Auction of Nirav Modi's Artwork Collection Raises $8 Million

The fugitive billionaire, currently in a London jail, tried to block the auction, but the income tax department was able to proceed.

Over $8 million was raised on March 26 in Mumbai for India’s tax revenue department when an alleged $2 bilion bank fraudster’s art collection was successfully auctioned. This was the latest example of Narendra Modi’s bid to demonstrate his government is attacking corruption and punishing defaulting businessmen.

Good prices up to $3.7 million were achieved in the Saffronart auction for top works by two famous modern painters and by another from the 19th century, as well as other modern and contemporary artists.

The collection belonged (through a shell company) to Nirav Modi, a billionaire diamond jeweller and trader, who is now languishing in London’s Wandsworth prison awaiting extradition proceedings. In India, he is charged with money laundering and corruption.

Modi, 48, fled India in January 2018 when a $2 billion (Rs 13,000 crore) fraud centred on the government-owned Punjab National Bank emerged. He and his uncle, diamond trader and retailer Mehul Choksi, were the main beneficiaries of cash advances criminally obtained from overseas branches of Indian banks.

Saffronart conducted the live auction for Central Mumbai’s tax recovery office, having beaten Christie’s and two other Indian auction houses, AstaGuru and Pundole, to get the commission; the first ever staged for the tax department. Saffronart won partly on its ability to carry out the auction quickly, which the government presumably wanted so that it can demonstrate during the current general election campaign that it is beating fraudsters.

The total value of the auction sales was Rs 59.37 crore or $8.73 million (including buyers’ premium), which was at the top end of estimates, and 55 of the 68 lots were sold, including most of the important works.

Top lot fetches Rs 22 crore

The top lot, which fetched a hammer price of Rs 22 crore or $3.24 million (Rs 25.24 crore or $3.71 million including buyer’s premium), was a dense red 60in x 40in oil on canvas by Vasudeo S. Gaitonde, a leading Indian modernist.

It had the cache of having been shown in the Guggenheim Museum in New York and the Guggenheim Collection in Venice. The price achieved was less than an over-optimistic but undisclosed estimate made for the tax department by Mumbai’s Sir Jamsetjee Jeejeebhoy (JJ) School of Art that had probably been influenced by the Rs 25.5 crore ($4.38 million) record price achieved at a Christie’s Mumbai auction in September 2016.

The other most important work was a south Indian royal scene from the late 1800s by Raja Ravi Varma, who died in 1906, having built a reputation for merging European artistic styles with Indian life, seeking commissions from rich and powerful patrons. A 42in x 57in oil on canvas, it fetched a hammer price of Rs 14 core or $2.1 million (Rs 16.10 crore, $2.47 million including buyers’ premium). The hammer price was below the artist’s record price of Rs 20 core reached at a Pundole auction in Mumbai in 2016, but was close in dollar terms.

Worries that collectors might not bid because the works were tainted by being owned by a fraudster proved wrong. Some critics originally suggested that the collection included several fakes (a growing problem in auctions), and that Modi had poor taste. Neither turned out to be true. Whether he collected art simply to show off his wealth and display his artistic interests to his important friends and customers or whether he was a genuinely involved collector, many of the works in the auction showed that Modi had a discerning eye or at least listened to knowledgeable experts.

Both Varma and Gaitonde are regulars in most Indian auctions, as was another notable name in the collection, F.N. Souza, who was clearly a favourite of Modi because ten of his paintings were sold. Contemporary artists included Jitish Kallat and Subodh Gupta, and there were five lots by Chinese artists that sold at good prices.

Saffronart have their regular spring on line auction over the next two days, as does their online rival AstaGuru. There was a fear that some bidders might be tempted to wait for those sales, though that appears not to have happened. The annual South Asian spring auctions have also just been held in New York with Christie’s achieving sales of $5.84 million and Sotheby’s $3 million last week, so there has been plenty of competition.

Modi was a celebrated and internationally known jeweller with top society and film-world customers and rave articles in the Financial Times about his watch collection and an Indian architectural magazine about his art works.

Tracked down earlier this month by the UK’s Telegraph newspaper, it emerged that Modi had started a new diamond business after he fled to London.

He has been living, perhaps appropriately, in Centre Point, a luxury tower block of flats at the eastern end of Oxford Street that was regarded, when it was built for offices in the mid-1960s, as an outrageous example of rampant capitalism and property speculation.

He was arrested when he was  trying to open a new bank account soon after the Telegraph story appeared, and is now in jail (and demanding bail) while India’s request for extradition and his counterclaim for political asylum pass through the courts.

Acting against fraudsters

Curbing corruption and preventing black money flowing abroad have been a major focus for Narendra Modi’s government. The fact that Nirav Modi and his uncle managed to flee, having bled the Punjab and other government banks of $2 billion, was a serious embarrassment. A new Fugitive Economic Offenders Act that came into force last year allows the government to confiscate properties and assets of alleged economic offenders who go abroad to evade prosecution.

While it took a British newspaper to find the jeweller, the government has taken what action it could over the past year. Banks clamped down on the jewellery retail outlets to such an extent that the business collapsed. Modi’s 30,000 sq ft luxury seaside house near Mumbai that violated coastal planning regulations was demolished by authorities using explosives earlier this month.

The finance ministry’s Enforcement Directorate (ED) and the Income Tax department have a total of 173 paintings, of which Modi was the effective owner, and eleven vehicles that include Rolls Royce, Porsche and Mercedes models. The ED said that the paintings belong to Camelot Enterprises, one of Modi’s companies, and were commandeered by the tax department as part of their efforts to recover tax dues of over Rs 95 crore.

Modi’s lawyers took unsuccessful legal action on March 25 to stop the auction, alleging that Camelot only owned a few of the works and that the tax department did not have the right to sell the full catalogue.

Narendra Modi no doubt hopes that his namesake’s extradition proceedings, and those of Vijay Mallya, a failed airline businessman who is also holed up in London, will proceed fast enough for him to be able to claim that he is punishing corrupt and fraudulent businessmen, especially those who flee abroad.

This piece has been taken from the blog Riding the Elephant. John Elliot is a journalist and author of the just published book IMPLOSION: India’s Tryst With Reality.