Looks like us Canucks have our own crime busting super hero....
Way to go Herbert.
Montreal art collector gets his just rewards
Launched suit: Sotheby's, Christie's to pay nearly $600M in price-fixing case
National Post
Herbert Black's antique furniture is considered among the best in North America.
Donna Terek, The Associated Press
Alfred Taubman, who was forced to resign from Sotheby's, was also a director of Livent Inc.
Sotheby's and Christie's, the world's biggest auction houses, have been forced to pay nearly US$600-million to settle allegations of price fixing following a class-action suit launched by a Canadian businessman.
Herbert Black, who runs a scrap metal company in Montreal and is an avid art collector, said yesterday he had felt "used and abused" by both companies for years and finally launched a lawsuit this year on behalf of thousands of collectors.
"I had a strong feeling as to what was going on," Mr. Black said. "You feel kind of stupid if you are being taken advantage of and you can't do anything about it. So it took some time, two years, and we did something about it."
The lawsuit, which was followed by several others, alleged that Sotheby's and Christie's colluded for eight years over the fees they charged buyers and sellers during auctions of art, furniture, jewellery and other collectables.
The companies control 95% of the world's auction trade, which is a US$5-billion a year business. They also enjoy a prestigious place in the art world.
The allegations sparked a furor in the art world and forced the resignation of Sotheby's chief executive officer, Diana Brooks, and chairman, Alfred Taubman, a Michigan shopping mall developer who took control of Sotheby's in 1983.
Mr. Taubman was also a director of Livent Inc., the Toronto-based theatre company that collapsed in 1998 amid allegations of fraud.
On Sunday, Sotheby's agreed to pay US$256-million to settle the lawsuits and another US$70-million to settled a suit filed by company shareholders. Of that amount, Mr. Taubman is paying US$186-million himself.
Christie's is also expected to pay US$256-million to settle the collectors' suit. However, both companies are still being investigated by the U.S. Department of Justice and officials in Europe and Australia.
Mr. Black declined to say how much he will receive under the settlement. "I'll come out of it very well," he said.
He has been collecting for 20 years and his antique furniture items are considered some of the best in North America. He also owns a Renoir that he bought in 1980 for US$1.76-million and he once owned a John Lennon guitar that he bought for US$20,000 in 1984 but gave to a charity.
Mr. Black, who started working in his father's scrap business as a teenager, gained notoriety in 1996 when he made nearly US$70-million in a series of risky copper trades. He lives in a $3-million house in Westmount, the upscale Montreal neighbourhood.
Mr. Black had an earlier tussle with Sotheby's. Last year, the company agreed to reimburse him for two antique chairs he bought in 1994 that were later found to be fake. He said that issue was settled amicably and the price-fixing suit was unrelated.
Mr. Black said that launching the lawsuit was difficult because everyone in the art world knows each other.
"People were opposed to me doing it. They felt that it was fruitless and the comments I heard were, 'These are friends of yours. How could you do this?' " he said. "I probably lost a few friends by doing it."
Mr. Black said he felt compelled to sue because the companies began working too closely together. According to the lawsuit, they started co-ordinating auctions in 1992 so as not to conflict with each other. Company officials also allegedly met secretly to increase and set fees charged to buyers and sellers. They stopped negotiating special fees to top clients such as Mr. Black.
"It wasn't just the financial aspect of it, it was the moral aspect of it," he said. "These were my friends."
Mr. Black said he feels sorry for the executives who resigned.
"There is new management and I'm sure whatever happened, happened. There is no future in the past, one has to move forward," he said.
Scrap with auction houses
Collusionary pricing practices at Christie's and Sotheby's
Linda Frum
National Post
Wendy Longlade, National Post
Herbert Black received a settlement from Sotheby's and Christie's: "I might give the money to charity."
Displayed on a massive mahogany desk in Herbert Black's Westmount library, inside the treasure-filled, $10-million Georgian castle he built for himself three years ago, are two jewellery catalogues for an upcoming Sotheby's sale in New York. Some of the pages, filled with pictures of antique ruby rings and Cartier diamond bracelets have had the corners folded over -- suggesting that bids are likely to follow.
"Looks like there's no hard feelings," I say to the man who launched a civil class action lawsuit against Sotheby's and Christie's for price fixing that resulted, two weeks ago, in a US$512-million settlement. (The exact amount of Mr. Black's share has yet to be determined.)
