SOME plots could not be invented, even by Jeffrey Archer. Believe this one. The chief executive of elite auction house Sotheby's - a high-glam, fortysomething blonde with legs - plots secretly with rival Christie's. She gets caught, pleads guilty - it's price fixing - and faces three years in the slammer. In court in New York she pleads, 'My boss told me to do it. He's the real criminal. Jail him, not me.' But the owner of Sotheby's denies it. 'She's lying to save her skin,' he declares. It's one against one. Who's telling the truth? Nobody knows. Except, of course, the people with whom Sotheby's plotted: Christie's.

"The blonde": Diana D Brooks arriving at federal court in New York on October 5, 2000 to face anti-trust charges

The board of Christie's meets in London. Worried faces all round. These guys have only escaped the dock and the slammer themselves by giving maximum assistance to the Feds. Now the Feds want even more. Agenda: do we send Sotheby's boss to jail? If we say nothing, is it a travesty of justice for the blonde?

It's not fiction, not mad fantasy. Every word of it is true.

When Sotheby's chief executive Diana D Brooks pleaded guilty to illegal collusion with Christie's last October, she signed a plea agreement which was enough to make a decent woman shiver - even in Dede's ankle-length mink. 'Defendant Brooks understands,' reads the text, 'that the maximum penalty which may be imposed against her upon conviction for a violation of Section One of the Sherman Antitrust Act is a period of incarceration of three years and a fine in an amount equal to the largest of (a) $10 million; (b) twice the gross pecuniary gain derived from the crime; or (c) twice the gross pecuniary loss caused to the victims of the crime. In addition, Defendant Brooks understands that the court may impose upon her a period of probation of between one and five years and may order her to pay restitution to the victims of the offense.'

Defendant Brooks - preppy, well-bred, short skirts; star of stage, screen and radio; heroine of Sotheby's Duchess of Windsor and Jackie Kennedy Onassis auctions; darling of American millionaires - has suffered anguish in court over nine months and may have run up $3 million-plus in law fees. She has been sacked by Sotheby's and has resigned from the board of Yale University. She has brought Sotheby's close to financial ruin.

Brooks's fate is in the balance as I write. She has been waiting three long months for sentence. Her prayer has been that she has turned enough State's evidence against her 75-year-old boss, A Alfred Taubman, to send him - not her - to the penitentiary.

If she has failed - and if Christie's has added nothing to her claims that she acted on Taubman's orders - Brooks's future is stark: she swaps the floor-length mink for one to three years in an orange top and orange cotton tracksuit with drawstring, the ugly uniform of female prisoners in the USA. 'What a relief,' grunted a prime mover on Sotheby's board on hearing of the orange trousers. 'She never did look good in stripes.' He added with relish that it is a special pleasure of American women's prisons that they deny hair dye to the inmates, so Brooks, if sent to the slammer, would look half blonde, half black by April. It would be an unprecedented humiliation for a girl from Miss Porter's School at Farmington, Connecticut, the Benenden of American education. The open, undiluted joy at senior levels of Sotheby's at Diana Brooks's comeuppance is one of the most unexpected features of this case.

If she escapes jail - and orange trousers - there are still painful fines to be faced. At risk, for Mrs Brooks, is her personal fortune, not least her 1.4 million Sotheby's shares. These have improved from £7.08 on March 1, 1995 to £18 each on March 1, 1999. As interested as the judge in Brooks's shares is Sotheby's. 'Sotheby's expects to collect at least $25 million from her towards our $256 million settlement with sellers,' declares a senior voice in the New York management. Will Sotheby's be paying her legal fees? 'Almost certainly not.'

Equally, the damage so far costed to 'the victims' - Sotheby's shareholders and sellers at auctions in the United States, 1995 to 2000 - is $286 million. Double that sum, convert it to sterling, and Defendant Brooks stares at a fine of £400 million. Her assets, one may safely say, do not run to such sums.

Brooks's standard of living has taken a tremendous tumble over the past year. The mansion in the Connecticut River valley has been sold and the Brooks family has decamped to Florida, where her husband, Michael, owns a house. The only property now owned by Mrs Brooks for the courts to seize is a small apartment in New York.

'Get this clear,' says a top Sotheby's man. 'Diana Brooks is now a convicted felon. She will never again hold a position of trust, in public life or in a private company. She will have to resign all her boards. She will not be able to vote.'

The transparent gratitude at her departure makes this clear, also: Dede Brooks is now a non-person at the firm where she was a mover and shaker for so long.

Why did she upset so many? Scratch 20 people at Sotheby's, in London or New York, and you get these messages: she talked too much; she couldn't take criticism; she made crucial strategic mistakes; she made enemies of those who dared to disagree with her and when she quarrelled, she quarrelled for good; she lost Sotheby's most valuable players in personal disputes, yet admitted no weakness, saw none of her own fault lines; she made too many decisions without consulting; she hogged the television cameras, and the glory and limelight of the big sales. She bunkered herself, in later years, with cronies. That, at least, is the enemy case.

