Warhol's box of tricks

Warhol in New York's Stable gallery, 1964, amid the Brillo box sculptures at the centre of the scandal. Photograph: Getty Images

In late 2003, Mayfair gallery owner Brian Balfour-Oatts was offered the deal of his career – a collection of rarely seen Warhol sculptures never before put up for sale. Painted white and silk-screened red and blue, the wooden boxes mimicked the 60s cardboard packaging for Brillo pads and represented a benchmark in Warhol's artistic output.

After shocking the art world with his infamous portraits of Campbell's Soup cans in 1962, Warhol began work on 100 wooden sculptures of packing containers for a range of products from Brillo scourers to Del Monte peach halves. When they went on show in Manhattan's Stable Gallery in 1964, many of his contemporaries denounced the artist for "capitulating to consumerism" but Arthur Danto, today one of the world's foremost Warhol experts, and a professor of philosophy at New York's Columbia University, recalled walking out of the exhibition in awe, believing he had just witnessed "the end of western art".

By the 1990s, Danto's view had come to dominate, with the wooden Brillo boxes much sought after. Since his death in 1987, the value of Warhol's work had sky-rocketed and Balfour-Oatts knew that, if genuine, these boxes were a gold mine.

Warhol's radical working methods can make it hard to discern what is and what is not by the artist. Delegating to a team of technicians who worked in a Manhattan studio he called the Factory, the artist created a conveyor belt that consciously blurred the line between individual authorship and mechanical reproduction. But Balfour-Oatts knew his way around the art world. He had worked for auction house Sotheby's before opening his own gallery, Archeus Fine Arts, which showed artists such as Lucian Freud and David Hockney. After decades in the business, he was convinced of the sculptures' authenticity. The reason for his confidence was his source: Pontus Hulten, a seminal figure in the contemporary art world who could provide an impeccable provenance for the pieces. An early champion of contemporary art and friend to Warhol, the Swedish curator had enjoyed an unimpeachable international career. Now approaching his 80th birthday, he was living in semi-retirement in the Loire valley, France. Balfour-Oatts arranged a meeting at Hulten's chateau, La Motte, unaware he was about to become ensnared in one of the most audacious art frauds of modern times.

As director of Stockholm's Moderna Museet, Hulten had staged Warhol's first European retrospective in 1968, filling the entrance to the gallery with 500 Brillo boxes. Quite a number were still decorating La Motte, Balfour-Oatts recalled: "A few were even being used as bedside or coffee tables."

Hulten described to Balfour-Oatts how the Stockholm exhibition had come about: "Pontus told me he went to see Andy in New York. Andy gave him a cardboard supermarket carton and told him to use it as a template for the Brillo boxes. So Pontus went back, made screens and created the [wooden] boxes." At least 100 had been fashioned in Sweden on Warhol's behalf, Hulten told him. This authorised manufacturing of Warhol's work did not faze Balfour-Oatts. By 1986, Rupert Smith and Horst Weber von Beeren, two printers employed by the artist, had created more than 20,000 Warhols, the former telling one biographer: "We had so much work that even Augusto [the security man] was doing the painting."

Warhols had become a shrewd investment, especially since 1995 when the Museum of Modern Art in Manhattan had bought the artist's 32 Campbell's Soup Cans for £24m, and Balfour-Oatts had been following the market ever since. A few months before his visit to La Motte, market analysts from Bloomberg predicted that the Warhol wave was nowhere near cresting, while the website Artnet calculated that some pieces had achieved a 27.09% rate of return for investors over the last four decades. Gold over the same period had reaped under 7%. Balfour-Oatts concluded that Hulten's 1968 wooden Brillo boxes were a good way in. The first batch had come up for sale in December 1994, a set of 20 sold by Hulten to a Belgian dealer, Ronny van de Velde. They had gone for £3,700 each, and sold the same year for more than £6,700 each. By 2000, the Wall Street Journal was advising would-be collectors to invest in a 1968 wooden Brillo box, highlighting one then being sold by dealer Anthony Meier, in San Francisco, as "a blockbuster work" at only $50,000.

Balfour-Oatts firmed up the deal. "I eventually bought 10 pristine ones for £45,000 each and another 12 that were slightly scuffed or had coffee stains on them for much less." He paid approximately £640,000, with help from a group of investors. Hulten provided a certificate of authenticity and, as a sign of goodwill, chucked in the original cardboard carton Warhol had given him as a template. Within three months Balfour-Oatts had sold on 10 of the wooden boxes through Christie's to a mystery buyer for £475,650, clearing at least £150,000 profit. The rest went to a rich American client for slightly less.

