A member of the Qatari royal family has pledged the world’s most expensive watch and other collectibles valued at almost $83 million to Sotheby’s (BID:US) to cover debts owed to the auction house, according to court documents.
Sheikh Saud Bin Mohammed Bin Ali Al-Thani, a cousin of the Emir of Qatar, provided Sotheby’s with items from diamond jewelry to tribal art and four vintage watches made by Patek Philippe of Geneva, Switzerland, the auction house said in an Oct. 12 filing with the New York Department of State. The timepieces include a pocket watch known as the Henry Graves Supercomplication, which an anonymous bidder bought for a record $11 million in a Sotheby’s auction in 1999.
Al-Thani has been hit with two lawsuits since the end of September, one of which alleges the sheikh failed to pay for $19.8 million of ancient Greek coins that he bid on in January. A U.K. court, in a judgment today extending a freeze on $15 million of the sheikh’s assets at the request of the coin dealers, said Al-Thani appears to have left at least 11 auction houses and dealers unpaid in the last 18 months, including $42 million owed to Sotheby’s.
Al-Thani couldn’t be reached for comment. A man who identified himself as a “private employee” at an office the sheikh maintains in a residential tower complex near London’s Portman Square said Al-Thani was out of the country for a month. Andrew Gully, a spokesman for New York-based Sotheby’s, said the firm doesn’t comment on private business arrangements.
“It’s not unheard of in the auction business, when clients run into cash problems, for auction houses to take property in lieu of payment,” said Michael Plummer, the cofounder of Artvest, a New York-based firm that provides investment advice for the art market and a former chief operating officer of the financial-services unit at auction house Christie’s. Plummer said he had no knowledge of Al-Thani’s specific situation.
Al-Thani’s direct family once ruled Qatar, with both his grandfather and uncle serving as emirs for the Gulf nation, according to David Roberts, the deputy director of the Royal United Services Institute in Doha. Al-Thani formerly ran Qatar’s National Council for Culture, Arts and Heritage, where he spearheaded a national effort to furnish a new museum complex by spending as much as $1.5 billion on artwork and collectibles during the decade ending in 2005, according to ARTnews.
He made bids to snap up iconic works for himself and Qatar, paying $15 million for 136 vintage photographs, including work by the late Alfred Stieglitz, and $8.8 million for John Audubon’s Birds of America, according to Daniel Wade, editor of a news site run by Paul Fraser Collectibles in Bristol, U.K.
In early 2005, Al-Thani was placed under arrest in Doha, Qatar, under suspicion of misusing public funds, according to reports in magazine ARTnews and the Telegraph newspaper in the U.K. No official record could be located on whether Al-Thani was charged, and a spokesman for the Qatari embassy in Washington didn’t return a telephone call seeking comment.
The sheikh resurfaced in the art market several years later, and ARTnews named him as one of the world’s top 10 collectors in August 2011. At the time, the publication estimated that Al- Thani had spent several hundred million dollars on art during the preceding two years.
“He is a connoisseur,” said Peter Finer, a London-based dealer of fine antique arms and armor whose website lists clients such as the Metropolitan Museum of Art in New York and the Victoria and Albert Museum in London. Finer said he has been selling items to Al-Thani since the 1990s, at one point for an “enormous sum of money,” and added that the sheikh had always conducted himself “impeccably.”
Al-Thani in January successfully bid on coins including a $3.25 million single gold piece from the Ancient Greek city of Pantikapaion that bears the head of a bearded satyr, according to an Oct. 9 lawsuit filed in Washington, D.C., by A.H. Baldwin & Sons Ltd. of London, M&M Numismatics LLC of Washington and Dmitry Markov Coins and Medals of New York. Al-Thani hasn’t paid for any of the coins, and the plaintiffs are charging the sheikh monthly interest of 2 percent, according to the ruling today in London, which extended an asset freeze on $15 million in connection with the suit filed in the U.S.
While the sales agreement between Al-Thani and the coin dealers required all disputes to be resolved in Washington, D.C., courts, the plaintiffs had sought the asset freeze in the U.K. because the sheikh owns property there.
“This pattern of behaviour is both unexplained and inexplicable,” the London court said in today’s order. “The sheikh’s royal status is irrelevant. We are all equal in the eyes of the law.”
Stephen Rubin, an attorney representing Al-Thani in the case, declined to comment. Michael Ward, an attorney at SJ Berwin LLP, a firm that is also representing the sheikh, didn’t immediately return a telephone call seeking comment.
