Owner of auction house accused of market manipulation
Rodney Menzies has denied consigning and then buying works from his own collection
By Elizabeth Fortescue. Market, Issue 194, September 2008
Published online: 11 September 2008
SYDNEY. The owner of two of Australia’s leading auction houses has had to deny rumours that he is buying back his own works, culminating in a complaint to consumer authorities and a push towards industry self-regulation.
Rodney Menzies, the millionaire businessman and chairman of Menzies Art Brands, had made no secret that Picasso’s 1954 portrait Sylvette—that was put up for sale in his Deutscher-Menzies saleroom on 18 June—was being offered from his own collection.
The work fetched the highest ever price for a painting at an Australian auction when it sold within estimate for A$6.9m ($6.5m), including the buyer’s premium of 20%. The day after the sale, however, he was forced to deny rumours that he had not only sold it, but had bought it back. At the time, Menzies Art Brands said the painting had been sold to a buyer in New York, and Mr Menzies, who also owns Australia’s Lawson-Menzies auction house, said the rumour that he had repurchased his own painting showed the depth of industry jealousy towards him.
Shortly after this, media reports in the Australian Financial Review and television network ABC’s Four Corners programme questioned the way in which Mr Menzies ran his business. Allegations were made that he had, on previous occasions, sold and bought back his own paintings through his auction company, and
that this was tantamount tomarket manipulation.
The day after the Four Corners programme aired on 28 July, a number of auction companies became joint signatories to a complaint to the Australian Competition and Consumer Commission, which centred on allegations relating to false and misleading conduct by Menzies Art Brands under the country’s Trade Practices Act. It has not yet been determined whether the auction house has a case to answer.
The spokesman for the group of rival auctioneers, Tim Goodman of auctioneer Bonhams and Goodman, would not name the other signatories to the complaint, but he said they were leading players from several Australian states.
In a statement to the media, Mr Menzies said that the complaints about his company’s business practices “seem to be drawn from a handful of small competing art auction houses”.
Meanwhile, Mr Goodman said the industry was now pressing ahead with plans for self-regulation under a new body tentatively called the Australian Society of Fine Art Auctioneers and Valuers.
However, in light of issues raised in the media, Mr Menzies said he had decided to amend Menzies Art Brands’ catalogues to advise that some works may be part or wholly owned by the auction house or by himself, and that some works may be the subject of a guaranteed minimum price to the vendor.
Mr Menzies also said he would review and update a number of conditions of contract, “including those relating to reserves, provenance, warranties and privacy of information, to further enhance the information provided in the best interests of the relationships and dealings between Menzies Art Brands and its clients”.
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