And the boxes would only increase in value. In 2005, Hulten donated his remaining collection of art works, including six 1968 Brillo boxes, to the Moderna Museet in Stockholm. In an accompanying catalogue, he left an account of their creation. "The Brillos were stacked in front of the entrance rather high," Hulten wrote. "There were some 100 Brillo boxes made in Sweden according to Andy's instruction. As the hundred did not seem enough in the rather big space, some cardboard Brillo boxes were added to the upper part of the stack and at the back. These came from the Factory. I still have one such cardboard box…" The wooden boxes, after the 1968 show, had been stored at the museum. "I retrieved them when I moved to Los Angeles," he added. When Hulten died in 2006, a single 1968 wooden Brillo sold at Christie's for £120,000, and the following year, 10 of these wooden Brillos, sold on by Balfour-Oatts, went on public display for the first time.

Their mystery buyer had been British dealer Anthony d'Offay, who has dominated the European contemporary art market for 30 years. Once Warhol's UK agent, d'Offay's Brillos now took centre stage at a retrospective staged by the Scottish National Gallery of Modern Art in Edinburgh to mark the 20th anniversary of Warhol's death. The following February, d'Offay announced he would be selling the Brillos to the nation, along with his entire private art collection – worth £125m, but knocked down, philanthropically, to £26.5m, or what he had paid for the works.

Then, earlier this year, Balfour-Oatts received the letter all dealers dread. He was being sued by d'Offay. It was alleged that there was a problem with the Brillos. They might even be fakes. With a mounting sense of doom, Balfour-Oatts made some calls only to discover that Christie's, too, was being sued. "I did everything I should have done to check out the boxes before I sold them on," Balfour-Oatts says. "They had come to me with glowing provenances and left my care endorsed by Warhol's estate. And now, suddenly, three years on, there's a whiff of scandal."

It was coming from Sweden, where another 1968 wooden Brillo box had, in April 2007, been pulled from a sale at the respected Stockholm Auktionsverk (auction house) following allegations that it was a modern fake. Its removal had kick-started something that had never happened before – an investigation into the two secretive bodies that straddle the world of Warhol: the Andy Warhol Foundation for the Visual Arts and itsauthentication board. This inquiry's findings would prove shocking for the foundation, its board and the lucrative market in pop art.

By virtue of its enormous bequest – 4,118 paintings, sculptures and collaborations, 5,103 drawings, 66,000 photographs, more than 100 films, 4,000 hours of video, as well as Polaroids, notes and sketches – the Andy Warhol Foundation for the Visual Arts has, since its creation in 1987, become a powerhouse in the contemporary art world. Besides the millions of dollars it accrues in selling its own Warhols, it also makes money licensing Warhol images and merchandising. All of this has enabled the foundation to govern an endowment of approximately $260m. In return, it is required (under the terms of Warhol's will) to give annual cash grants to artistic causes, that must, according to US charity laws, amount to 5% of the value of its holdings. The foundation has also gained kudos by opening a well-regarded Warhol museum in the artist's hometown of Pittsburgh, Pennsylvania.

Its influence stretches well beyond its headquarters in New York's Lower East Side. The foundation has also come to dominate the global market in Warhol by embarking on a project to publish a catalogue raisonné, a multi-volume compendium (still in progress) that purports to list all genuine Warhols, each item having been approved by the Warhol authentication board.

Set up by the foundation in 1995, the board was formed to quell rising concerns about the quality of the Warhol market at a time when the prices for the late artist's work were beginning to soar. By focusing on what could be said to be by Warhol, this board also decided what was not. According to dealers close to the foundation, the board was also a response to an internal inquiry that found that Fred Hughes, Warhol's former manager, who died in 2001, had authenticated numerous dubious Warhols.

The foundation has always insisted that it and its board are separate institutions and that the decisions of the board, whose advisors include experts and scholars, are completely independent from the foundation. Others dispute this, as two of the most important paid foundation staffers also work as principals at the board. The foundation's sales agent Vincent Fremont attends all board meetings and Joel Wachs, head of the foundation, is nominally the board chair. The foundation's catalogue raisoneé includes work verified by the board, and its research is conducted by two people who sit on both the board and the foundation.

