SAFFRON ART & OSIANS ...................... GOVERNANCE AND BUSINESS PRACTICES !
An investigation into the business practices of Osian’s and Saffronart Management Corp., two of India’s premier art houses, has revealed several irregularities in their account books, including a possible attempt to rig the price of artworks and dupe investors, according to an income-tax (I-T) department official involved in the probe.
The two houses—both set up in 2000—separately denied any wrongdoing, claiming all their transactions were transparent, well documented and in line with the law.
The I-T department’s “appraisal report”, previewed by Mint, reveals that Osian’s had obtained fake purchase bills worth Rs15 crore for artworks. The department, which started a probe into alleged tax evasion in 2007, questioned three persons who provided Osian’s with such bills and admitted theywerefake,theofficialsaid.
“Fake purchase bills can be used to inflate the price of art by lesser known artists. This is the easiest form of manipulation of prices in the art world. The technique is similar to that used in the stock market to rig the share prices of any company,” said the official, who didn’t want to be named.
Art houses can use these fictitious purchase bills to set an inflated benchmark price for works by artists, causing genuine investors to pay more,according to the official. “Some of the art galleries have inflated the price of certain artists up to as much as 700%,” the official said. The assessment wing of the I-T department in Mumbai is evaluating the extent of suspected tax evasion by the two houses.
On Saffronart, the report said the art house had paid royalty to an associate firm, Planet Saffronart Management Corp., in the British Virgin Islands, to reduce its tax liability. The report also said Planet Saffronart had given Rs11 crore to Saffronart for acquiring its intellectual property rights.
The department investigated such transactions and found them not in line with the law, said the official. “We have also found a lot of cash transactions in Saffronart,” he said.
The report also said at least 18 investors, who had invested Rs10 lakh and above each in Osian’s Art Fund, could not explain the source of the money they had put in the fund.
An art fund is like a mutual fund where investors do not pick the individual investment vehicles and instead invest in a pool of artworks. Typically, high net worth individuals invest in such funds. The minimum investment in some funds is pegged at Rs25 lakh.
The I-T department has alleged that Osian’s was involved in synchronized trading and rigging of prices of art.
The two houses—both set up in 2000—separately denied any wrongdoing, claiming all their transactions were transparent, well documented and in line with the law.
The I-T department’s “appraisal report”, previewed by Mint, reveals that Osian’s had obtained fake purchase bills worth Rs15 crore for artworks. The department, which started a probe into alleged tax evasion in 2007, questioned three persons who provided Osian’s with such bills and admitted theywerefake,theofficialsaid.
“Fake purchase bills can be used to inflate the price of art by lesser known artists. This is the easiest form of manipulation of prices in the art world. The technique is similar to that used in the stock market to rig the share prices of any company,” said the official, who didn’t want to be named.
Art houses can use these fictitious purchase bills to set an inflated benchmark price for works by artists, causing genuine investors to pay more,according to the official. “Some of the art galleries have inflated the price of certain artists up to as much as 700%,” the official said. The assessment wing of the I-T department in Mumbai is evaluating the extent of suspected tax evasion by the two houses.
On Saffronart, the report said the art house had paid royalty to an associate firm, Planet Saffronart Management Corp., in the British Virgin Islands, to reduce its tax liability. The report also said Planet Saffronart had given Rs11 crore to Saffronart for acquiring its intellectual property rights.
The department investigated such transactions and found them not in line with the law, said the official. “We have also found a lot of cash transactions in Saffronart,” he said.
The report also said at least 18 investors, who had invested Rs10 lakh and above each in Osian’s Art Fund, could not explain the source of the money they had put in the fund.
An art fund is like a mutual fund where investors do not pick the individual investment vehicles and instead invest in a pool of artworks. Typically, high net worth individuals invest in such funds. The minimum investment in some funds is pegged at Rs25 lakh.
The I-T department has alleged that Osian’s was involved in synchronized trading and rigging of prices of art.
