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M P F A  B L O G

Fraud and Forgery

Due to the unabated proliferation of fraud and forgery in the art market, and the scourge of establishment misattributions, we have logged further details of these grubby dealings in a number of our pages. Walter Osborne, Aloysius O'Kelly, Nathaniel Hone, Augustus Burke, Roderic O'Conor and Frank O'Meara are regularly forged but the list is endless. Much of the work of these particular artists is signed in block capitals, which are easy to copy for even the most ham-fisted of forgers. On top of this, the unfortunate collector is regularly stuck with the the clumsy misattributions of book-worm experts who spend far too much time in libraries and who lack the forensic skills of a of a well trained dealer, conservator or forensic analyst. We must then consider the appalling mistakes made by the 'Department Specialists' in the major auction houses and their extraordinary inability to assess a painting for excessive repainting and restoration. The result of all this is that many collections formed without proper expertise comprise on many occasions works that are significantly compromised in one way or another.

There is nothing worse in any market than malpractice, especially when it is combined with profound ignorance. One of our latest postings exposes further details of the murkier side of the art market in which we describe the recent history of two Paul Henry drawings we bought in New Zealand recently and their reincarnation soon after they left our hands. We describe a 'collector' who fraudulently invents a provenance for the drawings and an ignorant auctioneer who naively believes that a mundane VAT payment is sufficient to establish a concrete provenance. We describe how this mendacious operator reneged on an undertaking to rectify the misinformation given to the press by posting saleroom notices rectifying the false description. We describe a gullible Irish Times journalist who believes that once his copy is provided by his advertiser, it is fit for publication. To make matters worse, his editor, who is fully aware of the fraudulent nature of the operation, refuses to print a clarification or correction in spite of the much feted policy of the newspaper.

With the ink hardly dry on the Paul Henry scandal, we were obliged to write again to the same editor concerning a Louis le Brocquy forgery and the same lack of editorial discipline. We naively believed that we could embarrass the newspaper into taking action by charging them with malpractice in the following terms:

‘The sophisticated operators who use ignorant resellers such as Morgan O’Driscoll must be overcome with joy whenever they read about the success of their scandalous operations in your columns. The Irish Times puts itself forward as the leading broadsheet in the country yet you are perfectly happy to support this grubby trade without question in the greedy self-interest of selling advertising space’.

We have asked the editor if he ever takes into consideration the consequences for the unsuspecting reader who might be taken in by the misinformation published in his newspaper. We are still waiting for a reply. We have called again and again on The Irish Times to describe their ‘Art and Antiques’ page as an advertisement feature and to make it clear to their readers that the copy for these pages is effectively written by the advertisers.

The le Brocquy episode was exacerbated by the inclusion of a very convincing text in Morgan O’Driscoll’s auction catalogue written by the UCD academic, Dr Róisín Kennedy. However, to give Dr. Kennedy her due, she unhesitatingly admitted to being duped by the forgery. However, the affair highlights a serious issue in the academic world and raises the question as to whether or not active academics should involve themselves in the art trade. Their facility to write glowing prose is all too often overshadowed by their inability to weed out forgeries, which requires entirely different skills. The light in which an academic might be held by their students following a major blunder is hardly worth the risk. There is no shortage of scholarly publications for informed articles and this is surely a far safer avenue for any academic not properly aware of the murkier side of the art trade.

The Garda Bureau of Fraud Investigation is responsible for policing the forgery trade but their hands are tied by an appalling lack of resources. Moreover, the woefully inadequate structures of the Property Services Regulatory Authority encourages the sale of forgeries in Irish auction rooms as the flawed legislation under which the Regulator operates does not provide for the seizure of forgeries at short notice.

Self regulation of the auction trade is even more inadequate. According to the Royal Institute of Chartered Surveyors: “Behaving ethically is at the heart of what it means to be a professional; it distinguishes professionals from others in the marketplace”. These fine words are included in the RICS publications but they appear to have very little meaning. Their insincerity is further enhanced by the following: “We've created a clear and streamlined set of professional and ethical standards to guide our members and ensure that all those we deal with have confidence in us. There are five standards. All members must demonstrate that they act with integrity; always provide a high standard of service; act in a way that promotes trust in the profession; treat others with respect; take responsibility.” Adjoined to their logo, they display a further enticement: RICS - ‘the mark of property professionalism worldwide’. Morgan O’Driscoll uses this RICS logo at the front of his catalogues, presumably to instil a feeling of trust and confidence in those attending his auctions.

However, there are a few facts that bidders should know about before they fall for any of these advertisements. In 2011, we contacted the Royal Institute of Chartered Surveyors about the Osborne forgery sold by Adam’s Salerooms, Dublin, under the RICS pledge. Our correspondence was handled by the RICS compliance director who promised that she would take up the matter with Adam’s and revert to us as soon as her investigations were concluded. Despite numerous reminders, we received no response. In 2013, we contacted the Royal Institute of Chartered Surveyors again about the standard of Adam’s cataloguing. We were promised a response within two weeks. Three years later, we are still waiting.