With the board's backing, an "authenticated" work wins a much-cherished catalogue number. If rejected, a work is stamped twice with the word "denied" in red ink, before leaving its offices worth less than a beer-mat.

It is a process shrouded in secrecy. Decisions are never explained and a legal waiver indemnifies the board's decisions, protecting its members from being sued by irate collectors. The waiver also authorises the board to change its mind about a work's status, at any time, a sensible addition given that art scholarship is always being refined. However, the waiver has also bought the silence of dealers and collectors who fear upsetting the Warhol establishment lest it decide to transform their authenticated treasures into junk.

Talking Warhol with anyone in the international art world is extraordinary. "Don't tell anyone you've met me," says one famous east London dealer. A millionaire collector in New York warns, "I'll tell you and then deny we've met should it ever come out." A third sends emails using a specially generated address, shorn of all identifiers.

Before buying from Hulten in 2004, Balfour-Oatts approached the authentication board. It confirmed that Hulten's boxes were genuine. The 22 he intended to buy were among 94 Swedish boxes that had been authenticated since 1994, and that would be included in the 2004 catalogue raisonné. The entry states: "The wood boxes have been catalogued as they have been examined and identified since 1995. Although there are slight discrepancies among individual examples, the Stockholm boxes may be said to constitute a uniform edition."

But in June 2007, three months after the Stockholm Auktionsverk withdrew its Brillo box, the Swedish newspaper Expressen sought out art critic Olle Granath, a personal friend of Hulten, who had helped prepare the 1968 Warhol retrospective. Granath, who later became director of the Moderna Museet, had some startling information: there had been no wooden Brillo boxes on display in Sweden in 1968. Short of time and money, someone at the museum had decided to buy 500 cardboard packaging cartons directly from the Brillo factory in Brooklyn, New York. In an essay penned by Granath from 2007, he explained: "They were shipped in flat packs across the Atlantic and folded at the museum. The museum attendant and I became real wizards at folding boxes." Granath told Expressen that he had warned the art market to be wary of fakes as far back as 1997, going so far as to write to the authentication board when he had heard some wooden Brillos from Stockholm were up for sale, and doing the same in 2002, when he was approached by the board as it prepared to include them in its catalogue raisonné. He had heard nothing back.

Others who had worked at the Moderna Museet, such as professor Ulf Linde and professor Karin Lindegren, backed Granath's story, while Björn Springfeldt, who had arrived at the museum in the summer of 1968 and spent six subsequent years as its director, stated that he had never seen wooden Brillo boxes in the museum stores, as Hulten had claimed in his 2004 catalogue. Since all Hulten's sculptures that had sold in auction houses were made of wood, dealers and collectors were left to ponder where these boxes had come from and how he had got them past the Warhol foundation and board.

The Moderna Museet scoured its archives and located an invoice dated 10 January 1968, that proved decisive: 500 cardboard boxes had been imported directly from Brillo's factory in Brooklyn, New York. It sensationally "re-catalogued" the six boxes it had on display as "copies/exhibition material", while institutions and private collectors around the world, who had paid tens of millions of pounds for the 1968 Brillos, waited to see what the foundation and board would do.

Swedish journalists carried on digging and found that more than 105 wooden Brillo boxes had actually been manufactured at Hulten's behest in 1990, 22 years after the Warhol exhibition had closed and three years after the artist's death, the work carried out by two carpenters, moonlighting from the Malmo Konsthall gallery. But why would Hulten have risked his reputation? Thomas Anderberg, a Swedish art critic, suggests that these Brillo boxes were commissioned as props for a pop art show at the State Russian Museum in Leningrad, in 1990, where 10 had been exhibited. Forty five of them had turned up later that year at a museum in eastern Denmark, with 105 exhibited in 1992 at a Bonn museum where Hulten had become artistic director. By then, these boxes were recorded as the "property of a private collector", a subtle change in attribution that suggested props were becoming art works.

"Hulten didn't need the money," Anderberg says. "He had to be lampooning the market and dealers." Hulten's colleagues believe this, too. They point to his connection to a satirical Swedish magazine called Blandaren (The Mixer), a Private Eye-style journal that pokes fun at the establishment. Hulten was known, too, as a severe critic of the money-driven contemporary art market. His last job had been curating the inaugural exhibition at the Museum Jean Tinguely in Basel, dedicated to the esoteric Swiss artist who created sculptures that self-destructed in the galleries that displayed them. Says Anderberg: "I believe Hulten decided to show up the entire Warhol industry."

