My partner is a CPA whose post-collegiate experience in audit came from Price Waterhouse. 20 years of my working life were spent in commercial lending with now sadly departed First Interstate Bank. I say this by way of indicating that explicit disclosure is how we are experienced in doing business. Those of you who have made purchases from us know that, whatever the type or scale of transaction, it is accompanied by a signed invoice.
And why not? I ask rhetorically. A signed invoice wherein are disclosed all the terms and conditions of the sale is a pretty basic contract, outlining as it does the mutuality of agreement between buyer and seller.
It is surprising, therefore, when I read today about a solicitor speaking to a conference of UK auctioneers who cautioned that it is not okay to pay a ‘gratuity’ to someone who directs to them a possible consignor. What a surprise. The auctioneers are further advised to disclose the payment of any such gratuity to all parties.
That this would have to be the subject of a public forum leads one to surmise that, in England at least, payments of what I would term kick-backs must be terribly prevalent. Very sorry to hear it, and very sorry to hear that auctioneers must be at least be reminded, if they even knew in the first place, that they have a fiduciary responsibility to their clients that obligates them to disclose all aspects of the sales transaction.
Perhaps I’m being too hard on auction houses, as kick-backs within the trade can take many forms. I am reminded of a discussion we had fairly recently with one of our lawyer-neighbors on Jackson Square. A nice guy, but as a litigator, he’s a bit of a bulldog- rather what you want, of course, if he’s on your side. He was inquiring about the extent to which we had done business with a prominent local interior designer. As it happened, he named someone we knew, but had never done business with. The lawyer went on to mention that he had prosecuted the designer, on behalf of the designer’s former client, for taking kickbacks from a couple of dealers in mid-century modern furniture that were used in the client’s home. Would the designer have used items from these dealers anyway? Perhaps, but that isn’t the point- the designer had not disclosed the receipt of this ‘gratuity’ to his client, which gratuity, of course, enriched the designer at the client’s expense.
Unfortunately, we have antiques dealer colleagues, not so many in this country as abroad, who love to pay kick-backs to anyone, interior designer or otherwise, who bring buyers into their shops. This may be considered by the dealer as a cost of doing business, but, of course, it is the buyer who ultimately foots the bill. One wonders, of course, how many and how much in ‘gratuities’ were paid by the dealer(s) involved in the evolving scandal mentioned in an earlier blog, and reported extensively in The New York Times involving the sale of fudged-up ‘antiques’ at inflated prices.