hong Song-won was given a suspended two-and-half-year jail term for helping Orion Group Chairman Tam Cheol-gon hide illegal funds through purchasing artwork and laundering money via trading certain pieces.
She later was also involved in similar cases with former National Tax Service Commissioner Han Sang-ryul and Namyang Chairman Hong Won-sik, which involved the late artist Choi Wook-kyung’s “Hakdong Village.”
Most recently, she was investigated over suspicions of assisting the CJ Chairman Lee Jae-hyun by inflating the cost or forging papers in the purchase of artwork. Lee and his family allegedly purchased a total of 138 famous paintings worth 142.2 billion won through Gallery Seomi between 2001 and 2008. Among the items are high-value pieces by leading contemporary artists such as Andy Warhol and Jeff Koons.
Steven Murphy’s impressive PR machine at Brunswick has pulled off another coup for him. The Financial Times offers a story about auction houses keeping up with advances in tech. The story itself doesn’t offer much revelation but it does put Murphy at the center of it.
Christie’s has created a CRM platform much like any bank or real estate sales operation to try to centralize (and control) client information better and not be at the mercy of a staff that may depart:
Christie’s now has James Map (as in founder James Christie), a sort of private internal social network that allows specialists, client service staff, support staff and executives to see what is known about a client and his tastes. Past auction records, relatives’ purchases and sales, statistical inferences on how likely clients are to move from buying an expensive watch online to participating in a high-end evening sale – it all can be in the mix.
The idea, Murphy explains, was “to create an internal app that spiders into our database of information and brings up on our internal [screen] environment lots of connectivity. This is faster and better than the email chains [that it replaced].”
Perhaps more interesting and significant is the way the company is trying to make it easier to get lower-value objects vetted by the right person:
Auction houses used to regard the sale of smaller, cheaper objects from, for example, estate liquidations as an annoying loss-leader business that just wasted their specialists’ time. Now, however, many are making money selling objects for $2,000-$3,000; it’s just a matter of cutting transaction costs. “We have a new app with which you can take a picture, push a button, and it goes to a specialist, with a description. Then the specialist can decide if it might fit into an auction,” says Citron.
Reuters’s story on the opening of the Luxembourg freeport contains some interesting information from Tony Reynard, the head of the Singapore freeport owned by the same company. There are plans for additional freeports in Dubai and Shanghai:
Luxembourg and Singapore’s majority owner is Yves Bouvier, a Swiss businessman with an art storage and shipping service already operating in Geneva, a city which set up its first freeport in 1854.
“We had to move on to Luxembourg because Geneva was full. With Luxembourg we have an airport that can handle cargo. In Geneva you have to move everything by road,” he told Reuters.
Reynard said there were plans to set up a similar operation in Dubai and, possibly, Shanghai – both home to large number of potential affluent clients, keen to have their treasures stored securely and confidentially in exchange for a fee.
The folks at Wealth-X have released their billionaires census which tracks everything about the world’s billionaire population, including that 23% of them attend some sort of an art-related event:
Globally, the billionaire population has reached a record 2,325 people, which is a 7 percent increase from 2013. Their total net worth of $7.3 trillion is 12 percent higher than last year’s net worth and higher than the combined market capitalization of all the companies in the Dow Jones Industrial Average.
“North America—the region with the most billionaire wealth in 2013—was overtaken by Europe in terms of billionaire wealth in this year’s census,” said the report. However, the U.S. maintains its position as the world’s top billionaire country, with 571 billionaires in 2014.
Here are other countries with a high concentration of billionaires:
United Kingdom: 130
Hong Kong: 82
Saudi Arabia: 57
At the center of the Brett Whiteley art forgery case in Australia is the disgraced dealer Peter Gant. Gant still staunchly defends his innocence in the case of two Lavender Bay paintings that are said to have been created by Mohammad Siddique. Gant has given up on his life’s work and reputation but hopes the potential trial to resolve the charges will exonerate him and Siddique:
“What friends?” Gant laughs bitterly, showing his stained teeth. “I’m persona non grata. My best friends are my wife and my children.” […]
Gant tells me he has been subjected to malicious campaigns, errant reporting and “fucking witch trials” in the past. He says people wilfully misconstrue him, and that “rich bastards have made up their minds about me”.
He concedes that his reputation is unsalvageable now, and speaks fondly of people who he admits would probably “pretend not to know me if you asked them”.
Gant seems simultaneously proud and disappointed in his status as a pariah – but he will not allow contrition to soften his position. He insists that he has done nothing wrong, other than to associate with dilettantes. Gant has rallied in the trench, but there are a lot of forces advancing on his position.
We’ve spoken now for four hours and Gant has lost track of time. He’s startled when he looks at his watch – he’s due back in Geelong in an hour for a family event. He needs to get to the train station, and quickly. “I hate Melbourne now,” he says. “No one knows me in Geelong.”
