Friday, December 20, 2013

Fools and their money - thoughts on wine fakery & the Rudy Kurniawan case

Would you like to buy a Picasso that used to belong to Hemingway? I have a few of them I bought from a guy I met in the pub who discovered them in a walled-up cellar in Madrid. It's an amazing story; he's an amazing guy. Austrian or German - shares his name with  a very famous brand of spectacles. Not his name of course; he adopted it. Very amusing! 

Naturally, he can't tell me the precise location of that cellar - or why Hemingway never mentioned buying them - but a man from the auction house says the paintings are real and that's good enough for me. 

Not interested? How about one of my Renoirs? I've got quite a lot of them too. They came from another guy I met in the same pub. Comes from somewhere in Asia. Young, dynamic and mega-rich and splashing money around like it was confetti. And the thing about him is that he's an illegal immigrant! Isn't that cool? I really like dealing with wealthy, edgy people. And the amazing thing is that he manages to get all these truly amazing paintings from nowhere - at least nowhere he can actually name and he also kind of connects to a parallel universe. So he's got paintings Renoir painted before he was born! How cool is that?

So you're not tempted to let me have a few hundred thousand dollars for my paintings? Well, that's just too bad because I have lots of mega-wealthy people who are biting my hands off to get them. And they don't ask tricky questions about where I got them... They're just like some of the rich guys who bought all those fake bottles of wine we keep reading about.


I never met Rudy Kurniawan, the man who was found guilty this week for faking much of the $35m - yes, that's $35,000,000 - worth of "fine" wine he sold at auction. But in the 1980s I did meet Hardy Rodenstock, the man accused of faking the "Jefferson" 1787 Lafite. At the time, I did not know that Rodenstock was not his real name (he was born Meinhard Görke) but when I mentioned his family relationship to the German spectacle firm of Rodenstock he did nothing to correct me. Far more significantly, I also asked him the obvious question of how he came to have amassed such an extraordinary collection of great old bottles, including huge numbers of rare magnums and imperials.

Hardy Rodenstock, the source of wine that supposedly belonged to
Thomas Jefferson

At first, he simply said that he had a fine nose and an unusually good network. When I persisted and suggested that he might not be unique in either respect, he looked at me directly and said "many of them come from South America". Hearing those words - the kind of Rodenstock "cryptic comment" referred to by Benjamin Wallace in his book The Billionaire's Vinegar - spoken in a Germanic accent sent a shiver down my spine. We both knew that there would only have been one way for large amounts of pre-war wine to have got to that part of the world. And that would have been as part of the looted treasure shipped there by Nazis fleeing Germany at the end of the war. For me at least, the notion that the rightful owner of one's glassful of sublime 1921 Petrus might have ended his days in Dachau somehow reduced its appeal. Others may have had fewer scruples.

In fact, however, despite my memories of movies like the Odessa File and the Boys from Brazil, I did not actually believe Görke/Rodenstock's explanation, because I'd already heard enough stories of Bordeaux chateau-owners quietly questioning among themselves the authenticity of the bottles of their wines he'd presented at his famous tastings. It seemed to me to be far more likely to be a case of confessing to a smaller sin in order to deflect attention from a larger one. 

That conspiracy of silence among producers about the faking of their wines was maintained for decades. It was only broken in April 25 2008 when, at a New York auction, the Burgundian Laurent Ponsot bravely stood up and said "those aren't our wines" to John Kapon of Acker Merrall and effectively forced him to withdraw them from the sale. Kapon's memorable reaction at the time was to say "shit happens". 

John Kapon had to remove fake Ponsot Burgundies from his auction at
the last minute after pressure from Laurent Ponsot. But, as he says, "shit happens"

The seriousness with which the head of that US auction house took the suggestion that he was selling fake Burgundy was illustrated by the fact that, despite talking to Ponsot over the phone about the producer's concerns before the sale, it required a transatlantic flight by the Frenchman for them not to go under the hammer. If Ponsot had not got on that plane, there is every reason to believe that a wealthy wine lover or "collector" (or both) would have paid serious money for wine that the auctioneer had ample reason to believe was fake. 

The wine that bothered Ponsot was consigned to Acker Merrall by Rudy Kurniawan who claimed (but only after pressure from Ponsot) to have bought it from an untraceable "Mr Hendra" in Indonesia. If it had not been for the separate efforts of Ponsot and a legal suit from billionaire Bill Koch in September 2009 claiming that Kurniawan had sold him fake wine - through the same auctioneers - in 2005 and 2006, it is questionable whether any alarm bells would have rung.
Billionaire collector Bill Koch tells court that 1% of 43,000 bottle cellar
are fakes - but that these represent 25% of the value

Bill Koch who is worth $3.8bn and stands at number 329 on the Forbes Rich List has expensively gone to court claiming to have been tricked out of hundreds of thousands of dollars by both Rodenstock and Kurniawan. This does rather put me in mind of Lady Bracknell. "To buy crazily overpriced wine from one faker may be regarded as a misfortune; to buy crazily overpriced wine from two fakers looks like carelessness". 

Which brings me to the nub of the matter. While westerners condescendingly talk of the crisis of fake wine in China and of the stupidity of the wealthy Chinese who fall for the bogus bottles, little has been made of the gullibility of the people on this side of the world who have parted with tens of millions of dollars on wines with no proven provenance. The auction houses too, are a little like the banks in the way that they seem to have escaped much of the opprobrium they deserve for their lack of professionalism.

Stated bluntly, "Rodenstock" and "Kurniawan" arrived out of the blue, splashed around money, frequented the rich, famous and wine-fixated, and remarkably quickly transformed themselves into geese - miraculous fowl that reliably laid large numbers of golden eggs in the form of great old bottles of wine. If they had suddenly begun to offer Picassos or Renoirs like my imaginary friend in the pub, I think someone might have cried fowl. But in the wine world, we prefer wilful ignorance.

Establishing the provenance of a bottle of Bordeaux is supposedly tougher than that of a painting. Artworks are all identifiably unique, as are watches (which carry serial numbers). Un-numbered bottles of wine are not - which raises the question of why the labels of all fine wines aren't numbered as a matter of course. Especially now that they often cost more than the timepieces.

Obviously, numbering current vintages doesn't solve the problems of the older bottles at the heart of the recent scandals. For those, anyone wanting to be sure of not being taken for a fool needs to be able to trace the progress of the bottle from the original cellar to the person who is offering it for sale. Where that's not possible - as in the case of a vendor who refuses to say precisely where and how he obtained the wine, a very big health warning should hang over the transaction. And over the auction house or merchant brokering the deal.

But maybe none of this really matters. Maybe the auctioneers, merchants and producers who have cashed in on the recent stratospheric rise in the price of fine wine all owe Rudy Kurniawan a debt of thanks. Until of course confidence is sufficiently battered for the house of cards to come tumbling down. It may never happen, of course, but you never know: in the words of John Kapon, "shit happens".


  1. Great post Robert, it is amazing how the auction houses got unpunished and only the immigrant got caught don't you think?

    1. Thank you, and yes, certainly!