Antiquorum SA Sues Former Management

November 30, 2007byWilliam George Shuster

Antiquorum, the world’s leading fine watch auction house, has filed civil and criminal complaints against its former management, citing an audit that allegedly found financial “irregularities.” The complaints, filed in late October in the courts of Geneva, Switzerland, seek to recover what one Antiquorum official called “tremendous amounts of money, multi-millions.”

Antiquorum officials also say they’re working on an IPO (public sale of common stock), coming within two to three years.

Osvaldo Patrizzi, Antiquorum’s founder and former chief executive officer who was ousted in August, says he’s has filed criminal complaints against Antiquorum and Artist House, its parent firm, in November, and is working on forming an auction company with “a new concept.”

Top officials of Antiquorum—all new since August, when Patrizzi and the former executive team were let go—spoke at a Nov. 30 morning press conference at its Geneva headquarters, reviewing their first 100 days and the company’s future.

Yo John Tsukahara, Antiquorum’s chief executive officer; David Smith, chief financial officer, Christophe de Kalbermatten, Antiquorum’s attorney; and Brandon Thomas, a top Antiquorum’s watch expert, addressed a dozen newspaper, news service and watch trade journalists in the 45-minute session. The press conference was necessary, said Smith later, to rebut “things circulating out there [about Antiquorum and its new management] that are completely false from our point of view. We wanted to document these issues, say that we’ve gone through a difficult time, but we’re in good shape, selling watches and looking forward to a good year.”

Yo John Tsukahara

Former Antiquorum officials, later the same day, also held a press conference in a hotel across the street to contradict allegations made by Antiquorum’s new management. Patrizzi addressed it by phone from New York, where he had an “important meeting on a new concept” for an auction company, he told JCK.

‘Excellent Condition.’ Tusukahra said Antiquorum S.A. is “in excellent condition with an excellent team of management, experts, and employees, [who] held strongly together during this precipitous transition.” Its healthy status, he said, is underscored by good results in its recent auctions and a specifically-commissioned, months-long review by independent auditor PriceWaterhouseCoopers, which found it’s in “good operational and financial shape.”

The audit, though, also detected, “some financial mismanagement and irregularities, caused by former management,” Tsukahara added. Based on those, Antiquorum SA has filed civil and criminal complaints against its former management “to secure the rights of the company, its shareholders and customers,” said Tsukahara. Details on the “irregularities” and complaints weren’t given, so as not to jeopardize the ongoing investigation, said Christophe de Kalbermatten, Antiquorum’s attorney.

However, the audit did show “Antiquorum is healthy and largely profitable, despite any potential impact caused by former management misconduct,” according to Smith, Antiquorum’s CFO. “Trading results for 2007 approximate those of 2006. We’re seeing a significant number of new clients. Overall, we’ll be stronger and better.”

‘Strongly Supportive.’ Tsukahara said Antiquorum’s parent firm, Artist House Holdings, remains “strongly supportive [and] continues to provide the means for further growth,” an indirect reply to some earlier Swiss reports that Artist House’s backing of Antiquorum and Tsukahara, an Artist House board member, had cooled.

When Artist House, a Japanese conglomerate, bought 50 percent of Antiquorum in late 2005, said Tsukahara, a process began to create a new management team and a “smooth handover,” when Patrizzi retired as CEO at the end of 2008. It was “clearly stipulated,” according to Tsukahara, that there would be operational, management and financial changes to prepare Antiquorum for an IPO (a privately-owned company’s first sale of stock, as it goes “public”). However, said Tsukahara, “the former management didn’t accept” the changes. That led this summer to “irreconcilable opinions on strategy and management of the company,” and, what Tsukahara called, “an unexpected acceleration of the hand-over,” when Patrizzi was fired in August.

Smith said that, “Often when a family-run company [like Antiquorum] is sold, the former owners [who stay with it] forget it belongs to someone else. That can be a problem, when there are new rules and regulations a public company has to follow, that the private entrepreneur didn’t, in converting a family-run business to professional organization.”

‘Stabilizing operations.’ At the end of “this difficult year,” he said, “we’re stabilizing operations. Next year, ww’ll continue to lay a firm base, initiate good business practices, eliminate some bad ones of the past, and begin creating the track record needed before committing to an IPO.”

The unexpected changeover in Antiquorum’s management did cause some problems. “Some clients left for one reason or another” since August, but “we’ve gotten new clients, and some old relationships that faltered came back,” said Tsukahara. Antiquorum horology expert Brandon Thomas noted that Antiquorum already has 800 watches consigned for auctions this year and next, and will continue its well-known “thematic” auctions (begun by Patrizzi), including one in 2008 on the “Rolex sports watch,” Antiquorum’s first thematic auction in New York City.

“Thanks to our extremely competent team of experts, Antiquorum’s operations continue at full steam,” Tsukahara told reporters. “Now the work of identifying irregularities is done, it’s time to get back to day-today business for our customers, management and company, and make Antiquorum grow.”

Antiquorum does about $100 million annually, and has branches in 10 cities serving 13 countries, including New York, London, Moscow, Paris, Milan, Munich, Shanghai, and Tokyo.