He takes a final swig of his wine before he departs. “I don’t give a flying fuck if it goes to trial or not. If it goes to trial at least we can prove authenticity – otherwise there’s doubt.”
Whiteley or wrongly: alleged con man opens up on art fraud charges (The Saturday Paper)
The Mexican authorities have imposed new anti-money laundering rules on a broad range of businesses including art galleries. The Washington Post reports that these new rules, which demand greater disclosure to galleries and authorities about art buyers, are putting a big crimp in sales:
“The art in Mexico is marvelous. It is superb,” [Guillermo] Zajarias, the owner of Aura gallery, said. “The market should be growing. But it has totally frozen.”
Zajarias and other art dealers here blame their recent troubles on a new law intended to uncover the hidden profits in the lucrative world of Mexican drug trafficking. The government is now demanding more information from a wide range of businesses about who their customers are and how much they are spending. The new anti-money-laundering regulations have many supporters among those who fear the turbulence of an economy awash in narco dollars.
But gallery owners and auction-house directors here say they have become collateral damage. Since the law went into effect last year, Zajarias estimates that sales at his gallery in the posh Lomas de Chapultepec neighborhood have fallen by 30 percent, a figure echoed by other gallery owners.
“And it’s 100 percent related to this law,” he said. “This is fiscal terrorism and it is not fair.”
Mexican art galleries suffer as drug-money laws end anonymous cash buys (The Washington Post)
The two Gaitondes previously owned by George Gund made $1.085 and $1.685m each at Bonhams this week:
Hundreds of bidders from all around the world participated in one of the season’s most anticipated auctions. Bonhams’ Indian, Himalayan & Southeast Asian auction on September 17 brought in a total of over $4.7 million in sales.
All eyes were on the phone bank that was buzzing with activity as the bids for the two star lots—the paintings by V.S. Gaitonde—rose higher and higher until finally, Untitled, 1961 sold for $1.085 million and Untitled, 1963 sold for $1.685 million, both to overseas bidders. Untitled, 1961, a darker work of a more dramatic palette of black and indigo represents a transition, as he moved to develop his non-objective series. Untitled, 1963 is an incredible work that marks the beginning of Gaitonde’s classical style.
Amy Koler and Stephen Meyer sued American Fine Art Editions, managed by Phillip Koss and another employee, Jeff Dippold, for selling a Warhol they were keeping with the gallery in exchange for the gallery being able to display it:
In 2009, Koler and Meyer decided to move to St. Petersburg, Fla. and to keep much of their artwork in a home in Arizona, but sought to store the “Red Shoes” piece.
Koss – American Fine Art’s gallery manager – and gallery employee Dippold “suggested that plaintiffs keep the Red Shoes piece at AFAE’s gallery and an arrangement by which AFAE would agree to store and insure the piece through AFAE’s business insurance in return for plaintiffs’ agreement that AFAE could display the piece and use it to help market sales of other similar works. The defendants knew from their discussions with plaintiffs that plaintiffs intended to keep ownership of the piece and not to sell it,” according to the complaint.
Koler and Meyer say they spoke with Dippold a number of times over the years, and he failed to mention any plans to sell the piece, and they repeatedly told him they were not interested in selling it.
They travelled to the gallery in Scottsdale this year, and found that the defendants had sold the Warhol.
“Defendant Dippold claimed that the defendants sold the ‘Red Shoes’ piece ‘months ago,’ and asked, ‘didn’t Phil call you?’” the complaint states. […]
Dippold offered to pay $65,000 – the amount the plaintiffs paid for the piece, but its value today is far higher, Koler and Meyer say.
What Happened to My Warhol? (Courthouse News Service)
The Artelligence Podcast spends a little time talking to LAMA’s Peter Loughrey about the growth of his regional auction house and LA’s distinctive art and design collecting culture:
Peter Loughrey is an established curator, trusted consultant, and a well-recognized expert in Modern Design & Fine Art. He is a prominent figure in the Los Angeles Modern Art & Design community through his involvement at LACMA as a member of the Decorative Arts and Design Council and Contemporary Friends, as well as his contributions to Taschen books. Not only is he a repeat appraiser on PBS’s “Antiques Roadshow”, but he has also been featured on Forbes’ “Sold!” on Ovation TV.
Peter co-curated many Los Angeles gallery shows, including “Gio Ponti: Furnished Settings & Figuration” (2004) and “Dutch Design” (2005), both at ACME Gallery, in addition to co-curating and publishing a catalog for “Gaetano Pesce: Pieces from a Larger Puzzle” at Los Angeles’ Italian Cultural Institute (2010). He has also written numerous articles and was a contributor in the books Case Study Houses (Taschen 2003), Julius Shulman Modernism Rediscovered (Taschen 2007), and Collecting Design (Taschen 2010). He was named one of the 50 most powerful dealers in the Art + Auction “Power Issue” for two consecutive years.