Audio Transcript:

Aaron Schachter: Here is another story we've been following out of China. It involves a painting by a Chinese artist that was sold at an auction in Hong Kong a few days ago. It went for $3.7 million dollars. So you’d think it was well guarded right? Well, it was reported missing yesterday, but it appears the painting wasn't stolen. No, it may have been accidentally thrown out with the trash by the cleaning staff at a hotel. Phillip Hoffman is chief executive of the Fine Art Fund in London. He says the mystery of the missing painting in Hong Kong, reminds him of many others.

Phillip Hoffman: I barely might have dropped into the waste paper basket, but I mean it’s not the first time. I've been in the art world for many years and when I was back at Christie’s, there was a fantastic Rembrandt drawing that was a very small work on paper. And the owner was so worried about it, it was worth about $500 thousand, he had it put into a huge crate, and delivered to the back door of Christie’s. And then the owner rang the head of the Old Master Baums; He said, “Oh please, could you check the crate, it’s just arrived. And there should be my priceless Rembrandt drawing in there.” And when he got down to the back counter, the porter said to him, they said, “Where’ the crate? He says, “Well the crate was empty. Well looked inside. We couldn't see anything, maybe a bit of paper or something, but we just shredded it. So that was the end of one Rembrandt drawing that went through the shredder, but there’re so many more. I burst out laughing but, I realized afterward that is wasn't a joke. When one of my clients called and said, “I've just had report that a forklift truck has just put two beautiful holes through my three million pound mirror”, and I just thought he was joking. But it was absolutely true. They were trying to move the mirror painting, which was in a crate,and they put the two forklift prongs straight through the middle.

Schachter: When these things are shredded or destroyed, insurance must cover them right?

Hoffman: They do, but not always for the full amount. I mean, there was the infamous story of Steve Wynd, the casino owner, who hosted a great party for the sale of probably the most expensive picture about five or ten years ago; A Picasso, $130 million, and he sold it to one of the big hedge fund managers. And he was so pleased he had a big party to celebrate and he’s partially blind and he took one of his friends over and he said, “Look, come and have a look. I've just sold this picture for $130 million, and as he turned around he put his elbow straight through the middle of it. And the insurers then said, “Well, what’s the value we’re going to pay out?” And I think the starting point was, ‘I want $130 million.’ And the insurer said, “No, It’s the reduction of the value of the picture; that hole, we’ll give you $50 million.” Then there was a huge argument as to what they should give and what they shouldn't give. See, if you’re clever, you’ll have a policy that the insurers will pay out all of the loss, but if you’re not very clever, or you’re under insured, they won’t pay out anything.

Schachter: I’m sort of shocked in the way that insurance will cover these accidents.

Hoffman: Accidents do happen. I mean everybody tries to pay insurance to make sure that in the rare event that something like this happens, and it is fairly rare. It’s not like it doesn't happen every day, and I remember we had a porter who was carrying a $2 million pound Ming vase, and he dropped it. Some of the team in the department even said, you must get rid of the porter. He’s absolutely useless. He dropped the vase. And I said, “Well I think he truly deserves a promotion, because he’s probably the only guy that’s actually carrying anything, all the rest were too lazy to move anything.

Schachter: Or too scared.

Hoffman: Or too scared.

Schachter: We started by talking about this drawing from China that was lost in the trash. I never think of paintings as something that can be lost in the trash.

Hoffman: Sometimes they’re not...they’re wrapped in some rather miserable looking brown paper wrapping with string around it, and people don’t realize that there is a work of art. They think it’s a bit of rubbish. We had a Cristo, which was actually a work of art, made of polythene and string. And the recipient of it thought that the polythene and string was the wrapping. So they very kindly undid it all; the string and the polythene and found nothing inside. [Laughter] So we had a nice amount of polythene and string but [laughs] the work had gone.

Schachter: What’s it like to hold a million dollar, or several million dollar art work in your hand?

Hoffman: I mean I picked up a [Daega?], worth about $5 million dollars which we owned and handed it to a client to have a look at and they looked at it and said; “What is this?” And I said, it was by Degas, one of the dancer’s, and they said, “Well, what’s this worth?” I said, it’s about 5 million. And they said, “Oh my God! Don’t let me hold it.” I said, “Look, you know, you artists’ held works of art. I know that it’s a lot of money but you know, as long as one’s responsible, you know what we’re doing, it’s not impossible to pick up a work of art, you've got to hang it. You've got to take it off the wall. You just gotta be super careful when you do, especially at these types of values.

Schachter: Phillip Hoffman is the chief executive of the Fine Art Fund. Thank you for speaking with us Phillip.

Hoffman: Thank you very much, indeed.