PARIS — In a warren of side streets not far from the stately Boulevard Haussmann is a squat concrete building that contains another world.

The Hôtel Drouot is France’s oldest, largest, most storied and most profitable auction site, a frenetic three-story bazaar of marvels and junk: Picassos and Basquiats, stamps and used handbags, dusty carpets, couches, clattering glassware. Its walls upholstered in ratty red velour, its 16 salesrooms teeming and clamorous, Drouot figures among this nation’s most beloved monuments to the material.

For years, the authorities largely ignored the whispers of swindles, scams, employees on the take.

But in December, the French police exposed what is said to be an extensive art-trafficking ring within the auction house. A dozen people were arrested on suspicion of theft and conspiracy to commit fraud, most of them “commissionaires,” members of Drouot’s clannish corporation of handlers and transporters; since then, four more have reportedly confessed to stealing. The police are said to have recovered more than a hundred missing objects and artworks, including several Chagall lithographs and a Courbet valued at as much as $135,000.

But perhaps more surprising than the thefts themselves is the culture of casual corruption that Justice Ministry investigators uncovered when they conducted their own investigation after the scandal broke. Crooked practices, they found, were not only widespread but broadly condoned. Drouot regulars were not surprised.

The auction house denies any wrongdoing, but has nonetheless announced a series of procedural changes aimed primarily at limiting, if not ending, its 158-year relationship with the commissionaires. The proposed changes, which include using outside companies for transport, have met with some support, but also skepticism and anger; boisterous Drouot has adopted a more sober tone of late. And with the auction house’s dominance threatened by Christie’s and Sotheby’s — they were effectively barred from the auction market until 2001 — the recent upheaval has stirred fears that Drouot, at least as it has been known and cherished for a century and a half, may never be the same.

“You have to know the dirty tricks, there are dirty tricks,” said Claude Pariset, 68, an antiques dealer from Champagne and a Drouot devotee for near 50 years. “It’s a racket,” he continued, waiting in the cafe Central for the evening truck to come for a newly acquired Louis XVI commode. “But that’s the job.”

December’s arrests came as little surprise, he said.

“The problem is that honesty is not rewarded in this business,” said Zareh Achdjian, 26, a third-generation antiques merchant and Drouot regular. Dressed improbably in Ugg boots, a gray pea coat and a dark brown Russian fur hat, Mr. Achdjian raced from room to room on a recent afternoon, laughing and chatting and bidding. He carried with him a framed series of yellowing pages covered in Sanskrit, for which he had just paid $400.

Since its founding in 1852, Drouot has been owned and overseen by the same auctioneers who wield the hammer there, a structure that long ago institutionalized many of the practices that have led to the scandal, say detractors and enthusiasts alike. In a practice known as “ballot stuffing,” auctioneers, who make a commission on each sale, fake bids in order to push prices higher, Drouot merchants say.

They say, as well, that as many as half their colleagues operate in auction rings, illegal schemes in which buyers agree not to bid against one another, keeping prices down. Conspirators then resell the objects elsewhere and share the profits.

Perhaps the most persistent rumors have concerned practices of outright theft: valuables slated for sale at Drouot are known to disappear from homes and trucks before they ever reach the auction house, apparently stolen by the auctioneers and handlers hired to inventory, pack and sell them.

“These are things that go on, that have always gone on,” said a justice official with knowledge of the ministry’s investigation, which is to be concluded in coming weeks. He spoke on the condition of anonymity, citing the continuing investigation.

Drouot’s president, Georges Delettrez, denied the auction house’s complicity in any theft. “We were stolen from. It is not Drouot that steals,” said Mr. Delettrez, an auctioneer himself, referring to the crimes uncovered in December. Despite 6,000 daily visitors and 800,000 items sold each year, only three official theft complaints have been lodged against the auction house in the past decade, he said.

At least one came from a Drouot auctioneer. In 2005, the auctioneer said, nearly $30,000 in clients’ merchandise disappeared during transport; some of the lost items were reportedly recovered in a storage container belonging to a commissionaire. The auctioneer declined to discuss the theft further and requested anonymity, saying publicity about the case had caused him “troubles” at Drouot.

Mr. Delettrez has laid most of the blame for whatever recent thefts may have occurred with the commissionaires, who dress all in black. Also known as the “cols rouges” or “Savoyards,” they are a notoriously insular group drawn exclusively from the Alpine departments of Savoie or Haute-Savoie and accepted into the 110-man collective only by majority vote. They have coordinated much of the auction house’s finely tuned chaos since its founding in 1852.

Of the 12 individuals arrested in December, eight were commissionaires, as were the four said to have confessed more recently. “We were betrayed,” Mr. Delettrez said.

The police declined to comment, citing their continuing investigation. True to form, the commissionaires have kept largely silent on the matter. But their lawyer, Jean-Philippe Confino, said the group had been the target of undue criticism. “If illicit practices had been going on for 150 years, mouths would have opened much sooner,” he said.

Some suggest that the commissionaires have been made scapegoats, while others note that, as yet, no trial has been held, no convictions handed down.

“Frankly, the commissionaires aren’t dishonest — at least mostly,” said Jean-Claude Binoche, 65, a Drouot auctioneer for the past 40 years. Mr. Binoche bristled at the implication that the accusations of theft might be symptoms of broader corruption.

“We tell the truth from morning until night,” he said. “I don’t understand why, in their hearts, people don’t believe it.”

Mr. Binoche was convicted of embezzlement in 2006, stemming from a 1995 auction in which he sold himself two works at vastly deflated prices, two Paris courts found. To Mr. Binoche and other defenders of the status quo, that was just the way things worked. The authorities “don’t understand anything,” he insisted. “For them — a bit like all the French — art should be in museums, it should be forbidden to own any.”

Many Drouot auctioneers, though, say the authorities were right to intervene. Drouot, they say, must modernize to survive; the Justice Ministry itself says it hopes to guide the auction house into change and, in effect, save it from itself.

“A catastrophe has befallen us,” said Claude Aguttes, a prominent Drouot auctioneer. “It’s exactly the sign we needed.”