The director of a Russian museum flew to Geneva on Friday to pursue plans to sue Christie's auction house for blocking his intended $6 million bid for a Faberg? egg sold this week.
The Russian National Museum envisioned the diamond-studded "Winter Egg," which sold for $5.5 million Wednesday to an anonymous bidder, as the jewel in the crown of its collection.
The Moscow-based museum -- founded in 1993 as Russia's first private museum -- was prepared to pay as much as $6 million, and had sent a representative to Geneva to bid, Alexander Ivanov, the museum's director, said Thursday night. He said Mikhail Tyurikov checked into the Intercontinental Hotel with a Russian bank guarantee for the target bid with additional authorization to go to $7 million, if necessary.
Then, two hours before the sale, Christie's took away Tyurikov's bid number and physically barred him from the auction on the grounds that the museum had not supplied an adequate guarantee of payment, according to both the museum and Christie's.
Since the egg sold for $500,000 less than the museum's intended bid, the museum's representatives feel they have a right to reopen bidding, Ivanov said.
"This was a total scandal," said Ivanov, who left for Geneva on Friday morning to meet with lawyers about his proposed suit to reopen bidding. "We made the decision a long time ago that we wanted to buy the egg, so that it would return to Russia. We gathered $8 million together. We worked for this."
At issue is a Russian bank's letter of credit, which Christie's said it does not consider a genuine guarantee of payment. Christie's and Ivanov scrambled to resolve this issue in a flurry of 11th-hour faxes, at the end of which both parties were confused, and Tyurikov was back in his hotel room, empty-handed.
In early negotiations, a Christie's official said, the museum had promised a letter of credit from the Russian Bank of National Credit confirmed by the Bank of New York, which would imply financial responsibility on the part of the American bank.
The Russians did not consider the Bank of New York as a guarantor, but as a go-between, Ivanov said. When Tyurikov turned up in Geneva, his guarantee was signed only by the Russian bank. Officials at the Bank of New York would not comment on the case.
Bank officials in both the United States and Switzerland "clearly indicated that this was not a guarantee," said Franz Ziegler, director of financial administration for Christie's International in Switzerland. "We had an agreement that they would open up a letter of guarantee with the Bank of New York, and they simply failed to do so."
Particularly in view of the Russians' $6 million offer, Christie's had no motive to exclude them, he added. "It was very much in our interest to have these people in the auction."
He added that Ivanov's plans to sue were hardly a threat to Christie's, whose policy on verifying bidders' ability to pay has not changed for 100 years. The museum has "absolutely no grounds" to sue Christie's, he said.
Christie's refusal was predictable, given Russian banks' international reputation, said one Western bank official. "I don't think that is unusual," said Miljenko Horvat, president of Citibank Russia. "The credit risk of Russian banks is not very well understood even by those of us who work here."
In order to guarantee acceptance of a letter of credit, Russian banks must have their credit confirmed by a Western bank -- meaning the Western bank has taken on financial responsibility, he said.
The National Museum -- which is financed and run by a coalition of 15 private collectors -- has accumulated one of the country's biggest collections of jewelry manufactured by the imperial jeweler Karl Faberg?, said Elvira Sametskaya, a museum curator who occasionally works as a consultant for the museum.
During its year of existence, the National Museum has made a career of snatching up valuable antiques for rock-bottom prices, she said. Pending the renovation of a new space, however, the museum has no permanent gallery.
The Russian National Museum envisioned the diamond-studded "Winter Egg," which sold for $5.5 million Wednesday to an anonymous bidder, as the jewel in the crown of its collection.
The Moscow-based museum -- founded in 1993 as Russia's first private museum -- was prepared to pay as much as $6 million, and had sent a representative to Geneva to bid, Alexander Ivanov, the museum's director, said Thursday night. He said Mikhail Tyurikov checked into the Intercontinental Hotel with a Russian bank guarantee for the target bid with additional authorization to go to $7 million, if necessary.
Then, two hours before the sale, Christie's took away Tyurikov's bid number and physically barred him from the auction on the grounds that the museum had not supplied an adequate guarantee of payment, according to both the museum and Christie's.
Since the egg sold for $500,000 less than the museum's intended bid, the museum's representatives feel they have a right to reopen bidding, Ivanov said.
"This was a total scandal," said Ivanov, who left for Geneva on Friday morning to meet with lawyers about his proposed suit to reopen bidding. "We made the decision a long time ago that we wanted to buy the egg, so that it would return to Russia. We gathered $8 million together. We worked for this."
At issue is a Russian bank's letter of credit, which Christie's said it does not consider a genuine guarantee of payment. Christie's and Ivanov scrambled to resolve this issue in a flurry of 11th-hour faxes, at the end of which both parties were confused, and Tyurikov was back in his hotel room, empty-handed.
In early negotiations, a Christie's official said, the museum had promised a letter of credit from the Russian Bank of National Credit confirmed by the Bank of New York, which would imply financial responsibility on the part of the American bank.
The Russians did not consider the Bank of New York as a guarantor, but as a go-between, Ivanov said. When Tyurikov turned up in Geneva, his guarantee was signed only by the Russian bank. Officials at the Bank of New York would not comment on the case.
Bank officials in both the United States and Switzerland "clearly indicated that this was not a guarantee," said Franz Ziegler, director of financial administration for Christie's International in Switzerland. "We had an agreement that they would open up a letter of guarantee with the Bank of New York, and they simply failed to do so."
Particularly in view of the Russians' $6 million offer, Christie's had no motive to exclude them, he added. "It was very much in our interest to have these people in the auction."
He added that Ivanov's plans to sue were hardly a threat to Christie's, whose policy on verifying bidders' ability to pay has not changed for 100 years. The museum has "absolutely no grounds" to sue Christie's, he said.
Christie's refusal was predictable, given Russian banks' international reputation, said one Western bank official. "I don't think that is unusual," said Miljenko Horvat, president of Citibank Russia. "The credit risk of Russian banks is not very well understood even by those of us who work here."
In order to guarantee acceptance of a letter of credit, Russian banks must have their credit confirmed by a Western bank -- meaning the Western bank has taken on financial responsibility, he said.
The National Museum -- which is financed and run by a coalition of 15 private collectors -- has accumulated one of the country's biggest collections of jewelry manufactured by the imperial jeweler Karl Faberg?, said Elvira Sametskaya, a museum curator who occasionally works as a consultant for the museum.
During its year of existence, the National Museum has made a career of snatching up valuable antiques for rock-bottom prices, she said. Pending the renovation of a new space, however, the museum has no permanent gallery.
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