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London's Art World Blues

A font of British profit and pride has been rocked by a smuggling scandal. Now the business is struggling to preserve its credibility while its sales and global competitiveness are also under threat.


LONDON — Eager to get the best auction price for an 18th century oil painting, Victoria Parnall asked a respected art dealer in Milan for advice.

"I would smuggle it," replied Roeland Kollewijn, the Old Masters expert at Sotheby's, the Italian city's branch of one of the world's premier dealers. Illegally evading tight Italian export controls, the painting could go to London by truck for auction by Sotheby's there, he explained. Transportation cost: about $750. Possible gain between Italian auction price and London auction price: about $4,000.

"I'm not going to smuggle it until I have it out of this office legally," Kollewijn cautioned Parnall at Sotheby's Milan headquarters. "It's not that I don't trust you. It's just that this is such a filthy business."

Parnall was a reporter. A TV camera in a brooch she wore captured the moment, broadcast across Britain last month in a documentary on the underside of the London art market, one of the world's greatest.

Now, alarms are sounding in the sophisticated, market-for-everything capital, a magnet for buyers and sellers of art and antiquities since its days as the center of a world empire. Behind the glossy catalogs, the fairy-tale auction salons, the beautiful people bidding thousands with the flick of a manicured finger, trouble is building.

Challenged by scandal and intrusive European bureaucrats, the multibillion-dollar London art world is struggling to preserve its credibility and prestige while its profits and international competitiveness are also threatened.

"If there is bad news about one auctioneer, it affects us all in the minds of the public," said Roger Hollest, managing director of Phillips of Bond Street, a major auction house. "Now is a particularly sensitive time, because so much change is in the air. The whole art market is under a hell of a lot of pressure."

Economically, London art dealers face demands from the European Union to levy increased sales taxes and royalties. They fear that higher costs in a fiercely competitive business would push sellers away from London and toward less controlled markets such as New York and Geneva.

Ethically, the market is troubled by accusations that some of its members collaborate in art smuggling and in the sale of looted antiquities from the Mediterranean region, India and China.

The smuggling of the painting of an old woman by Giuseppe Nogari, a lesser-known Venetian artist, climaxed an investigation by Peter Watson, a British journalist and art expert who in 1991 was given hundreds of internal Sotheby's documents by a disaffected former employee.

Watson bought Nogari's "Old Woman With a Cup" in Naples, Italy, last year for about $15,000. Parnall, an Australian of Italian extraction, took it to Milan with her hidden camera and the story that it was among a group of Italian paintings she and her sister had inherited.

Expecting a collection of Old Masters from Parnall's supposed inheritance to also be consigned to Sotheby's, Kollewijn volunteered to smuggle the Nogari--a clear violation of company rules.

"They don't want to know I do it, but they want me to do it," Kollewijn told Parnall.

Diana D. Brooks, president and CEO of Sotheby's Holdings, said she watched the documentary in shock and pain.

"I couldn't believe it. I felt as if I had been hit by an express train, as if everything important to us in the world was being trampled. I was devastated, because our integrity means everything for us," Brooks said last week from Sotheby's headquarters in New York.

Age-Old Custom

Sotheby's, founded in 1744 and bought by American developer Alfred Taubman in 1983, is the world's biggest and most famous auction house. An art-world icon for more than 200 years, Sotheby's says its ethical standards are "the most stringent in the industry."

Spiriting the Nogari out of Italy was, on one level, a contemporary replay of a custom as old as history. Victorious Roman legions shipped home carved Egyptian columns; 2,000 years later, some of them still decorate piazzas in the capital. Successive conquerors, from Goths to Crusaders, Mongols and rampaging European armies--followed by latter-day archeologists and private collectors--burnished the take-it-home tradition over the centuries.

Today, however, the export of artistic patrimony is restricted or illegal in many parts of the world. Italy, for example, forbids the export of any art object more than 50 years old without permission. India has a 100-year threshold but almost never grants permission.

Yet newly arrived old Indian statues, Etruscan pots and Chinese vases regularly reach London, selling routinely at all the best addresses.

"A number of auction houses and dealers subscribe to a code of conduct. My impression is that they pay not the slightest bit of attention to it," said Colin Renfrew, a Cambridge University archeologist and member of the House of Lords. "The market in Old Master paintings is generally conducted to higher standards than the antiquities market."

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