"No! Not at all," says the handsome, well-dressed Mr. Black expansively. "I am prepared to move forward and put what happened behind us. And I hope they have the same feelings. I would like peace. And I think that they should respect that had they not done what they did, I would not have done what I did."
According to Mr. Black, and the U.S. Justice department, what Sotheby's and Christie's did was rip off their clients with collusionary, non-competitive pricing practices. And then, what Mr. Black did was to break rank with his multi-millionaire collecting friends and sue.
The son and grandson of Montreal scrap metal dealers, Mr. Black, who owns the Montreal-based American Iron and Metal Co., and who has made a large fortune in metal and copper trading (on one remarkable afternoon in 1996 he made $30-million in a single day of trading) is not the sort easily taken advantage of.
At the same time as his former friend, the ex-CEO of Sotheby's, Dede Brooks, is staring down a choice between a three-year jail term and ratting-out her former employer, the popular and socially prominent billionaire A. Alfred Taubman.
Mr. Black and I sit in his sumptuous, silk-walled study and talk about the case from his cozy and victorious perspective.
We are sipping Earl Grey tea from delicate Ginori china cups. Surrounding us are the fabulous objects that earned Mr. Black his place -- along with Bill Gates and Steve Martin -- on ARTNews magazine's list of the top 200 collectors in the world.
New York Magazine once described the gregarious Mr. Black as a "maverick." What they probably meant was that he is a man who has amassed one of the most important collections of Georgian furniture in North America and yet who lives in Quebec -- and only Quebec -- an oddity in an art world that revolves around the axis of New York, Palm Beach and London.
But Mr. Black has made his presence known. In 1980, when he paid a then record US$1.76-million for Pierre-Auguste Renoir's The Little Gypsy Girl, he became a member of the connoisseur class vigorously courted and coddled by the auction houses. "A New York art dealer joked with me at the time that I had just bought myself free lunch and dinner in New York and London for the rest of my life."
Before 1992 -- in the years when Sotheby's and Christie's were genuinely competitive -- there was no end to the generosity they would bestow on their best customers. Mr. Black was routinely invited to black tie galas and swishy openings, like the one he attended for the American Ballet Company. Christie's gave him a complementary membership to MOMA, worth thousands of dollars. But the most valuable perk for a leading customer like Mr. Black was that when he sold something, he was not required to pay a seller's commission fee.
"It was complementary because they were collecting on the purchase side," explains Mr. Black. "When I was selling something they would sell it gratis, they would pick up the transportation, the insurance, the cost of the photography, they'd pick up all the expenses related to the sale."
And then, in 1992, the generosity abruptly stopped. "Christie's told me that they would have to start charging commission on sales. And so I approached Sotheby's to try to negotiate a better deal. The person at Sotheby's didn't exactly laugh in my face, but I could tell by the look on this individual's face that there would be no deals.
"I was told, in effect: 'It doesn't matter whether you're at Sotheby's or Christie's, there is no negotiation.'"
He was certain that something unorthodox was going on, but Mr. Black continued to do business with both houses. He had no choice. Together they control 95% of the US$4-billion worldwide auction market. But his resentment did not go away. Then, a year ago, he received a call from a contact at Christie's telling him that Christie's, under pressure from the U.S. Justice Department, had turned in evidence of collusion with Sotheby's, in return for amnesty in any future criminal proceedings.
"And I said, well all that's fine," explains Mr. Black. "But what are you going to do to put it right with me? Merrill Lynch paid Orange County US$400-million to settle their differences. Goldman Sachs, with a group of others, paid the pensioners from Maxwell US$400-million. So what do you guys plan on doing? And he started laughing. That upset me. He was calling to tell me he took from me. That it was illegal. That it was wrong. And that there would be no compensation." Mr. Black decided on the spot to sue. But to his surprise, he had few supporters.
"When I initiated the suit, I called around and tried to see if there were other collectors who would go along. I had friends in New York who said, 'If you have the nerve to do it, you should, but we won't go along.' One friend in Washington said he would go along, and then he withdrew. The response I got from a lot of people was: 'We know you're right, but these people are our friends. And you don't do things like this to your friends.' And my argument was: 'If we're such good friends, why did they do this to me?' It was business for the auction houses. And so it's business for me."
