Art Market: Victorian values: Official objections and a disastrous fire ended an American millionaire's plans for a museum here to show his splendid 19th-century paintings. Now he is giving - and selling - up. Geraldine Norman reports

MAGNIFICENT Victorian paintings which were intended in 1986 for a museum in the heart of London are being dispersed at Sotheby's and Christie's this week. Fred Koch, the American millionaire who owns them, was refused permission by Westminster Council and English Heritage to turn St John's Lodge in Regent's Park into a museum - his scheme was thought too lavish and American, and therefore unsuitable for a historic building.

The paintings have apparently been in store ever since. Koch, who never speaks to the press, has not allowed either auction house to use his name, which makes identifying the paintings that belong to him a little problematic. However, his ownership of several important works is an open secret in the London trade.

The star turn is a 7ft painting by Sir Lawrence Alma-Tadema called The Roses of Heliogabalus, on which Christie's is forecasting a price

between pounds 700,000 and pounds 900,000. Tadema's classical scenes were admired and imitated by early Hollywood directors, and this picture is a splendid example.

Heliogabalus, the most debauched of Roman emperors, reigned from AD218 to 222, when he was murdered. One of his wheezes was to have his court smothered in rose petals in the course of a feast. In the picture a canopy has just been loosened and the emperor's guests are struggling with a cascade of pink roses. Tadema, who was at the height of his international reputation, asked pounds 4,000 for it; he painted the picture in London during the four winter months and had roses sent in weekly from the French Riviera by rail.

As a collector, Koch has particularly favoured narrative paintings and Pre-Raphaelites. Christie's is also selling an exceptionally beautiful late Pre-Raphaelite work, The Gentle Music of a Bygone Day by John Melhuish Strudwick, one of the most successful of Burne-Jones's followers. It is estimated to fetch pounds 300,000 to 400,000. A Lord Leighton which Koch has consigned to Sotheby's carries the same estimate; it is called Old Damascus and set in a handsome old Damascus courtyard - a servant is teasing apples from a tree into the pink silk skirt of a little girl. There are also great Middle East scenes by Edward Lear and David Roberts, an outstanding Atkinson Grimshaw landscape and a history painting by James Tissot.

Fred Koch is the eldest of four brothers, sons of another Fred Koch who invented a means of squeezing extra petrol out of the crude oil refining process; he sold his technique to Stalin, watched his Russian friends liquidated and became a rabid anti-Communist and founder member of the John Birch Society. Fred Senior died in 1967 leaving a business worth around dollars 250m. The second son, Charles, took over the chairmanship and turned Koch Industries into the second-largest private company in America.

In the process he has alienated two of his brothers, Fred and William, and there have been a series of fraternal clashes in the American courts. William's twin, David, has sided with Charles. In 1983 a settlement was reached, under which Charles and David bought out their two brothers' interest in Koch Industries; William reputedly got dollars 620m and Fred dollars 400m. William claimed his brothers had undervalued the company by more than 50 per cent and went back to court for more.

Fred was always the odd man out. The other three studied engineering at Massachusetts Institute of Technology, while Fred majored in English at Harvard and drama at Yale. The others went to work for Koch Industries, while Fred settled in New York and got involved in backing Broadway shows. With the 1983 settlement behind him, Fred turned into an important art patron. The Pierpont Morgan Library in New York and the Harvard Theater Collection are the main recipients of his largesse, but he also spent almost pounds 2m on the construction of the Swan Theatre at Stratford-upon-Avon.

He also started spending his

money on books and paintings. He collects 19th- and 20th-century literature - manuscripts, letters and rare editions - and is said to have a particular passion for Oscar Wilde. . He also collects drawings by book illustrators of this period, livres d'artistes and music manuscripts. Koch buys on an enormous scale and occasionally sells; Christie's sold 151 items from his collection in New York in June 1990 for dollars 953,282. The top price paid was dollars 110,000 for the autograph manuscript of Evelyn Waugh's Vile Bodies.

His scheme for St John's Lodge in Regent's Park combined his passion for art and literature. He set up a trust to run it whose purpose was defined as 'the advancement of public education, appreciation and awareness of 19th-century art, architecture and literature'. Besides restoring a building to exhibit the paintings collection, he intended to establish a reference library and award scholarships for the study of 19th-century art and literature.

When his Regent's Park scheme was turned down, he cast about for an alternative building and ended up with Sutton Place, near Guildford, Surrey, a great Tudor house built by one of Henry VIII's courtiers. It had formerly belonged to the legendary oil tycoon J Paul Getty.

Koch embarked on a massive restoration programme, which has now been going on for six years and is still incomplete. In the meantime, he bought superb antique furniture for the house and a collection of bronzes to complement his paintings - including at least three bronzes by Alfred Gilbert, who sculpted Eros at Piccadilly Circus.

On 7 October 1991 the high security warehouses of James Bourlet and Sons, art and antiques shippers, at Feltham, near Heathrow, went up in flames. The 40,000 sq ft building was gutted. It is said that all the furnishings Koch bought for Sutton Place, together with his collection of bronzes, were among the pounds 100m of art treasures that perished.

The paintings were, happily, stored in a different location. While no one seems to know why Koch has decided to sell them, it is a reasonable guess that the Bourlet disaster caused him to lose heart with his project. In June 1992, he sent to Christie's a masterpiece by Albert Joseph Moore entitled Red Berries. It was estimated at pounds 500,000 to pounds 700,000 but didn't sell.

Sotheby's was simultaneously asked to auction the 7ft David with the Head of Goliath by Guido Reni, for which he had paid pounds 2.2m in 1985, one of the few Old Masters in his collection. It too was left unsold. He has now applied for an export licence to take it to America.

After a bad start in the British salerooms he has had some dazzling luck in New York. In February Christie's sold a painting by Tissot for him, L'Orpheline, for a record dollars 2,970,000, and Sotheby's followed up on 26 May with a record dollars 2,532,500 for Alma-Tadema's Baths of Caracalla. It remains to be seen whether Heliogabalus's Roses can beat that price this week.

Sotheby's sale is on Tuesday 8 June; Christie's on Friday 11 June.

(Photograph omitted)