Osian's Art Fund: The Broken Paddle

Flamboyance and grandeur marked out Neville Tuli as India’s best-known art messiah. Today the collapse of his fund has revealed he got it all wrong
by Dinesh Narayanan, Elizabeth Flock, Shloka Nath | Jan 29, 2010

Read it at Forbes

No, it was not the money that I valued —what I wanted was to make all this mob of Heintzes, hotel proprietors, and fine ladies of Baden talk about me, recount my story, wonder at me, extol my doings, and worship my winnings.”
–Fyodor Dostoevsky in The Gambler

If the 19th Century Russian author were to live and search for a novel idea today, he could try telling the story of Neville Tuli, who spent 18 years gambling on horses at Laddrokes in London, returned to his roots in India where he became the best-known spokesman of the country’s art and launched the world’s largest art fund. The story would, of course, turn melancholic, detailing how he fell from glory with the plunge in the art market, struggled to pay his investors and stared at the risk of losing all that
he created.

One good place to start the plot would be the Mumbai office of ABN Amro Bank. A bank executive pays a visit to the office of Tuli’s Osian’s Connoisseurs of Art (Osian’s) almost every other day to recover money that the firm owes several wealthy clients of the bank who invested in an art fund sponsored by it. The dues are more than Rs. 40 crore. The bank has so far managed to extract some of that money. A lot remains. (ABN Amro declined to discuss the case with Forbes India but said it will review any client complaint and investigate).

Neville Tuli, the flamboyant chairman and managing director of Osian’s, needed about Rs. 115 crore to repay investors in Osian’s Art Fund – Scheme Contemporary 1, when the three-year scheme matured in July 2009. Unfortunately, a global recession froze the art market, landing Osian’s in a liquidity crisis and left the close-ended art fund marooned with unsold inventory and a cash shortage just around that time.

Soon, word spread that Tuli’s art fund wasn’t able to pay off investors at its close. This set off a reaction among the art fraternity, beating down the prices of the works of marquee names such as M.F. Husain and F.N.Souza in the fund’s portfolio. Surely, Tuli has told banks such as ABN Amro and BNP Paribas that referred their clients to the fund that it was only a “delay not default” caused by the art market reversal. But he