We considered contacting the Royal Institute of Chartered Surveyors regarding the standard of Morgan O’Driscoll’s cataloguing but we see little point as it appears that there is very little difference between the standards set by the Royal Institute of Chartered Surveyors and the Property Services Regulatory Authority where light touch regulation seems to be the order of the day.

The majority of auctioneers and dealers make every effort to run an honest business. It is a shame that their endeavours are thwarted by such a small few.


If you have an interest in exposing malpractice in the art market, you can help by adding a link on your website to our fraud and forgery pages.


Caveat Venditor

Some time ago, one of the major auction houses advertised a valuations day in Dublin for a forthcoming sale in London. I canvassed a number of clients and assembled half a dozen paintings for the specialist’s visit. Two were consigned, each the property of different owners: a study after one of the early Masters and a sketch by a rare Italian artist. Both were destined for a much publicised sale. However, without our knowledge or consent, the study was diverted to a secondary venue where, unsurprisingly, it was left unsold, even though it carried a very realistic reserve. The sketch was over-estimated by the specialists and also left unsold in the main sale.

The auctioneers refused to re-offer the sketch with a more realistic reserve in their subsequent sale because: "we don’t re-offer unsold lots in our important sales". To put it another way, the value and saleability of the painting had been tarnished or burned to in trade jargon. The auction house wanted our client to re-offer the painting in an unimportant sale months later. It’s a bit much to expect anyone to have to wait for over a year for their painting to be sold so this offer was rejected and a request was made for the return of both paintings to Dublin. However, the auctioneers refused to deliver the painting until ‘unsold’ charges were paid. The pre-auction confirmation indicated a minimum unsold charge of £0.00 per lot and no illustration fees had been agreed. In any event, as we shall see below, whether or not charges of any sort might have been due is debateable and is not the point of this article.

The study was eventually downgraded even further and despatched to a provincial outlet of the same firm where it sold for a fraction of what it had been expected to make in the high flying London catalogue. We now come to the sting in the tail, or should I have said tale. Disregarding the fact that our client had graciously agreed to a 50% reduction in the reserve, the auctioneers sent us a cheque for a pittance in settlement of the ‘sold’ account. On top of the buyers premium and sellers fees, deductions were made for, shipping, insurance and catalogue illustration. However, to add insult to injury, the ‘unsold charges’, which the auctioneers were claiming against our second client were levied against our ‘Master’ client’s sold account, even though they knew that we were acting as agents for two different clients. Needless to say, we took them to task and they eventually returned the second painting and sent us a paltry second cheque to make up the balance on the ‘sold’ account. The affair dragged on for the best part of a year and cost us a great many hours in unpaid work. However, just in case there might be any misunderstanding, the auctioneers did eventually meet all of their legal obligations to our clients and it seems fairly clear that the reason for the fiasco was that one department had no idea of arrangements made by their colleagues.

The point of this article is to demonstrate the difficulties, which can be encountered in dealing with a large auction house, even for a professional, and this particular firm might not be any worse than their competitors in this regard. Caveat Emptor is a phrase often quoted in the art business. However, from a seller’s point of view, Caveat Venditor is far more important and one should be aware of the pitfalls, which might lie in wait for the unwary. To end on a more positive note, some of the smaller auction rooms might be much easier to deal with and we would be very happy to pass on some suggestions on request. Better still, appointing an experienced dealer to sell your paintings privately can save you as much as 25% in costs and give you a quicker return without the danger of spoiling the desirability of your paintings by having them burned and branded as unsold lots.


Droit  de Suite



Dominic Penny b.1948
On the Vartry River, Wicklow, Summer Corn

Oil on canvas, 11 x 15 inches. Signed by the artist
Euro 3,250. This painting is for sale free of Droit de Suite.
Waiver: All sale and resale rights under Droit de Suite have been waived by the creator of this painting.

Dominic Penny. 24th February 2013

The European Union Directive on Droit de Suite (also known as the Artists Resale Rights) is invalid as it binds all Member States to the social welfare systems of other Member States. Droit de Suite was first introduced in France in the 1920s as a social welfare measure to assist impoverished artists. However, under the Treaty of Rome, every Member State is entitled to its own social welfare arrangements. Apart from this, as an art dealer, I refuse to collect Droit de Suite royalties because the Directive infringes a number of fundamental rights to which I am entitled as an Irish citizen, and which are enjoyed unhindered by traders in other goods throughout Ireland and the European Union.

