Osian's Art Fund: The Broken Paddle
The Noose Tightens
The ambitious international venture not only sullied Osian’s books, it also landed Tuli in trouble with both Abraaj Capital and international auction house Christie’s. Tuli’s offshore company based in Jersey Isles was acting as the purchasing agent for IAAF and had accordingly signed an agreement with Abraaj in June 2008. The June agreement listed a total loan of about $23.7 million to Bregawn in the previous month. Abraaj has moved a London court to recover that money for which Neville Tuli has also given a personal guarantee.
Tuli says that Bregawn was acting only as a purchasing agent for Abraaj, which bought the art with the intention of selling it to IAAF. The Osian’s Art Fund had an option of selling its Modern and Contemporary art collection to IAAF if it was launched.
Bregawn landed Tuli in another soup too. Auction house Christie’s has reportedly held on to art worth almost a million dollars that Tuli purchased for Osian’s because Bregawn owed it millions of dollars. Osian’s recently moved court to prevent Christie’s from re-auctioning the art works. Osian’s, according to reports, claims Bregawn is a separate company and, therefore, not responsible for that company’s liabilities. Neville Tuli cannot ring-fence Osian’s or Bregawn, a source says, because he is the face for both, a view Christie’s has also taken. Another source close to international auctioneers says that auction house Sotheby’s too came close to suing Osian’s last year for an $8 million payment. The source said Tuli bought art but never paid for it.
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Image: Santosh Nagwekar/ Fotocorp
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“Sotheby’s has now received a partial payment from one of the Neville Tuli companies in respect of the amounts due to Sotheby’s. A substantial debt to Sotheby’s remains and Sotheby’s is holding art property as collateral against this debt. Sotheby’s will not be commenting on the precise details but even collectively, Neville Tuli’s companies have not paid US$8.8million for any property,’’ Mathew Weigman, worldwide director of sales publicity at Sotheby’s, said. However, at the time of going to press, Sotheby’s had not moved court.
In his August interview with Forbes India, Tuli answered questions about his debts. “Osian’s does not owe one rupee to Christie’s. Osian’s does not owe one rupee to SaffronArt. Osian’s does not owe anything to any auction house; the only thing we owed was something to Sotheby’s, OK? And Rs. 1 crore. We don’t owe anything to galleries, we don’t deal with galleries; we don’t buy from them.”
He had also said Osian’s had not bought anything at Christie’s. The day after the interview, he sent a list of creditors, including 13 galleries. The list puts Osian’s’ total outstanding debt at Rs. 10.5 crore, of which Rs. 6 crore is owed to auction houses, specifically Rs. 3.3 crore to Sotheby’s. It did not list any debt to Christie’s.
When Osian’s Art Fund was launched, an advisor with a foreign institutional investor concluded that it was too risky to bet on. He argued that the total value of transactions in the art market had been Rs. 50 crore in 2004, Rs. 225 crore in 2005 and Rs. 311 crore in 2006 until June.
There were only 12 paintings in Indian contemporary art until then to have fetched a value in excess of Rs. 3 crore and 102 paintings in the previous two years to have crossed Rs. 1 crore. “The market seems to be quite small for the size of the fund,” he wrote to his bosses.
The advisor’s observations turned out to be uncannily accurate. Osian’s Art Fund was a big fish in a small pond. Now the pond has little water and Osian’s is struggling for breath. A perfect existential conundrum for a Dostoevsky novel.
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just think a company who is treating it's employees as it's slave and not paying even salaries or can't even afford to pay salaries to its staff, how come will it pay to it's investors??
