[CPProt.net] At Getty Trust, the trust part is lacking. Can friends impartially investigate friends? That's only one question troubling the arts institution. One answer: Look for new leadership.

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CRITIC'S NOTEBOOK
At Getty Trust, the trust part is lacking
Can friends impartially investigate friends? That's only one question
troubling the arts institution. One answer: Look for new leadership.
By Christopher Knight
Times Staff Writer

November 13, 2005

THE board of the J. Paul Getty Trust has formed a special committee to
examine the burgeoning controversies that have engulfed the institution, the
nation's third-largest private philanthropy, over the course of the last
year. One might say it's about time.

One might also say it's a day late and a dollar short. (Or $5.2 billion
short, given the Getty's vast wealth.) Not only does this plan not pass the
smell test, it's an offense to the olfactory system. To be meaningful, a
review committee should be independent and pristine, without a whiff of
conflicting interests. Instead, this one seems designed to embrace a hot
national trend: cronyism.

The Getty troubles trace back to trust President Barry Munitz — to serious
questions about his management of the city's most important art institution
and the troubling possibility of misuse of Getty funds. Yet all three
trustees named to serve with the board's chairman and vice chairman on the
new committee have close personal and business ties to Munitz.

Worse, two of them connect to the chief executive through the same business
relationship that launched the controversies in the first place.

Almost a year has passed since The Times reported that the Getty Trust sold
a Brentwood property to financier Eli Broad for $700,000 less than its
appraised value. That deal is suspect, even without the apparent discount.
The law prohibits the use of tax-exempt charitable assets for personal
benefit, but Munitz and Broad are close friends and business associates.

Munitz has denied being directly engaged in the land sale, but internal
records prepared by Munitz and reviewed by The Times indicate that he
instructed Getty staff to delay public listing of the property so he could
first discuss its availability with Broad. The documents also include a
staff directive to create the appearance of "reasonable distance from this
decision" for Munitz.

Munitz has served on the corporate boards of two companies founded by Broad
— AIG SunAmerica and KB Home. The special Getty trustee committee now
assigned to review his actions includes AIG SunAmerica's chief executive,
Jay Wintrob, a Broad protégé. A second committee member, Luis Nogales, sits
with Munitz on AIG SunAmerica's board and on the board of KB Home. Rounding
out the friendly trio is Lloyd Cotsen, who heads a local family foundation.
Munitz sits on that foundation's board.

Can anyone reasonably expect an independent review from this group? The
severely compromised committee is a symptom of the Getty's deep-rooted
problem, not its solution.

Remarkably, the coziness doesn't end there. The board has also retained a
well-regarded outside attorney, Ronald L. Olson, to assist in the inquiry
into the trust's practices, launched last summer by the state attorney
general's office. But, like Munitz directing his staff to create an outward
show of distance from the land sale to Broad, the board has fabricated an
appearance of diligent impartiality. The "outside attorney" represents the
company headed by the spouse of the special committee's vice chair, Louise
Bryson.

By now you will not be stunned to learn that his elite law firm has also
worked for KB Home.

Los Angeles County is home to some 10 million souls, and this is the best
they could do?

Given all of the entanglements, it is next to impossible to know who is
working for whose interests. The only thing that's certain is that the
public interest doesn't top the list.

The festering problems at the Getty Trust burst into view in October 2004,
following the abrupt resignation of Getty Museum director Deborah Gribbon
from one of the most coveted posts in the field. Without elaborating,
Gribbon cited sharp philosophical differences with Munitz. Since then the
scene has grown increasingly bleak. How did things get so bad?

At the time I noted one root cause: Munitz, since taking the helm in 1998,
has done what a corporate chief executive would do. He remade the board in
his own image.

More than half the 13 board members joined during Munitz's tenure. (Another
joined this summer, and in 2006 two more who were appointed before he became
chief executive will be replaced.) Like him, all are wealthy, even though
the Getty does not need trustee donations. Reflecting his own art-free
background, business and education figures dominate the board. Some are
collectors, but there's not a scholar, artist, intellectual or major L.A.
art figure in sight.