As Hulten was having his Brillo boxes knocked-up by carpenters in Malmo in 1990, the Andy Warhol Foundation was defending itself against a legal action that questioned a valuation of £60m that it had placed on Warhol's estate. What was regarded by some as a staggeringly low valuation enabled it to make far fewer charitable grants. Paul Alexander, an American journalist who reported on that trial, reflected: "Lawyers paid for by Warhol's own foundation happily arrived in court to denigrate Warhol's work – even claiming at one point that investing in Warhol could be 'risky' – to lower the value of the estate."

A New York judge ruled that the real value was £325m, a decision that coincided with the start of another legal battle, this time between the foundation and the New York attorney general, who began investigating allegations of mismanagement. This inquiry was in full swing by December 1994, when Hulten submitted a written statement to the foundation setting out the provenance of his wooden Brillo boxes as having been manufactured in Sweden in 1968 "according to Andy Warhol's instructions" for inclusion in the show. Hulten supplied no additional corroborative information and art historians who advised the foundation (the board was not set up until the following year), including Kasper Koenig, a colleague of Hulten's and a recognised Warhol expert, were perplexed. Koenig warned the foundation that the boxes on show in 1968 had been made of cardboard, having measured the gallery space himself in 1966 and calculated that 500 were needed in order to fill it. No one close to Warhol, especially Paul Morrissey, the artist's manager who attended the 1968 show, could recall seeing wooden boxes either. However, the foundation went ahead and authenticated Hulten's works.

On 3 March, 1998, the authentication board interviewed Hulten. Despite the 1994 warnings from Koenig and the 1997 letter from Granath, both of whom stated that all boxes from the show were cardboard, the wooden boxes were again authenticated, without corroborative photographic material or interviews with organisers of the 1968 show, the boxes subsequently appearing in the 2004 catalogue raisonné.

In 2006, the Scottish National Gallery of Modern Art in Edinburgh began putting together a major Warhol retrospective. Scheduled to run the following year, to coincide with the 20th anniversary of Warhol's death, the show had as its centrepiece the 10 Hulten Brillo boxes, said to be from 1968, that Balfour-Oatts had sold to d'Offay. The show ran from August to October 2007. Although the foundation knew the scandal about the 1968 Hulten Brillos was about to break by April 2007, when it was contacted by an auction house and critic in Sweden raising serious concerns, it remained silent until November. A source close to the Edinburgh show says: "Having collaborated closely with the foundation, getting images licensed, a catalogue prepared, checking the accuracy of all that we were showing, it felt like we were hung out to dry."

And no official report came until December 2007, when the board finally gave its initial response. While registered owners were told a probe was underway, Lars Nittve, then director of the Moderna Museet, was advised by the board that it "cannot determine whether or not these boxes were produced in accordance with the terms of a verbal agreement Pontus Hulten made with Warhol in 1968". The board signed off its report: "We want to assure you that the board is continuing to research into these works and will keep you informed of its findings."

Warhol experts such as Danto were incredulous: "Andy would never have given blanket permission to reproduce his work in this way." Brillo owners were furious.

The board's broad-minded approach towards the Brillos certainly seems to conflict with some of its own recent rulings, notably against Anthony d'Offay. In 2003, a Warhol print from the so-called Red Series of 10 self-portraits produced in 1965, was unexpectedly "denied" by the board. It was being offered by d'Offay to Charles Schwab, an American investment tycoon, for £1m and the dealer was now forced into the embarrassing position of calling off the sale.

The self-portrait appeared to have rock-solid credentials. Warhol had signed it, dedicating it to his business partner Bruno Bischofberger, who had bought it directly from the artist in 1969. Warhol had then chosen the image for the cover of his first catalogue raisonné, published in 1970. In 1986, Warhol had also signed a copy of this catalogue owned by d'Offay. Ten years later, the work had been bought by a private collector in Germany and exhibited at the Hamburger Bahnhof museum in Berlin, where a postcard depicting the image was copyrighted by the Warhol foundation.

And yet in 2003, this work was denied. The board told d'Offay: "It is the opinion of the authentication board that said work is NOT the work of Andy Warhol, but that said work was signed, dedicated, and dated by him."

The board explained that this series of self-portraits had been produced by an outside printer – although Warhol selected a photograph, chose the colours, guided the process and approved the results. It's a decision that seems even more mysterious given the fact that the foundation owns one of the same Red Series prints.

