This Art Market Needs A Kick Up The Bum


The guys who drive taxis on the Central Coast are an eccentric lot. On the way to Woy Woy station one day a driver told me, out of the blue and apropos of nothing, that carbon dating was a sham and that scientists had once claimed that a felt hat was "a million years old". An older guy who looked like he should be retired told me he’d been a cop in Sydney during the infamous "Green Light" period of the 1980s. He’d known all the major players and had been duly decorated — but he took early retirement when the royal commission came knocking. "All you need is a good partner you can trust and you can do f*cking anything," he’d said wistfully.

It should have come as no surprise then that Ronald Coles, the man at the centre of a major art dealing scandal, should turn up on the coast driving cabs to "make ends meet". The Fairfax press reported in January 2009, "the past finally caught up with Mr Coles when NSW Police stormed his Investment Gallery in Kenthurst and two other private properties, seizing firearms and 404 paintings — some by well-known artists — worth more than $5 million … Evidence has since emerged of dealings in works that are said to be forgeries and of multiple owners of the same artworks by some of the nation’s most celebrated artists including Tom Roberts, Sidney Nolan, and Norman Lindsay."

With a special task force investigating what would later emerge as the Australian art world’s largest (alleged) ponzi scheme, Coles skedaddled into the night — only to turn up in October, hunted down by intrepid Fairfax journos, snapping away as he stepped from his taxi outside a Central Coast hideaway. "I’m also a victim in all of this!" he cried.

With a sense of urgency and the mild panic that’s been a common feature of the global financial crisis, overstretched participants in Coles’s art investment scheme wanted their money back. The problem was, as with all ponzi schemes, the system only works if new "investors" can be continually found, and that people keep reinvesting in new "opportunities". Taking your money out brings the whole thing down. Although the majority of the art market in Australia is run to the letter of the law it’s still based on exactly the same set up: to make the system work, you have to believe in it.

As the Coles story was first breaking, I happened to have a boozy lunch with some art dealers. Everyone had frank and funny stories to tell about dodgy dealers of the past who’d scarpered overseas or had operated questionable criminal enterprises dressed up in art world finery. Oh, how we laughed. But I was also reminded of how difficult it is to report on the secondary art market (that is, auctions, traders and dealers re-selling work, while art galleries exhibiting new work for the first time are the "primary market"). As a staff reporter at Australian Art Collector in the late 1990s, I discovered that it was almost impossible to get reliable quotes from auctioneers on their own sales, let alone get them to speak on the record about the problems of the industry. Although everyone knows who the sharks are, no one can say anything, certainly not without proof, and you’d better be armour-plated against legal action if you start throwing accusations around.

Yet the legitimate secondary market resists the sorts of structural and legislative changes that would make it far more transparent. The kind of practices that seem dubious at best — gallery owners bidding on their own artists’ work at auction to keep up prices; buying up an artist’s work to inflate the market then selling it off at higher prices in mock "exhibitions"; ramping prices; phantom bidding — don’t do much to create a sense of trust in the market. It’s just the way things are and no one seems to be in a big rush to do anything about it.

Luckily for it, the Australian art world has pretty much dodged the GFC bullet. Thus far the casualties have been light. No major gallery in Sydney has closed, although many are rumoured to be on the brink over this summer break, and collateral casualties are said not to be directly linked to the GFC, such as the sad and untimely demise of the much-loved art magazine Art World.

The Melbourne art fair was cancelled and Sydney’s version had depressed sales, but the galleries who could afford the air freight to Hong Kong or Dubai reported decent sales. Although Sotheby’s Australia was sold off to rival auction house owner Tim Goodman, it was more a case of swapping brands than a hasty retreat, such as when Christie’s left Australia in 2006. Some even saw the possibility of a recession as a way of clearing out the bottom end of the market. Compared to the carnage of the recession of the early 90s, the market has held tight — it’s as though they circled the wagons but the Indian attack never came.

We may yet see a few galleries close and some high-profile collectors forced to sell off their lovingly curated collections to the market but, thus far, nothing much has happened. Worse, there’s absolutely no movement toward taking the opportunity presented by the current depressed period to clean up the market in the same way governments around the world have forced financial markets to regulate exotic financial instruments.

At a charity auction mid-year where I acted as the event’s MC, an auctioneer told me on the QT that punters were flooding the market looking for bargains but, finding the pickings slim, were putting down real money. Indeed, the auction house in question was apparently experiencing their best ever year. I repeated this claim to a well-known and respected auction market analyst who told me, also off the record, that such a claim was "total bullshit".

As a Central Coast taxi driver might tell you, the problem with the art market is that you just don’t know who to believe.

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