Those who remained loyal and close to Dede Brooks say that this is cruelly unkind; and that among her unsung attributes she much encouraged Sotheby's young. She was, of course, one of the few women to make it to the highest levels in a male-dominated profession. 'She was a galvanising force. She rebuilt our HQ in New York. She got this vast organisation online with Sothebys.com in 11 months,' says an admirer - though Sothebys.com, by the way of the world, lost $30.8 million in the first nine months of 2000.

'Brooks and Davidge,' Diana Brooks said to me in 1995, at the time of her criminal conspiracy with Christie's chief executive, Christopher Davidge, 'would be the greatest auction house in the world - if Sotheby's and Christie's did not exist.'

Brooks confided on several occasions her high admiration for her opposite number, the man who dragged Christie's out of the 18th century and, as best as he could manage, into the 20th. For a while, she was a bigger fan of Davidge and of his revolutionary attack on the inertia and defeatism at Christie's than were many in Davidge's own parish. For Christie's, even more than Lloyd's or Barings, was a uniquely conservative staff-mix of aristocratic poor relations, disinherited landed gentry, the sleepier Old Etonians and descendants of the Liberal Party sales of titles under Gladstone and Lloyd George.

Brooks met Davidge, socially and professionally, at intervals from 1991 onwards, more in London than in New York. She was well aware - as she once voiced to me - that the meetings between them, if held in the US, would attract attention under Securities and Exchange Commission rules. For Davidge, contact with Dede Brooks ran a smaller risk of offence; Christie's was a British-owned company, Sotheby's an American one.

Relations between them later turned poisonous. For Davidge beat Brooks at her own game, by taking Christie's in 1995 to world number one by sales and staying there for four convincing years; it was the first time since 1954 that Christie's was again market leader. Davidge's success demonised him inside Sotheby's and gave him legendary status in his own house, Christie's. Brooks could not easily explain how this forceful Englishman was scooping the biggest art collections on the market in the mid-Nineties - in her own New York.

After Christie's won the $93 million Loeb and $206 million Ganz family sales, Davidge debated with colleagues whether to take on the unprofitable $41 million Evelyn Sharp collection solely to deny Sotheby's three big ones in a row. Sharp was a socially influential New York sale (Evelyn's son, Peter Sharp, owned the fashionable Carlyle Hotel in Manhattan); victory was assured to the auction house which offered the highest guarantee; a third loss by Sotheby's would have been the end of the line for Diana Brooks. Like a shrewd football manager analysing his opposition, Davidge decided, after not much loss of sleep, to give Sharp to Sotheby's. Dede, though saved from dismissal, was hardly gratified. Sotheby's overestimated Sharp's 20th-century paintings with its guarantee of $57 million and lost more than $10 million on their sale.

After 1997, contact between Brooks and Davidge declined. Both spoke in private of a loss of trust between them. Mrs Brooks revenged herself for Sotheby's misfortunes by secret telephone calls to journalists such as me to point out smuggled lots in Christie's catalogues. She would also rage against Lord Hindlip, Christie's jokey new chairman, and brief against him. Both Brooks and Davidge came to complain violently of disinformation handed to the media by the other. The golden days were over.

But how, in better times, could Diana Brooks and Christopher Davidge have been so stupid as to collude - announcing in spring 1995 identical new charges for sellers, new charges of vast complexity, but somehow miraculously the same?

The answer, for cynics, is that the habit of not competing (on charges to clients, at least) had become ingrained down the years. That philosophy was never more explicitly set out than by Sotheby's former accountant, Peter Spira. 'The reason why each house has to have the same commission structure,' he explained abjectly, 'is that clients would immediately flock to one if it offered more advantageous terms than the other.' Well, yes, they would. Spira believes that it is enough for Sotheby's and Christie's to compete on service and expertise. Or, as so many of Christie's old guard have said to me down the years, 'what's the point of battling with Sotheby's? Forget sales, forget market share and who's number one. It's only profit that matters.'

Davidge, however, and his highly effective first chairman from 1988 to 1993, Lord Carrington, were not so lazy-minded. They were intensely keen to restore Christie's status as world number one by sales after 42 years' inferiority to Sotheby's.

Fighting Sotheby's was second nature to Davidge. His collusion, therefore, was deeply unexpected. But he had reasons. Art was in the pit of recession. Christie's was stalked by takeover bids like lions in the jungle. Profits at both houses were minimal, respectively a mere 1.98 and 2.48 per cent of sales. Experts were sacked in dozens. High-end, million-dollar pictures were so uncommon at auction that a nil-charge strategy was introduced to entice sellers.

