Venture capitalist sues Christie’s over Picasso once owned by a criminal

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A wealthy art collector is suing Christie’s after the auction house allegedly failed to tell him a Picasso painting he bought had been owned by an individual convicted of a serious drug offence.

Brewer Management Corporation guaranteed that it would buy Picasso’s “Femme dans un rocking-chair” for £14.5mn if it failed to sell at an auction in February 2023, according to the lawsuit. The authorised representative of the British Virgin Islands-based company is Sasan Ghandehari, a London-based venture capitalist.

The lawsuit says the painting had been owned by José Mestre Sr, who ran his family’s port container operation in Barcelona and was convicted of an offence relating to drugs in 2014 after police found a 202kg cocaine shipment hidden on a cargo ship.

His son, José Mestre Jr, was the owner at the time of the sale, Christie’s told Ghandehari, according to the lawsuit.

BMC is claiming it would never have signed the contract to guarantee the painting if Christie’s had told Ghandehari about Mestre Sr’s conviction.

Ghandehari is asking Christie’s to cancel the contract and return the £4.8mn already made as part-payment for the guarantee.

In the art market, previous ownership can affect the future value of artworks. A provenance allegedly including a drug criminal could make a work harder to sell on.

Christie’s said: “This is a straightforward debt claim and Christie’s will robustly defend this claim and continue to pursue the sums rightfully owed to it. Mr Ghandehari is an experienced art market investor and collector, who has been active in the market for many years, across auction houses, and is well advised.

“Christie’s owes duties of confidentiality to its clients, bidders and buyers but is confident that it has complied with all legal and regulatory obligations in relation to due diligence of the work and our consignor.”

The lawsuit claims that a senior executive told Ghandehari that Mestre Sr had died and that “everything was above board” relating to the ownership history of the painting.

Ghandehari said he only found out that Mestre Sr “appeared to be alive and had been convicted of drug trafficking” through an internet search after the auction. The collector “did not want any of his own money being paid to Jose Sr or any person connected with him”, the lawsuit says.

The lawsuit alleges that Christie’s made representations about the Picasso’s ownership and provenance that were “positively misleading” and in effect covered up “the potential that it could represent the proceeds of crime”.

Third-party guarantees, where the guarantor receives a cut of the upside if a work is sold or agrees to buy it for a set price if no buyer emerges, are a standard part of the auction world. Ghandehari has previously guaranteed Picassos at Christie’s.

Elizabeth Weeks, a partner at law firm Rosenblatt with experience in art disputes, said “it tends to be quite stacked against a buyer” in a lawsuit against an auction house, which has “the weight of its terms and conditions”, including disclaimers and limitations, on its side.

Weeks added that due diligence on the buyer’s part, including verifying provenance information provided by an auction house, was “key”.