According to the judgment today, Sheikh Saud is awaiting payment of $100 million for a wildlife preserve and a natural history collection that he sold to Qatar and the Qatar Museums Authority. In contesting the asset freeze, the sheikh’s attorneys said he had no plans to flee London, that there are no allegations of fraud, and that the debt owed to the coin dealers is “modest” relative to his assets.
Less than two weeks before the U.S. lawsuit, London auction house Bonhams 1793 Ltd. filed a suit against Al-Thani and a colleague in the U.K. High Court of Justice. The suit, while listed on the court’s docket, is not yet publicly available and Julian Rupe, a spokesman for Bonhams, declined to comment. Al- Thani owes Bonhams 4.3 million pounds ($6.85 million) plus interest on unpaid auction debt, according to today’s judgment.
On Oct. 12, Sotheby’s Financial Services Inc. disclosed a six-page list of about 240 collectibles that Al-Thani had pledged to the auction house’s lending unit, including a dozen pieces of jewelry, almost 80 tribal works of art from African and Polynesia, artifacts from Ancient Rome, antique books, illustrations and other printed works by 95 authors, and “a highly important Faberge Imperial Easter Egg.” Also on the list: six watches, among them the Graves Supercomplication.
Graves, a private banker in New York, commissioned the watch in 1928, and when it was delivered five years later, the timepiece had more than 900 parts and a then-record 24 complications, the term for mechanical features that go beyond basic timekeeping, according to Artfact.com. Graves paid 60,000 Swiss francs for the watch, or $265,000 in today’s U.S. dollars, according to historical currency data from Measuringworth.com and an inflation calculator on the website of the Bureau of Labor Statistics.
The Sotheby’s filing reveals for the first time that Al- Thani is the owner of the Graves Supercomplication, which has a star chart showing changes in the night sky over Manhattan and a minute recorder that plays the same melody as Big Ben, the bell of the clock tower at the Palace of Westminster in London. Following the 1999 Sotheby’s sale, the pocket watch went on display as part of the Patek Philippe Museum’s collection in Geneva.
Sotheby’s filed the list with the New York Department of State, a standard procedure to notify other potential creditors that the firm had a priority claim on Al-Thani’s artwork. The auction house primarily provides cash advances on the future sale of such collateral, though the firm will also make fixed loans on art that isn’t being auctioned off, according to its regulatory filings.
Sotheby’s, which also makes loans to clients secured by their artwork, didn’t say in the filing why the collateral was pledged.
Firms such as Sotheby’s will also accept artwork and collectibles from bidders who can’t come up with the cash they need to pay for artwork purchased at auction, according to Artvest’s Plummer. The firms will either sell the collateral in future auctions to recoup the amount owed or hold the property until the bidder repays the debt with interest, Plummer said.
The total owed to Sotheby’s includes a loan for $29.8 million and unpaid auction debts of $12.2 million, according to today’s judgment in the U.K., which didn’t list the collectibles Al-Thani pledged. Other auction houses and dealers that are owed money by the sheikh include Kuenker’s auction house in Germany, and Giuliano Russo of NAC Numismatics Ltd. of London.
In addition to real estate with an unencumbered value of 19.2 million pounds, the sheikh has assets with an estimated value of at least 77 million pounds outside Qatar, according to the judgment, among them possessions worth 67 million pounds in England. That includes 47 million pounds “in the possession of Sotheby’s, who are exercising security rights over them in respect of sums allegedly due to Sotheby’s from the sheikh.” Sotheby’s is holding another 5 million pounds of assets in the U.S.
Under Sotheby’s standard auction terms, payments are due from buyers within 30 days of the sale date, according to a Form 10-Q that the company filed yesterday with the U.S. Securities and Exchange Commission. Extended payment terms, usually of no more than one year, are sometimes granted to support a sale. As of Sept. 30, the company had $32.8 million due from one buyer classified as a long-term asset, according to the filing.
Prices are climbing for vintage watches, particularly those made by Patek Philippe, whose roots date back to 1839; Sotheby’s reported that a gold Patek Philippe from the Graves collection sold for $2.99 million in June, more than triple the $800,000 high estimate by the auction house. Still, the Graves Supercomplication may not top its $11 million record should the watch wind up being offered for sale, said Alfredo Paramico, the manager of Precious Time, a Luxembourg-based vintage watch fund.
“The Graves Supercomplication is the most important pocket watch ever made,” Paramico said in a telephone interview. “But not many collectors could go beyond the 5 million or 6 million euro threshold and no one would be able to compete with the Patek Philippe Museum,” a probable bidder, he added.
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