Issue #37  12/7/2001
Taubman, Sotheby's Former Chairman, Found Guilty of Anti-Trust Charges

On Wednesday, December 5 Sotheby's former chairman and currently controlling stockholder Alfred Taubman was found guilty of conspiring to fix sellers' fees with rival Christie's. He faces up to a three-year prison term and millions of dollars in fines. Sentencing is scheduled for April 2, 2002.

According to various press reports, jurors indicated outside of the courtroom after the trial that they believed the testimony of the prosecution's star witness, Diana D. Brooks, Sotheby's former chief executive, who said she acted at Taubman's request and admitted to repeatedly lying to cover up the crime.

Robert Fiske, of the law firm Davis, Polk & Wardwell, which handled Taubman's defense, said, "We're of course very disappointed in the verdict and we'll review all our options and decide what we will do next."

Sotheby's has already pleaded guilty to price-fixing and paid a $45 million fine. Sotheby's and Christie's has also settled a class action civil suit by agreeing to pay more than $512 million to customers in the form of coupons (I don't know about any of you, but I'm still waiting for my coupons), and Taubman, trying to avoid liability, agreed to pay $156 million of Sotheby's share of $256 million, plus another $30 million to settle a stockholders' suit. All of this information, by the way, was kept from the jury as "prejudicial".

From the jurors' comments, the key to the government's case was the discovery, from Taubman's diaries and calendars, of 12 private meetings in his London and New York apartments with Christie's former chairman, Sir Anthony Tennant, from 1993 to 1996. According to testimony at the trial Taubman concealed them from even his closest associates.

The foreman of the jury, Michael D'Angelo, remarked slyly, "You get together 12 times with somebody, use your common sense."

Jurors also indicated that an April 30, 1993, memo written by Sir Anthony that appeared to confirm areas of agreement with Taubman and suggest that the two chairmen "should now withdraw but stay in touch with a view to seeing how things go and intervening from on high if need be" was crucial to their decision.

Whether or not Taubman gets a legal reprieve, his reputation as a businessman has been clearly tarnished with sexist comments attributed to him and a defense that portrayed him as numbers- and details-challenged.

Taubman's attorneys oddly sought to defend their client by calling on witnesses that appeared to indicate that he was too incompetent in his role as chairman to have hatched the antitrust plot. Michael Ainslie, a former chief executive at Sotheby's, testified that Taubman probably lacked the understanding of finance to pull off such a complex conspiracy and that he "actually would fall asleep occasionally" at board meetings. Ainslie further remarked, "I can't imagine him being able to understand

the complexity (of the document)...It's all about numbers." Other witnesses portrayed the ex-chairman as more interested in lunch than the bottom line.

It got so bad that the lead prosecutor John Green referred to this defense as "the dumb, hungry Taubman story."

The trial brought Taubman and Sotheby's further bad publicity after network television and even the BBC covered some of the more scintillating exchanges at the trial, including the now infamous remarks attributed to the ex-chairman by and about former Sotheby's president Diana Brooks, such as "Don't be a girl" and "You'll look good in stripes" (a quotation that the defense contended was inaccurately portrayed).

A tired Sotheby's organization, issued this statement from its president, William Ruprecht: "While we feel for Mr. Taubman and his family, it is time for the company to move on." But that is still difficult considering that Taubman still controls the company through his stock ownership. In addition, the increase in buyers' commissions put in after rival Christie's hiked theirs, coupled with a weak economy, may eventually affect purchases at both houses. Sotheby's has unfortunately had to take the impact of their former management's criminal acts out of the hides of their own innocent staffers. Hundreds of jobs have been sacrificed due to the actions of a very few.

Finally, Taubman's indicted co-defendant, Sir Anthony, chairman of Christie's from 1993 to 1996, has refused to come to the United States from England and under English law cannot be extradited to stand trial. He gives no indication of wanting to vacation in the US anytime soon.