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Sotheby 's loses a diamond

The rare pink diamond set for auction last week in Sotheby's New York City gallery was, like the venerable institution, one of a kind. Appraisers at the 239-year-old auction house had estimated the value of the nearly flawless 9.58-carat gem at more than half a million dollars. But the day before the diamond was due to be auctioned, Sotheby's officials had a problem: the stone was missing.

Police and FBI officials were as mystified as the management of Sotheby's. The gem, known as Lot 296 and owned by a consortium of Japanese businessmen, had been protected by armed security guards and videocameras that snapped pictures every ten seconds. Nonetheless, when a customer asked to examine Lot 296 more closely, a startled Sotheby's clerk found in its place a cheaper diamond substitute (value: $10,000), apparently dabbed with pink nail polish.

Aside from the firm's employees, the only people who had access to the stone were a number of "very special clients," who were allowed to handle the diamond briefly while examining it. One of them may have been a little too special. FBI investigators believe that the switch was probably made during one of the intervals when the gem was out of the display case. They are now studying the videotapes to try to determine who did it. Said FBI Spokesman Joseph Valiquette: "It was a very professional job."

A major theft is one of the worst disasters that can befall an auction house, since it tends to undermine the trust placed in the institution by the owners of the fine art and other collectibles that it sells. But the missing diamond is only one of several problems now besetting the London-based Sotheby's. Last year the company lost $4.6 million on revenues of $80 million, and now it is fighting a formidable takeover attempt.

Two weeks ago, the Sotheby's board flatly rejected a $90 million tender offer made by Marshall Cogan and Stephen Swid through their company, Knoll International Holdings. Based in Saddle Brook, N.J., Knoll is part of a conglomerate that makes office furniture and carpet backing. Echoing their management's disdain for the Americans, Sotheby's art experts have threatened to quit en masse if the takeover occurs.

They may be forced to follow through on the threat. Sotheby's is vulnerable. Its would-be owners are determined and well prepared. Since Knoll owns 14% of the stock, Cogan and Swid are already Soth eby's largest shareholders. Unfortunately, from Sotheby's point of view, armed guards and cameras are no protection in a takeover fight. This file is automatically generated by a robot program, so viewer discretion is required.