Russian oligarch faces off against Sotheby’s in trial over art sales

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

A trial pitting Russian billionaire Dmitry Rybolovlev against Sotheby’s auction house began on Monday in New York, the latest stage in a sweeping legal saga that has roiled the art world.

Rybolovlev has sued Sotheby’s in Manhattan federal court and accused it of helping a high-profile art dealer vastly inflate the prices of famed pieces of art, including Leonardo da Vinci’s “Salvator Mundi”, before he purchased them.

Rybolovlev is seeking $377mn in damages from Sotheby’s as part of a long-running dispute over works he bought through Yves Bouvier, his agent for more than 10 years.

The oligarch claimed Bouvier posed as an agent helping to broker sales of the rare art, when in fact he was working as a dealer, buying the art from the auction house himself and quickly reselling it to Rybolovlev at a mark-up. Rybolovlev became a collector of valuable artwork after selling his holdings in Russian potash fertiliser producer Uralkali for $6.5bn in 2010. He also subsequently purchased AS Monaco, the football club.

He has alleged that Bouvier sold him René Magritte’s “Le Domaine d’Arnheim” and Amedeo Modigliani’s “Tête”, for substantially more than he had paid for them at Sotheby’s, and that the auction house provided documents to help ensure that Rybolovlev trusted the final price and obscure that Bouvier was the true owner of the art. He has described the 12-year scheme as “the largest art fraud in history”.

The case revolves around just four sales, a portion of the estimated $2bn of art Rybolovlev purchased from Bouvier over that time.

It provides a rare glimpse into the world of private art sales, where anonymity and discretion are typically paramount, and how transactions worth hundreds of millions of dollars are brokered between prestigious auction houses and the world’s richest collectors in secret.

Sotheby’s lawyers argued that Rybolovlev could not prove the auction house had involvement in any alleged wrongdoing.

“Sotheby’s business is to bring together a seller and a buyer and make a sale happen,” said Sara Shudofsky, a lawyer for Sotheby’s, in her opening remarks on Monday, in front of a 10-member jury that included a nurse, a nursery school teacher and a church organist. Selling art to Bouvier was in the company’s interests, it has argued, claiming it had no idea he planned to quickly flip the works for millions of dollars more than what he paid.

The auction house argued that Rybolovlev, who has amassed a fortune of about $7bn, did not take any measures to verify the provenance or the last price of the artworks he was purchasing, and said Rybolovlev had an “unreasonable” reliance on Bouvier. Rybolovlev “has every right to be mad at himself . . . for not taking the most simple, basic steps to protect [his] interests,” said Shudofsky.

Daniel Kornstein, a lawyer for Rybolovlev, called Sotheby’s involvement in the sales of the contested works a “trail of treachery”, and accused a representative for the auction house who worked closely with Bouvier on his purchases of helping to “plunder” Rybolovlev, by using Sotheby’s reputation to add credibility to Bouvier’s subsequent sales to the oligarch.

Kornstein drew upon another masterwork — “A Sunday Afternoon on the Island of La Grande Jatte” by pointillist Georges Seurat — when laying out the case to jurors. Looking at each individual piece of evidence, he said, “up close it is just dots”. But step back far enough, “and a picture will emerge”.

Bouvier, who was not a defendant in the Sotheby’s case, settled a separate criminal dispute in Switzerland last month, the last outstanding criminal case against the art dealer over the Rybolovlev affair. Another civil case against Bouvier in Singapore was also terminated as part of the settlement, the details of which remain confidential. He has denied any wrongdoing.

The federal civil trial in New York, which is expected to last a month, features a witness list that is a who’s who of the high art world including powerful dealers Larry Gagosian and Sandy Heller.