It was an era of suicide economics, and perhaps Christie's had no choice. It announced a new sliding-scale tariff on March 10, 1995. Publicly, Brooks declared, 'Sotheby's is studying this carefully and has no further comment to make for the moment.' But in fact her decision was already taken. Five weeks later Sotheby's - Tweedledee - followed Christie's identically. The new charges delivered the goods. By March 1997, profits doubled to $53.6 million and $68.3 million and directors at both houses did well from these spectacular increases. In those two years, Christie's shares rose from £1.48 to £3.16; Sotheby's from £7.08 to £10.35. None of these handsome gains made on the back of an illegal deal is known to have been handed back by directors at either house.

The announcement of the new charges was, in part, an elaborate hoax. On March 10, Davidge phoned me in Brussels with full details. Later, I phoned Brooks in New York about them. 'What new charges?' she asked innocently. She took down every word. She demanded to know what she already knew backwards. If I was suckered, so too was Sotheby's board. 'We debated these charges for hours in March and April 1995,' reveals one of her then top three. 'She insisted. We thought the decision might go either way. Now we know it was all pretence.'

How did it all come out? It is, until now, a mystery. At Christmas 1999 Christopher Davidge, resigning as chief executive, handed his personal papers to Christie's. They were revelatory. Many were handwritten notes of exchanges and phone conversations with 'DDB' (Diana D Brooks) and with senior colleagues, including 'AT' (Sir Anthony Tennant, chairman of Christie's, 1993-96) and 'CA' (the Hon Charles Allsopp, now Lord Hindlip, Tennant's successor). They told enough to send Christie's new CEO, Edward Dolman, headlong to the US Department of Justice. Dolman claimed the immunity granted to the first confessor in a conspiracy. The auction world fell in.

There are those who say that Davidge was consumed by revenge; that this was Samson, shaking the pillars of the temple. It is not so. The most important factor for Davidge was that his relations with Francois Pinault, Christie's new French owner, were breaking down. They were breaking down also with the chairman he appointed in 1996, Lord Hindlip. 'God knows what to do with Charlie,' declared Davidge, close to despair, at lunch in 1998, his head in his hands at a series of recent disasters; his response was increasingly to cut Hindlip out of key information and decision-taking in Christie's. Hindlip, captain of the Christie's old guard, made repeated and furious complaints to Pinault - followed, says the Christie's 'Deep Throat', by an ultimatum. For Pinault, it was a choice between an English lord who danced with the Austrian Rothschilds and Christie's most able manager in modern times. His CEO saved him any trouble.

Reading a stormy future, Davidge, with three-and-a-half years left on his contract, chose to resign rather than be pushed. He collected a generous £5 million payoff (£3 million of it is still to be paid), most useful to him after divorcing Mrs Davidge II in 1999 and meeting Mrs Davidge III. Self-interest explains much of his motivation for going. The Christie's/Sotheby's collusion had absolutely nothing to do with it. But why did he hand in the papers?

The unexpected answer is legal self-protection. Davidge seems to have feared that the collusion might emerge from Brooks or some other enemy, at some future date. A nightmare vision of engulfing legal costs compelled him.

To cover all risks, he surrendered his papers to Christie's insurers. Companies cover the actions of chief executives by indemnities, both during and after they leave office. But insurers wish to know what they are being asked to insure.

Davidge told all. The rest is history. Christie's and Sotheby's, sued by outraged Americans, have promised to refund $542 million to sellers. The courts - still to approve this - may ask for more.

Sotheby's, cleansing the Augean stables, is boasting that those directors closely connected with the collusion have left. Not one director at Christie's, however, has resigned over the affair. Meanwhile the US Department of Justice is investigating Alfred Taubman, still the controlling shareholder in Sotheby's. Taubman, Sotheby's chairman from June 1983 to February 2000, has not yet been charged but has turned over $186 million of his personal fortune to assist with Sotheby's promised $286 million refunds. Why did he do this if he is guilty of no offence? Taubman calls himself 'the commanding officer of a battalion' and nobly declares, 'The offending behaviour happened on my watch' - though, he insists, he knew nothing of it. Dede Brooks alleges, contrastingly, that she acted on orders.

Others whose future is to be resolved include Sir Anthony Tennant, Lord Hindlip and Davidge himself - named as 'top officers' of defendants Christie's International in the New York civil suit brought by angry vendors. None is talking. Davidge, for one, confessed a fear of self-incrimination in September and took the Fifth Amendment. Clearly, if Sotheby's is asking its CEO for compensation, Christie's might get the same idea.

Christie's remains protected by a conditional amnesty. That amnesty, however, depends on its full co-operation - a matter of daily judgment for the US Department of Justice. Christie's dilemmas have plunged it into a terrified public silence. Its employees, even, are forbidden to talk to staff at Sotheby's, 'unless they are in the same family'. Careless talk could cost Christie's a $45 million criminal fine; and it could send some elegant people to jail.

What remains is the largest question of all: is Sotheby's Taubman guilty? The former chairman denies it vehemently; Diana Brooks asserts it passionately. If she acted on orders and she can prove it, she is less guilty.

Sotheby's and Christie's, the world's glamorous auction houses, have certainly kept Fleet Street in business in the Nineties. One scandal has followed another. They are not necessarily over.