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Alfred Taubman

Christie’s Firing Exec Ignited Probe
Anger Drove Revelation Of Auction Price Fixing
October 08, 2000|By New York Times News Service.

NEW YORK — Last December, Christie’s, the London-based auction house, was forcing out its chief executive, Christopher M. Davidge, who had fallen from favor with the company’s new owner.

Christie’s executives and lawyers played tough, and negotiations turned bitter as Christmas approached.

Davidge, a third-generation employee of Christie’s attuned to slights in an upper-class society where he never felt comfortable, was angered over what he regarded as a paltry severance package, two friends said.

After all, he had driven Christie’s from perennial second place to the equal of its longtime rival, Sotheby’s.

But the friends said he was more worried that he was being set up to take the blame if an antitrust investigation by the Justice Department in New York ever came to life.

So when Christie’s demanded all of his business records, Davidge turned the tables and produced a bonanza. He dug out private files of his handwritten notes to Christie’s one-time chairman, Anthony Tennant, and gave them to his lawyer, who, by late December, had dumped them in the laps of the company’s criminal lawyers in New York.

The impact still reverberates through the $4 billion-a-year auction world.

Those files described years of price fixing and collusion between Davidge and his counterpart at Sotheby’s, Diana D. Brooks. They recounted secret conversations and meetings in apartments, restaurants and limousines to discuss fixing commissions paid by thousands of customers, dividing rich clients and a host of other steps to stifle competition and pump up profits.

The nearly 500 pages, filled with incriminating detail, were a road map to what A. Douglas Melamed, a senior Justice Department official, described last week as “classic cartel behavior–price fixing, pure and simple.”

The impact of the records was immediate at Christie’s. Before January was out, the auction house threw itself at the mercy of the government, offering to cooperate in exchange for amnesty.

Interviews in recent months with lawyers, auction house employees and other people involved in the criminal and civil cases provided new information about how the scandal unfolded and where it might be headed.

Because the investigation continues and the civil settlement has not been approved by the judge, most of those interviewed spoke on condition that their names not be used.

In hindsight, Christie’s refusal to be generous with its departing chief executive might be one of history’s clearest lessons in being penny-wise and dollar-foolish.

Throughout the year, the scandal has unfolded amid the drama of resignations by Brooks, and her boss, A. Alfred Taubman, the chairman of Sotheby’s, as well as a $512 million settlement of civil suits against the auction houses and last week’s guilty pleas to criminal charges by Brooks and Sotheby’s.

Taubman, who owns a controlling interest in the Manhattan-based Sotheby’s, was forced to resign as chairman in February. He has been named by the government as a target of its investigation. Taubman and Tennant, both of whom have been identified by Davidge as the instigators of the collusion, have denied any wrongdoing.

The conspiracy between the two houses started at least as early as April 1993, according to admissions by Brooks and Sotheby’s in U.S. District Court in Manhattan.

In statements to federal antitrust prosecutors, Davidge said Tennant told him he had met with Taubman, and that the two had agreed to make their businesses more profitable by coordinating various matters.

Davidge said that Tennant then instructed him to meet with Brooks to work out the details, said several people involved in the probe.

One document turned over by Davidge was a memorandum to him from Tennant that could be interpreted as authorizing the scheme after a meeting with Taubman, people who have seen it said.

Most of the voluminous Davidge records, however, are his handwritten reports to Tennant about meetings with Brooks, covering the subjects they discussed and outlining the agreements they reached.

It is unclear how much evidence exists that Taubman or Tennant initiated the conspiracy or intended to break laws. Brooks has told prosecutors that she was acting on the instructions of Taubman.

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