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A recent audit conducted by a British accounting firm found that the Maison sought to secure funding for an auctioned artwork provided by the two founders of the Russian luxury retailer, the Maison’s parent company. It turned out to rely on internal financial deals made with external backers. These guarantees and increased debt have reportedly put Phillips in a situation where it faces “substantial uncertainty.”
as a response to art news A spokeswoman for Phillips said the issues raised regarding the company’s finances do not affect its internal business. “Phillips regularly assesses expenses. No adjustments to the company’s operations and staffing are planned,” a spokesperson said.
Records reviewed by Guardian He said the dynamics could bring “serious doubts” about the stability of the business.
Phillips, one of the world’s top three auction houses, has offices in New York, London and Hong Kong. It is owned by Leonid Fridrian and Leonid Stolnin, founders of Mercury Group, a Moscow-based luxury retailer.
Auditors have flagged the auction house’s financial stability due to the risk to its £90m ($110m) property and the uncertainty about the owners’ ability to bear potential losses. rice field. The following year, Phillips will pay his £95.9 million ($117 million) to Mercury’s firm. Phillips owes £59.8 million ($74 million) to Russian companies, while £57.8 million ($71 million) owes the Russian group over an undisclosed period.
Philips’ parent company’s “exposure to the Russian/Ukrainian conflict” was also cited as a possible financial risk to the home. According to the documents, access to Mercury Group’s funds could pose problems for the Maison, in addition to potentially exposing it to financial laundering and reputational risks.
After the invasion of Ukraine last March, the auction house came under increased scrutiny for its involvement with prominent Russian clients and foreign trustees.phillips said art news In late February 2022, I did not expect Western sanctions against Russia and its business elite to affect housing operations and sales.
About a week before Russia invaded Ukraine, records reportedly show Mercury Group moved into a tax haven registered in the British Virgin Islands.
In a statement to Guardian, Phillips said its parent company has made a “significant” investment in the company since the acquisition was completed in 2012, albeit a small part of Mercury Group’s overall portfolio. The sale of the house began in 2008. The house ended up being $60 million. The owners have said they hope these investments will eventually pay off.