And unlike other arts organization boards, this one is only managing OPM:
Other People's Money. Getty trustees have little invested in the institution
they oversee.

Munitz has built a hollow but sympathetic echo chamber in the boardroom. The
special committee duplicates that fix — meaning it's not so special after
all.

Munitz's relations with the Getty board even reflect a cavalier attitude
toward self-dealing, which is the issue at hand in the land sale.
Self-dealing is the most explosive term in the lexicon of philanthropy: It
refers to the use of trust assets or income for the personal benefit of a
foundation officer, manager or trustee. The IRS forbids it, even if the
transaction can be shown to benefit the foundation.

In 1999 and 2000 Munitz presented more than $20,000 in gifts of art to four
departing trustees. A token of appreciation would have been a nice gesture,
but $20,000 in lovely parting gifts indicates a casual disregard for the
provision against self-dealing — especially since the trust's attorney had
warned against it. (Other board members later chipped in and repaid part of
the expense.)

A similar disregard marked the snafu over tens of thousands of dollars
Munitz directed to a documentary filmmaker whose company did not have
nonprofit status. (The company got the tax exemption a year after cashing
the Getty's first checks.) The finished film went on to win awards, but eyes
rolled when the credits rolled: Munitz's chief of staff was billed as
executive producer.

The Brentwood real estate deal was incendiary because it raised the looming
specter of self-dealing to precipitous heights. A sum in the hundreds of
thousands of dollars might seem like chump change to a foundation as rich as
the billionaire Getty — but try telling that to any other art institution in
town.

Money like that could hire a flotilla of buses to take schoolkids to Watts
Towers. It could underwrite a difficult exhibition at the Museum of
Contemporary Art, which a corporation might be afraid to fund. It might get
Self Help Graphics back on its feet in East L.A., or subsidize admission
prices that prohibit a lot of people from taking full advantage of the
city's exceptional artistic offerings.

Subsequent disclosures of Munitz's lavish compensation, travel and other
perks — many of them unheard of in the philanthropic field — were equally
shocking. Getty money seemed to have changed uses during his tenure, since
the annual average spent buying art — the lifeblood of the institution — had
simultaneously declined by one-third when adjusted for inflation. The roof
promptly fell in.

All-but-invisible oversight

WHEN that happens to a nonprofit, the exasperated question is always, "Where
was the board?" Oversight is the trustees' mandate.

But that's the wrong question. In practice, board oversight is faith-based:
Enormous confidence is placed in the organization's officers.

Boards are composed of successful people, and successful people are busy.
The Getty board is small and meets only quarterly. The chairman, John Biggs,
lives on the East Coast. Practically speaking, the board's oversight is
limited.

Consider Munitz's own example. Part of his argument for his unusually large
compensation package is that the Getty is an unusually large institution,
with exceptional management complexities. Yet while running it he has also
had time to sit on more than a dozen other corporate and nonprofit boards.
How much oversight can be expected from him, as chief executive or trustee?

A truer gauge of board supervision comes in trustees' response to a crisis.
The Getty board has flunked that test. For nearly a year it has remained
largely silent, obstreperous or stalled.

And now this "special committee" fiasco.

The board's inaction mirrors Munitz's mishandling of the most recent Getty
scandal. The museum's antiquities curator, Marion True, resigned last month,
just ahead of revelations about a personal loan arranged with the help of an
art dealer with whom she had done millions of dollars in museum business.
Getty lawyers informed trust officials about the deal in 2002 — but nothing
happened.

Munitz was not in charge when the loan was arranged, but by 2002 he had been
chief executive for more than four years. His failure to deal with the
ethical breach was a disaster. Papering over a bad situation then only made
it worse now.

Today, forming a special trustee committee made up of a chummy group of
personal and business associates carries similar risks. The stakes, however,
have grown. The board must learn the sober lesson of the Marion True
debacle: It should dump its embarrassing committee, put Munitz on
administrative leave and do the hard work of deciding whether that leave
should be permanent.


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Christopher Knight is The Times' art critic. He can be reached at
christopher.knight at latimes.com.

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