The Directive also infringes European Union standards under which Member States trade with each other. For example, under the 7th VAT Directive, an important principle was established whereby traders accounting under the Margin Scheme are allowed to charge VAT on the profit margin only. The Directive on Droit de Suite is an infringement of this standard because the levy is charged on the gross sale price. In very many cases, it is the expense incurred by the dealer, which raises the price of a painting above the threshold. These costs relate to framing; printing; marketing; receptions; and general overheads, and are often higher than what was paid to the artist for the painting in the first place. However, there is no allowance for these costs in the threshold calculations. Effectively, this means that a dealer becomes liable to pay a royalty to an artist as a result of his own effort and expenditure in promoting the artist, and is obliged to pay a royalty calculated on the extent of his own outlay. Furthermore, if the dealer is forced to sell at a loss, the royalty is still payable. All of this is in conflict with the basic principles of common law. For this reason Milmo-Penny Fine Art Limited claims the right to sell the work of any artist who has signed a waiver declaring that his or her painting can be resold free of Droit de Suite. This waiver can be in the form of an endorsement on the back of a painting or a simple waiver document as set out in the example above.

As an artist, the introduction of Droit de Suite has severely infringed a number of rights, which I have enjoyed as an Irish citizen since birth:

  • The fact that the resale rights are inalienable means that my fundamental rights to private property have been infringed;
  • I am entitled only to limited copyright on works that I create;
  • my rights to form a contract under my own terms and conditions are severely restricted;
  • my testamentary rights have been encroached upon and severely curtailed.

Bunreacht na hÉireann, the Constitution of Ireland, enacted by the people of Ireland on the 1st July, 1937 states at:
ARTICLE 43. 1. 1° The State acknowledges that man, in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods.
ARTICLE 43. 1. 2° The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath, and inherit property.

Furthermore, Article 17 of the Charter of Fundamental Rights of the European Union states: Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions.

Droit de Suite is a gross infringement of these rights. Prior to the introduction of Droit de Suite, I enjoyed full control over the copyright of my own work, and paintings which I had bought by other artists. The Directive on Droit de Suite interferes with these rights as it gives an outside agency the right to collect levies on my paintings whenever they are resold. The rights under the Directive are inalienable, which means that I am denied the right to opt out of the scheme. The Irish Government mistakenly believes that the Directive can be side-stepped by allowing artists the option of joining a collection agency or not. Brian McCabe, Intellectual Property Unit of the Department of the Enterprise, Trade and Employment states: “If an author chooses not to pursue that right, then that is a matter for the author.” That of course is as it should be. However, he is overlooking one of the terms of the Directive, which clearly states that the rights are inalienable. In effect, this means that artists are not allowed to decide for themselves whether or not they wish to be paid a royalty. They are denied choice, and the right to decide on a fixed and final price for their work. This is entirely unacceptable in a free democracy.

Under the Treaty of Rome, every Member State of the European Union is entitled to their own law of contract. However, the rights that I have enjoyed under Irish law, prior to the introduction of Droit de Suite, have been infringed. The Directive does not allow me to form a contract for the sale of a painting, which includes free and unhindered copyright. My testamentary rights have also been infringed. Prior to the introduction of Droit de Suite, I had the right to bequeath my paintings to my heirs or to others free of any encumbrance.

I retain full copyright over my paintings and forbid any agency from collecting royalties or levies on my behalf on the sale or resale of my paintings.

This obnoxious Directive was forced on the European Union as a result of lobbying by a small group of extremely wealthy French families who are heirs to the fortunes of artists long dead and gone. These families were unable to collect royalties from paintings sold in London and elsewhere. Because paintings offered for sale in France were subject to the levy, many vendors opted to sell overseas. This led to a drain on the French auction houses who joined the lobby for the implementation of Droit de Suite. After many years of resistance by Ireland and a few other States, backroom deals were finally agreed and the Directive came into force.

A number of greedy Irish artists were only too delighted to promote its introduction here. Their claim is that they do not have the opportunity to collect royalties, in the same way as an author earns revenue every time his book is reprinted. I fail to see the connection between writing a book and painting a canvas. In any event, the claim is bogus as there is nothing preventing an artist from selling printed reproductions of their work.

I call on all artists throughout the European Union and elsewhere to join with me and offer their works for sale free of Droit de Suite. I see no reason why your local gallery or your local auctioneer should not sell your works free of Droit de Suite if you waive your rights. l make a simple claim to copyright on my invoices, and also on a label attached to the back of my paintings. I also issue a Droit de Suite waiver which states: "All sale and resale rights under Droit de Suite have been waived by the creator of this painting". This does not prevent me from including reproduction rights of a painting if I wish to do so, or any other terms which may be agreed with the purchaser. I use the same procedure if I am donating a painting to an institution or a charity, or if I make a gift to a private individual. I have also put my local collection agency on notice that they do not have the right to collect royalties on my behalf. However, if you are unsure about your own position, you should seek local professional advice.

State imposition of inalienable rights is intolerable in a modern democracy.

Dominic Penny
Artist, Dublin, 2nd March 2009

 

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