Eskandar Maleki alleges deals were undisclosed, Amir Shariat countersues for malicious falsehood and defamation
The Iranian-born collector Eskandar Maleki is suing his former art adviser Amir Shariat for taking undisclosed commissions from the sale and purchase of art over nine years. He is asking for the restitution of more than $1m plus €800,000 relating to various transactions as well as damages, interest, and legal costs, among other things.
According to papers filed in the Commercial Court in London, Maleki is accusing Shariat of making “substantial undisclosed and unauthorised profits” when buying and selling art on behalf of Maleki and companies controlled by him. Shariat denies the allegations and has filed a counterclaim against Maleki and his wife Fatima for defamation, malicious falsehood and harassment.
In 1993, Shariat moved to London from Vienna, where his parents lived. Because their families were close, the Malekis, who have a home in Mayfair, agreed to “look after” Shariat and treated him “as part of the family”, Maleki’s claim states. The couple say they introduced Shariat to their contacts in the art world and in July 2004 made an oral agreement with Shariat for him to “purchase and sell works on their behalf” thus enabling him to establish his reputation in the art industry. It was agreed that Shariat would not take any payment or commission for these services because he was instead happy to build a reputation as a collector of valuable contemporary art, Maleki alleges.
Maleki has provided the court with an email sent by Shariat to Maleki’s wife Fatima on 14 May 2012 in response to the suggestion made by a third party to the Malekis that Shariat was taking unauthorised commissions. “This is total rubbish and I am happy to confront the person with you…People are jealous of success and that’s what it is. I have been offered many times commission in general and have always refused,” Shariat wrote in his email.
But Shariat and the Finsbury Trust Company Limited (FTCL), a corporate services organisation based in Gibraltar which is also being sued by Maleki, “fraudulently misrepresented” the price of art bought and sold on behalf of Maleki and are guilty of a breach of fiduciary duty and deceit because their invoices did not specify any commission or charge payable to them, Maleki alleges. For example, he says, in April 2013, Shariat said that there was a buyer at $300,000 for Glenn Ligon’s Figure #51, 2010, which he was selling on behalf of Maleki. FTCL sent an invoice for this sum to Azure Glory Limited, a company set up by Maleki in the British Virgin Islands. But the work was then sold by Shariat and FTCL for $375,000, to the Lindon Gallery, London.
FTCL acknowledges the details of the Ligon deal but denies acting on behalf of Maleki in this, or any other, art purchase or sale. “Finsbury entered into relevant transactions as principal and there was nothing preventing it from making a profit from the sale and purchase of art,” the company states, adding that it had no “contractual relationship” with the collector or owed him any fiduciary duty. In a counterclaim against Maleki, FTCL says that it is now facing legal action from the Lindon Gallery because the gallery paid $375,000 for the Ligon painting but FTCL has been unable to deliver the work because it has been withheld by the Malekis who are seeking to rescind its sale.
In his defence, Shariat denies receiving the assistance of the Malekis when he moved to London; denies acting as their “agent”, and denies the existence of an oral agreement with the couple. He says that the suggestion that he would agree to work for them for nine years without any “profit whatsoever” is “wholly inconceivable”. When he sold or bought work to or from the Malekis through his company the Rouhina Trust (RT), “at all times RT would purchase the artwork before subsequently selling that artwork to Mr Maleki or one of the [companies controlled by him]; and at all times RT would purchase an artwork from Mr Maleki before selling to a third party or retaining it in [its own] collection. [These] dealings were arms-length commercial sale and purchase transactions on a principal to principal basis and were not made pursuant to any [contractual] relationship,” Shariat states. For example, on 11 April 2012, RT bought a work by Rudolf Stingel—Untitled, 2012—for $400,000, but this was not sold to Maleki until 28 June 2012, for $450,000. “RT bore the commercial risk on this work for over two months.”
Furthermore, Shariat says he had an “express agreement” with Maleki that he would receive a discount when buying works as part of a group purchase enabling him to profit from transactions. He cites several works by Allora & Calzadilla which Shariat negotiated to buy in November 2010. This involved the acquisition of multiple works by the artists by several collectors, including the Malekis, from a single vendor. As Shariat had set up the deal and negotiated a discount “it was agreed and/or understood that he would be entitled to a greater discount on his piece than the other members of the group would be on their pieces”, his defence states; the Malekis were given a 15% discount, whereas RT received a 25% discount.
In a counterclaim against Eskandar and Fatima Maleki, Shariat alleges that the couple have engaged in a smear campaign against him; “avowedly expressed an intention to ‘destroy’ [him] and his reputation, to ‘make sure he goes bankrupt’ and to ‘punish’ him. Mr Maleki has even threatened to use [the couple’s] influence in Dubai to arrange for Shariat to be imprisoned there.”
“The Malekis strenuously deny all counterclaims which are brought against them and will defend them vigorously as groundless,” the couple’s solicitor Patrick Pennal of Keystone Law said in an email to The Art Newspaper.
A hearing will take place in London this month to determine how the case will proceed. A judge is expected to decide whether Shariat’s counterclaims against the defendants can be heard as part of the same proceedings.