French-Israeli telecommunications mogul Patrick Drahi is making headlines again as news emerged this week that his Altice cable company co-founder and former COO, Armando Pereira, has been detained in Portugal and remains in custody. detention as part of a major corruption investigation.
Subsequently, Alexandre Fonseca, President of Altice USA and Co-CEO of Altice Group, retired from all executive and non-executive roles at the company. Fonseca resigned from the Altice USA board on July 15, according to an SEC filing.
Pereira’s detention came amid a three-year investigation in private corruption, tax evasion and money laundering, according to published reports. Pereira is expected to be questioned by a judge but that won’t happen until tomorrow (July 19), according to media reports.
The involvement of executives of the Drahi-owned multinational has left some wondering about the implications for Sotheby’s.
Just over four years ago, Drahi acquired the nearly 280-year-old auction house for a cumulative $3.7 billion and took it private through his wholly owned US company, BidFair. USA. Sotheby’s shares previously traded on the New York Stock Exchange under the symbol BID.
While there is no direct link between the Portugal corruption probe and Sotheby’s, observers said the turmoil at two Drahi-owned companies was, at the very least, a distraction at one time where the international art market has shown signs of cooling and competition between major auction houses remains intense.
“It’s quite remote, both geographically and probably management-wise,” said an adviser who works closely with auction houses on behalf of shippers and customers. “But it’s certainly nothing anyone wants to deal with. There are enough questions in the market to begin with that no auction house wants anyone to focus on anything other than the art market. No distractions are helpful in a weakening market.
A representative for Jean Talamet, one of Pereira’s lawyers, told Artnet News: “At this stage, we don’t know how Mr. Drahi or Sotheby’s could anyway be impacted in the case involving Mr. Pereira.
Sotheby’s did not immediately respond to request for comment.
The latest scandal follows what appear to be other tax troubles for Drahi. last fall, a cache of leaked documents obtained by hackers revealed that Drahi’s art collection was worth around $750 million and was facing challenges from Swiss authorities over possible tax penalties related to the question of which “canton” or region he resides in .
According to a report in The world last November: “A battalion of tax experts, a possibly backdated contract and several West Indian shell companies: these are the elements of the operation which enabled Patrick Drahi to avoid paying taxes on the transfer of his vast collection of works of art, estimated at a value [approximately] 750 million euros. This aggressive tax optimization strategy flirts with the limits of legality,” according to the report.
Another of Pereira’s lawyers, Pedro Marinho Falcao, says Bloomberg News that his client “has been the target of a widespread attack in Portugal in recent days. The communication surrounding this operation was done in such a way that it led to its immediate condemnation in public opinion… the reality is not that simple.
Drahi co-founded Altice, the telecommunications group which includes Altice Europe NV and Altice USA, which is listed on the New York Stock Exchange. Although Pereira no longer holds an official role at the company, he was long considered Drahi’s “right hand man”, sources told Bloomberg.
Years of aggressive debt-driven acquisitions have left the companies under the Altice umbrella with more than $50 billion in debt, according to the Bloomberg report.
Meanwhile, Altice USA purchasing director Yossi Benchetrit, who is Pereira’s son-in-law, has been placed on leave while the company conducts an internal investigation in response to “circumstances in Portugal”.
“We take this investigation very seriously and we will continue to act diligently and urgently to make decisions that are in the best interest of our employees, customers and shareholders,” said Dennis Mathew, President and CEO leader of Altice USA in a note quoted by Bloomberg. “Altice USA leads its affairs with the utmost integrity.
According to a separate report by Bloomberg, bonds linked to the Altice group plummeted after news broke that key figures in the company are being taken up in the corruption probe. “Altice International’s junior ratings have fallen around 10 cents on the euro to 54.5 cents since the start of the week,” the report said.
Follow Artnet News on Facebook:
Want to stay one step ahead of the art world? Subscribe to our newsletter to receive breaking news, revealing interviews and incisive reviews that move the conversation forward.