D'Offay has declined to comment on the controversy over the Red Series self-portrait or the 10 1968 wooden Brillo boxes he bought from Balfour-Oatts. But others who own pictures from the same series are now suing the foundation and its board, claiming that these decisions are not random but part of a calculated policy of monopolising the market to manipulate prices – something the board and foundation are vigorously contesting. These litigants include Joe Simon, an American film producer based in London, and Susan Mearns, an American collector. Both allege that the foundation and board have come to exercise a questionable domination of the market, artificially controlling prices and creating scarcity to increase value, in a fraud that goes back 20 years.

Claudia Defendi, for the authentication board, recently issued a statement in response to the Red Series furore, saying that, "Warhol was a highly productive artist, and like many other successful artists such as Rubens and David, he employed assistants and carefully supervised them; that Warhol controlled the way his work was made, how it looked, and was well aware of how many of each subject and series were made. There are clear distinctions between what Warhol made and what he did not, and that the goal of the Andy Warhol art authentication board is to clarify these distinctions." Denying Simon's Red Series painting, Sally King-Nero, of the authentication board, commented: "The board knows of no independently verifiable documentation for the period in question, 1964 through 1965, to indicate or suggest that Warhol sanctioned or authorised anyone to make [the work]."

Meeting the foundation is a strange affair. Joel Wachs, its president since 2001, is a former Los Angeles city councilman. Dressed down in an open-necked Hawaiian shirt at the headquarters in Bleeker Street, he wraps up the process in so many preconditions that there is not much we are able to report. Taping the interview is not allowed. Anything we would like to attribute to Wachs has to be agreed by him in advance. And he reserves the right to change his quotes upon reading them.

But the gist is this: there will be no settlements with anyone. And what he wants Joe Simon especially to know is that he is coming after him. He will never back down. And, should they lose, he will force them to pay every cent of the foundation's legal bills. Given that Wachs has hiredDavid Boies, one the most expensive trial lawyers in the world, the bill, for pre-trial hearings alone, is estimated to run into more than £2.6m of Warhol's money.

The trial, which is expected to start this winter, will not be restricted to the Red Series. It will also scrutinise the Brillo affair and many more of the board's decisions – including the recent authentication of thousands of works that it appears were never seen or approved by Warhol. One of them is an unsigned, un-numbered Marilyn print, put up for sale by Sotheby's in 2008. Slated for sale at between $30,000 and $50,000, this work has on its reverse three separate markings made by the foundation and the board. First it was initialled and authenticated by Vincent Fremont, official sales agent to the Warhol Foundation, some time before 1994. Fremont inscribed the work as "out of edition", meaning that, although identical to a numbered print run of 250 from 1967, it had not been approved by Warhol. Ivan Karp, New York dealer and Warhol's informal manager in the early 1960s, says, "Such works were normally printer's copies, an extra run to account for any mistakes in the series, or sometimes a souvenir for the printer, even his payment, as Warhol was known to frequently trade his art for services."

The next stamp on the Marilyn is a red cross "denied", added by the board after it came into being in 1995 and, according to Karp, decided that it could not authenticate works the artist did not know about. Then there is a third stamp, added when the print was returned to the board after 2007 – this time an outright authentication. Karp says that the reason the board reversed its decision was because it had itself amassed thousands of these out-of-edition prints, and begun to market them. "It changed its mind as it began to sell in 2007 and contacted dealers offering the works for sale, including the Marilyn." One of those approached was d'Offay, whose Red Series self-portrait had been "denied" and whose 10 wooden Brillo boxes were now being scrutinised.

The board has issued a statement on these issues: "The panel adamantly refuses to disclose the reasons works are denied authentication. This could provide a road map to forgery [and] moreover, explanations are subject to misunderstanding and misinterpretation."

The foundation is now understood to be justifying its selling of work that Warhol never saw or approved of by saying it is "expanding its curatorial base". A source familiar with the foundation predicted that new categories of Warhols were soon to be announced, ones that would encompass the 1968 Hulten Brillo boxes and account for the Marilyns with multiple authentication stamps.

In London, Balfour-Oatts, who has moved into a new business, remains disillusioned. "It's all very upsetting. I met Pontus several times. If he did do this he is a sneaky old bastard," he says. "This business is turning into what everyone always wanted the art world to be: full of dodgy dealings, fakes and forgeries. I'm glad to get out."