Only 16 people added their names to Mr. Black's class action suit, and none, in his words, were people of "substance."
So why not? Why didn't the connoisseurs of New York, Palm Beach and London want revenge?
"The people who didn't want to sue are the people who go to the parties, and the dinners and the lectures," says Mr. Black. "They are intimately, socially connected to [the owners]. They are not prepared to put that friendship on the line. They're prepared to close their eyes and let it go away. A lot of people don't like confrontation, especially at that level. And after all, how can they sue their friend Dede Brooks? And their friends, the Taubman's? I mean, forget it! And for what? US$200,000? US$500,00? A million?"
"You mean for lunch money?"
"C'mon!" says Mr. Black by way of saying: 'Duh.' "And in the meantime, their names are in the newspapers. And people are talking about them."
"So to them, your settlement case was vulgar?"
"I can't say that. I think it's more that no one wants to make a public statement saying that they've been had. It's embarrassing."
Mr. Black is not embarrassed. And indeed, the fewer people who make claims, the more there will be left in the pot for him. I suggest to Mr. Black, who is divorced, the father of two and the grandfather of six, that most of his earnings will likely be spent on art.
He laughs. "I don't know. It's not relevant, truthfully. Whatever they write me out a cheque for, it doesn't matter. If I'm going to buy something, I'll buy it anyway because I'm not currently living on a budget," he snorts. "I might decide to give the money to charity. In fact, just sitting here, thinking of what to do with that money, I realize that I haven't thought about it before. I most likely will give it to charity. Maybe I'll give it to a children's hospital. Because this was never about money. It was about doing what's right."
"And the next time you walk into an auction in New York, what will the reaction to you be?"
"Well," says Mr. Black, a huge grin passing along his face, "we'll have to see." Clearly, he's not worried about it. That's what a US$512-million settlement can do for a guy.
Art magnate pleads guilty to price-fixing
Former Sotheby's head: Charges stemmed from suit launched by Montreal man
Paul Waldie
National Post
(Herbert) Black
Diana Brooks, the former head of Sotheby's, one of the world's largest auction houses, pleaded guilty yesterday to charges of price-fixing and faces up to three years in jail.
Sotheby's also pleaded guilty to the same charge and agreed to pay a US$45-million fine.
The charges are part of a lengthy criminal investigation that was prompted in part by a class-action lawsuit launched this year by Herbert Black, a Montreal businessman and prominent art dealer.
Mr. Black was among the first art collectors to allege that Sotheby's and Christie's engaged in price-fixing for eight years. The two companies control 90% of the world's auction market, which is worth about US$5-billion per year.
Last month, Sotheby's and Christie's agreed to pay nearly US$600-million to settle the class-action lawsuit.
"Those charged today were engaged in classic cartel behaviour," said A. Douglas Melamed, acting assistant attorney-general for antitrust, at a Washington news conference. "Price fixing pure and simple."
Yesterday, Brooks, 50, stood in a Manhattan courtroom and made the plea. Known as Dede, she was once one of the most powerful people in the art world. She had been with Sotheby's for 20 years and was credited with helping it turn around.
"I think she was a victim," Mr. Black said yesterday. "I have known Dede for several years. I worked with her. I enjoyed my relationship with her. I'm sad about what's transpired. She was placed in a very difficult position."
As part of her plea, Brooks has agreed to co-operate with investigators who are still probing both companies.
It is alleged that the companies colluded to increase and fix fees they charge buyers and sellers of art and other collectibles. Christie's has also agreed to co-operate with investigators and it may be exempt from any prosecution. Brooks' co-operation could put pressure on Alfred Taubman, Sotheby's former chairman, who took control of the company in 1983.
Mr. Taubman, 75, has denied any wrongdoing.
He and Brooks resigned last February shortly after Mr. Black filed his lawsuit.
Last month Mr. Taubman, a Michigan-based real estate developer, agreed to pay US$186-million of Sotheby's share of the class-action settlement.
Meanwhile, Sotheby's is trying to put the allegations behind the company.
"The behaviour that led to today's plea was wrong and is unacceptable," said William Ruprecht, president and chief executive officer of Sotheby's.
"On behalf of Sotheby's, I apologize to our clients for this breach of the standards of trust that they have the right to expect from us, and assure them that no member of Sotheby's current management played any role whatsoever in these events or was aware at any time that they were taking place." |