Replies to This Discussion
-
Permalink Reply by Bhupesh gupta on -
artseek,
no prizes for guessing :(
IN THE HALL OF SHAME ................ CONFESSIONS COME LAST ....... WE START WITH DENIALS ALWAYS !
it's too damaging and my guess is that the authorities would be having damning evidence to string toghether a tight enough case!
but see the dichotomy here ......... RAJIV GANDHI WAS PRIME-MINISTER AND HIS MOTHER WAS SHOT DEAD IN BROAD DAY LIGHT AND STILL IT TOOK YEARS TO PROSECUTE.......... god bless our country it happens only in india!
Artseek said:Bhupesh,
Saffron art and Osians have both denied the allegations.Pls check -
-
Permalink Reply by Sonali Engineer on -
This is in reference to the article that was printed in The Mint. Comments by Mr. Neville Tuli, Chairman - Osian's can be viewed on the link here: http://nevilletuli.blogspot.com/2009/02/these-are-points-we-would-l...
Thank you
-
Permalink Reply by Bhupesh gupta on
-
.
Tuesday, February 24, 2009
These are the points we would like to make in response to the article “Premier art houses under I-T scanner” in The Mint on 24 February 2009
“The allegations made by your source are clearly false and defamatory.
We at Osian’s have never ever even had or facilitated one rupee of 'cash' transactions, and the whole art world knows that fact clearly. It has been our mission to destroy the black economy and build a fully accountable and transparent framework for the arts and culture of India over the last ten years.
The so called 15 crore ‘fake’ purchases you refer to is absolutely incorrect. These transactions were made to Gallery 7, a twenty year old gallery, and his associate art dealer called Rashesh Shah, for purchase of artworks, by artists such as J. Swaminathan, SH Raza, Ramkumar, A. Padamsee, V.S. Gaitonde, Jogen Chowdhury, Atul Dodiya, among others. Like with many galleries and dealers they told us that they would like to directly invoice Osian's from their clients company as they do not own the artwork. Further, we were told that the client will pay them their commission. All transactions were fully paid in cheque and all artworks physically handed over to Osian’s. The IT dept two years later told us that these clients of Gallery 7 and Mr. Shah were not genuine art collectors but ‘benami’ parties. We have never dealt with Gallery 7 and Mr Shah thereafter.
There is no question at all of Osian's creating bogus turnover or synchronized trading to rig up prices. It is totally against our ethos and the very reason for why we exist. Naturally, there are many people who bought art for investment and hence re-selling is part of the process. That is absolutely normal.
Regarding the investors in the Osian’s Art Fund, every investor filled up a detailed form with PAN and bank account details, bank references and all legal requirements. Every document was given to the authorities, every payment was in full cheque. Your claim is absolutely not true. The success of the Osian’s Art Fund has naturally made many upset. Many fear that art funds will soon become public platforms, and so help further destroy the black economy. At the same time, the levels of disclosure set by the Osian’s Art Fund make us easy targets.
To fight the corruption and improve the system with integrity requires guts. At present the atmosphere has become such that the more honest and upright you are the greater the backlash. We have come to accept this process. However criticizing the system is not in Osian’s nature, we are here to build an alternative, create a new framework, and accept the consequences of that journey.
India still has the world’s largest black economy for antiquities, the largest material cultural heritage in the world and still not even 1% of it exists legally on paper. Most of our laws pertaining to antiquities and art treasures were drafted during the paranoia of the Emergency. That has to fundamentally change. To change this framework is not easy. From importing our art back into India to valuation and authenticity issues, these are burdens which the government machinery cannot handle without genuine private sector involvement, and yet the private-public partnership, despite some positive examples, is still rooted in lack of mutual respect.
Naturally, any private organization which will try to take on changing this system will be under constant attack. A new knowledge-base and full flow of information must be at the root of financial benchmarking in art. Hence Osian’s work has focused on archiving, public auctions, publications, exhibitions, festivals and art funds. These are all platforms to open and rebuild the system.
Accusations based on 1% fact and 99% distortion, have become the norm. Many machines, public and private, now thrive on passing half baked truths to destroy reputations. The success of the corrupt system is when it breaks the leader who wishes for change. Thus a constant conflict is inevitable until this framework evolves into something of pride for all of us.
