Art world braces for Sotheby's fees trial

The trial opened yesterday of the former chairman of Sotheby's, Alfred Taubman, who is charged with conspiring to rig prices with the auction house's rival of more than two centuries, Christie's.

The hearing in the US District Court in Manhattan threatens to cause further damaging embarrassment for the two auction firms from a price- fixing scandal that first exploded into the headlines in January last year.

Mr Taubman, 76, of Bloomfield Hills, Michigan, denies antitrust conspiracy. If found guilty he could be jailed for up to three years and fined hundreds of millions of dollars.

At the heart of the trial is the American government's contention that Christie's and Sotheby's illegally colluded between 1993 and 1999 to fix commission rates for sellers using their services. The government's case rests on sheaves of memos handed to investigators by Christopher Davidge, a former chief executive of Christie's, nearly two years ago.

In return for co-operating, Mr Davidge, who will testify at the trial, won conditional amnesty for himself and his firm, from which he resigned in December 1999.

Sotheby's has since pleaded guilty to an antitrust charge and paid a fine of $45m (£31m). Both auction houses have also paid out $512m between them to settle civil suits stemming from the affair. Mr Taubman paid most of Sotheby's share.

But while the auction houses insist that the scandal is behind them, the worst of their dirty laundry is now about to be revealed. The trial is expected to last at least a month and will, by all accounts, turn into a brutal and bitchy contest when witnesses attempt to lay blame for what happened on everyone but themselves.

Starring in this unlikely spectacle is Diana Brooks, the former chief executive of Sotheby's and a one-time fixture on the Upper East Side social scene in Manhattan. The first woman to head a prominent auction house, Ms Brooks pleaded guilty, with Sotheby's itself, last October. She agreed to testify for the government against Mr Taubman in this trial in return for what she hopes will be a lenient sentence.

One seat will be conspicuously empty at the trial. It has been reserved for Sir Anthony Tennant, who was Mr Taubman's counterpart at Christie's when the price-fixing arrangements were made. Sir Anthony, who lives in Andover, Hampshire, was indicted by US prosecutors with Mr Taubman in May but has declined to return to America to face trial. He has not been extradited from Britain.

Sir Anthony, 71, a former head of the Guinness empire, has publicly proclaimed his innocence and said he was being pursued as a "scapegoat for others" in the affair. Mr Taubman, who made his fortune building shopping malls in the Midwest, has also said he is "absolutely innocent".

Prosecutors will share with the jury large sections of the 500 pages of documents they received from Mr Davidge. They are expected to argue that the papers make clear that both Mr Taubman and Sir Anthony were aware of the price-fixing scheme, even if it was being put into effect by their lieutenants, Mr Davidge and Ms Brooks.

Lawyers for both sides are certain to employ tough tactics. The defence table will argue that the jury should disregard Mr Davidge and Ms Brooks. The judge in the case, John Greene, threw out a pre-trial motion by the defence to have Mr Davidge removed from the witness list on the basis that he received an $8m pay-off from Christie's that might influence him into trying to protect the company.

In addition to fixing commissions, the government charges that the defendants also exchanged customer information and co-operated in monitoring that the commission regime was enforced.

The US Justice Department says that Christie's and Sotheby's control 90 per cent of the fine art market between them.

They both trace their roots back to London in the mid-18th century. The scandal is the worst to beset each of the firms and with it have come some spectacular reversals of fortunes. Ms Brooks, who had a home in Greenwich, Connecticut, was one of the most respected figures on the arts scene and wielded the gavel herself at many of Sotheby's most celebrated sales. She presided, for instance, over the sale of the Jacqueline Kennedy Onassis estate.

Whether Mr Taubman will take the stand is not yet known. His lawyers will argue that Ms Brooks acted on her own in setting up the price-rigging scheme and that he was too distant from the day-to-day operations of the auction house to have any knowledge of it.