07/09/2004 12:00AM

Sanan backs up ethics talk with boycott

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LEXINGTON, Ky. - Satish Sanan, who recently launched an initiative to develop a code of ethics for the Thoroughbred bloodstock market, will boycott the select yearling market this year as what he called "a symbolic protest."

Sanan, who owns Florida-based Padua Stables with his family, is attempting to organize an industry-wide alliance to call for the development and enforcement of an ethical code. In a letter widely circulated among buyers, sellers, agents, and sales companies, Sanan has called on the industry to require agents to disclose what clients they are representing in a transaction and all fees and commissions they stand to receive as a result of the sale. He has also called for full disclosure of cosmetic surgeries and medications given to sales horses.

"Just as a symbolic protest, I am going to avoid the sales," Sanan said Friday. "The family feels very strongly that we should boycott them this year. This was a tough call for us to make, but we felt it was the right thing to do."

Sanan, 56, is among the top yearling buyers in the world and has been an aggressive bidder since entering the major sale circuit in 1997. He bought last year's top lot at Fasig-Tipton's Saratoga sale, a $2.7 million Unbridled-Words of War colt. His purchases have included $2.15 million Vindication, the 2002 juvenile champion, and $1.2 million Cash Run, the 1999 Breeders' Cup Juvenile Fillies winner. In 2000, Sanan spent $20,795,000 for 21 yearlings as North America's fourth-leading buyer by gross.

Sanan noted that Padua also has almost 90 yearlings, a factor that might have limited their auction purchases in any event. Sanan also said he had considered selling about 30 horses at auction this year but would keep those horses if he felt he had to in order to reinforce his point.

Sanan said he would not ask other buyers to follow his lead in boycotting the market. But he said if the Thoroughbred auction industry did not address ethical issues, more owners would likely gravitate toward private purchases.

The major yearling auction season begins this month with the July 19-20 Fasig-Tipton July sale in Lexington, followed by Fasig-Tipton's Saratoga auction Aug. 10-12, and the Keeneland September yearling sale Sept. 13-25.

Sanan's decision was met with disappointment at both auction houses.

"I was unaware of Mr. Sanan's decision and regret his position," said Fasig-Tipton executive Boyd Browning.

"You hate to lose a customer any time, but you have to respect their decision," said Keeneland spokesman Jim Williams. "And you hope that they may be a customer again in the future."

Sanan's decision came days after the British Jockey Club issued a code of practice for public and private bloodstock sales, saying it could ban violators from British racecourses.

The code marks the British Jockey Club's first foray into regulating bloodstock trade. "Although the code currently only applies to British transactions, I hope that other bloodstock trading countries may follow suit and adopt the same code or something similar," said Julian Richmond-Watson, the British Jockey Club's senior steward.

In general, the British code requires agents to declare potential conflicts of interest to their clients. Specifically, it calls for agents:

* Not to use their position to obtain "secret profit."

* To disclose any ownership interest in any horse they are selling to his client.

* To gain consent from both clients if a single agent represents both buyer and seller in a transaction.

* To relay offers presented to them on behalf of their clients in their entirety and respond to offers in accordance with their clients' instructions.

* To disclose so-called "luck money," payments paid to them by sellers or seller's agents after conclusion of the sale.

The code also says "a vendor must not offer any secret profit to any person whom he believes to be an agent acting for a prospective purchaser."

"If the Jockey Club is satisfied there has been a breach of the code of practice," the code says, "it is likely to consider this to be contrary to the integrity, proper conduct, or good reputation of horse racing, and the persons involved, whether bound by the Rules of Racing or not, may be banned from British racecourses and other licensed premises."

The code had been in the works since April and follows a pair of lawsuits over Thoroughbred sales. In 2001, a British civil court concluded that trainers Paul Webber and Oliver Sherwood had colluded to run up the price on a horse offered at auction. That prompted the Jockey Club to institute disclosure guidelines for trainers in their dealings with owners.

Early this year, another civil case arose over the private sale of the filly Foodbroker Fancy. Her trainer, David Elsworth, was offered a 5 percent commission by Foodbroker Fancy's owners, as well as an $18,000 bonus from the buyer's agent, Charlie Gordon-Watson. The Foodbroker Fancy case ultimately was settled out of court, but not before Judge Michael Dean questioned the legality of two-sided commission payments he called "secret profits."

In April, the Jockey Club established a working group under Thoroughbred Breeders Association president Philip Freedman, who oversaw the code's development. Others backing the plan included the British Horseracing Board, auction houses Tattersalls and Doncaster Bloodstock Sales, the European Federation of Thoroughbred Breeders' Associations, the Federation of Bloodstock Agents, the National Trainers Federation, and the Racehorse Owners Association.