Neville Tuli, Chairman – Osian’s.”
-
Permalink Reply by Bhupesh gupta on
-
there's no allegation of cash transactions on osians but there are serious allegations regarding synchronised trading and rigging of prices which prima facie looks true if you go through the records of osians auctions ........ one case in point the prices realised by PROKASH KARMARKAR'S WORKS ................... selling for unheard of 30 to 50 lacs!
a clear cut case of pan calling the kettle black !
over to you sonali engineer.
-
Permalink Reply by Artseek on -
Prokash Karmakar selling for 30 - 50 Lac? When was this?
Bhupesh gupta said:there's no allegation of cash transactions on osians but there are serious allegations regarding synchronised trading and rigging of prices which prima facie looks true if you go through the records of osians auctions ........ one case in point the prices realised by PROKASH KARMARKAR'S WORKS ................... selling for unheard of 30 to 50 lacs!
a clear cut case of pan calling the kettle black !
over to you sonali engineer.
-
Permalink Reply by Bhupesh gupta on
-
artseek,
it was a painting of a galloping horse and it sold for around 50 lacs in the year 2007 !
i was checking their website for records of old auctions but they don't have it there in archives all the auctions of 2007 ........ earlier years used to be there!
and i'm sure it's not a one-off or isolated case!
these noises about blasphemy and lullaby's can mislead novices not the battle hardened veterans who have seen it evolving for more than 20 years from ground zero!
though the humour is not lost on me when it comes to reading between the lines playing poker and calling a spade a spade even when you have aces up your sleeve!
Artseek said:Prokash Karmakar selling for 30 - 50 Lac? When was this?
Bhupesh gupta said:there's no allegation of cash transactions on osians but there are serious allegations regarding synchronised trading and rigging of prices which prima facie looks true if you go through the records of osians auctions ........ one case in point the prices realised by PROKASH KARMARKAR'S WORKS ................... selling for unheard of 30 to 50 lacs!
a clear cut case of pan calling the kettle black !
over to you sonali engineer.
-
Permalink Reply by Artseek on
-
Bhupesh,
You can't blame a auction house for this,its the buyer who pays the price.Auction house is only responsible for the estimate and not the sale value.
Bhupesh gupta said:artseek,
it was a painting of a galloping horse and it sold for around 50 lacs in the year 2007 !
i was checking their website for records of old auctions but they don't have it there in archives all the auctions of 2007 ........ earlier years used to be there!
and i'm sure it's not a one-off or isolated case!
these noises about blasphemy and lullaby's can mislead novices not the battle hardened veterans who have seen it evolving for more than 20 years from ground zero!
though the humour is not lost on me when it comes to reading between the lines playing poker and calling a spade a spade even when you have aces up your sleeve!
Artseek said:Prokash Karmakar selling for 30 - 50 Lac? When was this?
Bhupesh gupta said:there's no allegation of cash transactions on osians but there are serious allegations regarding synchronised trading and rigging of prices which prima facie looks true if you go through the records of osians auctions ........ one case in point the prices realised by PROKASH KARMARKAR'S WORKS ................... selling for unheard of 30 to 50 lacs!
a clear cut case of pan calling the kettle black !
over to you sonali engineer.
-
Permalink Reply by Bhupesh gupta on
-
artseek,
if there was an oscar for being naive and overtly foolish it should be given to ignorant buyers ......... if there were any in the first place ?? who bought at these absurd and completely rigged prices!
it's the moral responsibility of the concerned auction houses to come up with an estimate which is not absurd.
i had rubbished the saffron art's claims when they were waxing eloquent about their breed of artists and world records set by them.
a manipulation is a manipulation .......... big or small ....... only the scale and perpetuators vary !
it's easy to know .......... you don't have to be a genius!
i was born a genius but education ruined me!
Artseek said:Bhupesh,
You can't blame a auction house for this,its the buyer who pays the price.Auction house is only responsible for the estimate and not the sale value.
- ‹ Previous
- 1
- 2
- Next ›
© 2010 Created by IAN Editor
