When I started reading the NZZ article, I initially thought it was a rehashing of an article by Jose Perez. That article had earlier raised important questions about the Tropical Broad Arrow. I've recently questioned whether the methodology employed by Perez was valid. Well, in this case, subsequent events seem to have established that he was onto something.
The NZZ article reached a whole new level, for me, when it presented statements by Omega officials corroborating the fact that the Tropical Broad Arrow was not what it seemed. This was the first time the brand had apparently agreed with Perez, publicly. Subsequently, fantastic reporting by Andy Hoffman at Bloomberg and articles by Fortune and WatchPro largely corroborated NZZ coverage. The Tropical Broad Arrow was, in fact, a "made up" watch assembled from pieces of other watches. The community sometimes refers to these as "Frankenstein" watches, so I will use the nickname Franken Broad Arrow from here on out. The fact that this watch was built from parts that were not originally asssembled by Omega was not disclosed at auction. In fact, the catalogue entry notes the watch was, "Accompanied by Omega Extract from the Archives confirming production of the present watch on November 22, 1957 and original product literature." Possible bidders for the Franken Broad Arrow (with the exception of the fraudsters) had, seemingly, imperfect information when participating in the auction. Further, that information was materially relevant when it came to the historical importance, and value, of the timepiece in question.
I haven't spent much time discussing the method I use to decide what I will post on my blog. In fact, there is not a single method and it evolves over time. I did want to post about the Franken Broad Arrow because it speaks to the matter of imperfect information in auctions. There is a significant economics literature on this topic. However, this is the kind of story one does not write unless you obtain information, directly, from a reliable source. So, I contacted Omega's press office and shared details about my intent when it came to any information they might send to me. I indicated that this blog post was one likely outcome.
I didn't hear from Omega for a bit and that raised questions. These are questions that others had been asking. The key questions were: who assembled this watch and who put it up for sale? Prior stories made it clear that Omega was pointing the finger at its own employees, including a high profile individual who worked in the museum / heritage areas. Relatedly, did these individuals work alone or did they take direction from others at Omega / Swatch Group? Brands have some interest in seeing high auction price results since this can serve as the "engine" of the train that pulls along all other prices. As I waited for a statement from Omega, I became more concerned this might be a possibility.
A lot of that concern was alleviated with the response I received today. I have reproduced it here without alteration:
"OMEGA Statement concerning the 2021 auction of an OMEGA Broad Arrow
OMEGA and Phillips were the joint victims of organized criminal activity involving the selling of this specific watch by auction.
At the auction, hosted by Phillips, the Head of OMEGA Museum and Brand Heritage worked in tandem with intermediaries to purchase the watch for the OMEGA Museum, arguing that it was a rare and exceptional timepiece that would be an absolute must for OMEGA’s showcase collections, and should therefore be bought in this auction at all cost.
In fact, the watch is an assembly of mostly authentic OMEGA components, commonly called a “Frankenstein” watch. This timepiece is currently a key piece of evidence in the ongoing investigation that must also bring to light the seller of the watch.
Its false legacy allowed the profiteers to justify a highly inflated bid made through the intermediaries, which allowed those involved to collect and distribute the profits generated from the sale.
As it stands at present, there are three former employees (among them the former Head of OMEGA Museum and Brand Heritage), who have admitted to the run of events when confronted during an OMEGA internal investigation, which is active and ongoing. OMEGA is bringing criminal charges against all involved."
Frankly, this is what I would expect Swatch Group and Omega to do. At a minimum, the circumstances require a third party to investigate the role of insiders at Omega in perpetrating this fraud. Swatch Group is a publicly traded company and a wide group of shareholders have been victimized here. Without an independent investigation, too many questions linger regarding the validity of other watches accompanied by certificates of authenticity, since those certificates likely passed through the hands of the reputed fraudsters. This crisis threatens to create a major disruption in the value of vintage watch collections worldwide. By pressing charges, Omega ensures that the police will independently investigate and prosecute exactly those who were involved in the fraud. Pressing criminal charges suggests that the C suite at Omega / Swatch Group has a certain confidence in their own innocence in this matter.
I'll note here that the remainder of this story remains to be told. My hope is that the thread of this story is not lost as prosecutors and the police pursue this case. It is quite clear that any brand with an archive, auction houses, and collectors stand to learn from this very unfortunate event. The coming investigation will serve as an indespensible part of that learning process.
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