Getty Book Deal Led to Questions of Conflict

Former J. Paul Getty Trust chief Barry Munitz agreed to pay retired Getty board Chairman David Gardner nearly $300,000 to write a coffee-table book after Gardner left the foundation’s board in 2004.

Gardner was hired to write the book just months after he intervened on Munitz’s behalf to help the chief executive secure a five-year contract rather than the one-year extension some board members favored.

The book deal came after years of pressure from Gardner on Munitz and other Getty officials to find a way to compensate him for his service on the board, records and interviews show. The will of J. Paul Getty, whose oil fortune financed the educational trust that bears his name, specifically stipulates that board members are to serve without pay.

Plans for the book, which was to commemorate the Getty’s 25th anniversary, were canceled in March, a month after Munitz resigned amid turmoil at the nonprofit foundation -- but not before Gardner had collected $178,000 over 19 months for little work.

Gardner says he produced a rough outline during that time but did not conduct interviews or begin writing. He blamed his lack of progress on the trust, which he said did not provide the necessary cooperation.

Internal Getty documents show that Munitz and his staff were discussing a book deal for Gardner in 2003, while Gardner was chairman and Munitz was negotiating his own contract. Around the same time, Munitz also spoke directly to Gardner about writing a book after he stepped down as chairman, according to two former Getty officials familiar with the discussions. Citing ongoing investigations of the Getty, the officials asked not to be identified.

Munitz and Gardner, a former president of the University of California, deny any impropriety in the book deal.

Several experts on the laws governing nonprofits, however, said that discussions of the book deal while Gardner was chair created a potential conflict of interest, because both men stood to benefit personally from the official actions of the other.

They said that the book deal could also be viewed by tax authorities as a waste of the Getty’s charitable assets -- because no book was produced -- or even as an “inurement,” a serious misuse of tax-exempt resources to benefit an insider. Though rarely pursued by the IRS, a finding of inurement can lead to revocation of tax-exempt status.

“This is beyond self-dealing,” said Frances Hill, a professor at the University of Miami School of Law. “It’s insiders with a sweetheart deal.”

Munitz and Gardner, who have known each other for 30 years, say there was no connection between the contract talks and the book assignment.

“There was absolutely no deal or arrangement linking the [book] project and the contract,” Munitz said in an e-mail to The Times.

He added that Gardner, who sat on the executive compensation committee, played no direct role in negotiating Munitz’s 2004 contract. Like most other board members, Gardner voted in January of that year to approve the committee’s recommendation of a five-year pact.

Gardner, who holds a PhD in higher education and has written and edited several books, said he never discussed a possible book project until his last week as chairman in June 2004.

“Such a prospect never came up, until just before I left,” said Gardner, 73. He said Munitz first suggested the idea the week before Gardner stepped down, and no deal was finalized until after he was off the board.

Gardner said he has not been asked, nor does he intend, to return the money. He said the questions he raised about compensation and perks were reasonable, and that he enjoyed similar benefits at UC.

John Biggs, the current board chairman and widely considered an authority on corporate governance, said in a recent interview that he was informed in advance about the book deal and raised no objection.

“I think it’s the most honorable relationship that I can imagine,” said Biggs, adding that the amount paid to Gardner was “peanuts.”

Munitz resigned amid an investigation by the state attorney general into allegations that he steered grants to friends, used staff extensively for personal errands and spent the nonprofit’s money on expensive or questionable trips. Munitz agreed to pay the Getty $250,000 and to forgo $2 million in severance pay.

The relationship between Gardner and Munitz goes back to the 1970s, when they were both involved in higher education policy. In 1991, when Munitz came to California to become chancellor of the California State University system, Gardner, then president of the UC system, welcomed him with a reception.

Gardner retired a year later, after the Board of Regents voted in a closed-door session to give him an extra $857,000 in pension benefits. Coming in the midst of a state budget crunch and student fee increases, the deal triggered a public outcry and prompted an outside review that concluded Gardner’s administration had acted contrary to “principles of public accountability and public trust.”

That year, Gardner was named to the Getty board. He later served on the search committee that picked Munitz for the Getty’s top job in 1997. Gardner was chosen as board chairman in 2000.

Several trust officials said Gardner put pressure on Munitz and his staff to find a way to compensate him. “This was a never-ending fixation,” said one former senior Getty official. “It was a topic that never went away.”

In 1999, Gardner asked Munitz and other trustees about the possibility of changing J. Paul Getty’s will to allow board members to be compensated for attending four or five meetings a year and performing other oversight duties. A Getty review prompted by Gardner’s request determined that, although many private foundations pay their boards, most museums do not. The Getty is a hybrid, with a trust controlling a museum and related institutes.

The idea was dismissed after an outside attorney for the Getty warned that paying trustees would require going to court to change the will and might draw opposition from the state attorney general.

Gardner continued to push for benefits such as secretarial help and a Getty-financed office in his Park City, Utah, home, but the staff concluded that such perks could violate Getty’s will. He ultimately was given a cellphone and a computer.

He then asked for permission to have his wife travel with him on official business at Getty expense. Outside counsel had advised that the travel support might also violate Getty’s will. Biggs introduced a rule change intended to get around the restriction by designating spouses of the board chairman and CEO as “senior volunteers” so that their travel could be covered as a business expense, records and interviews show.

“We in fact made an exception for the chairman of the board,” Biggs said, conceding it was a stretch. “I think he would have declined to be board chairman” without the perk.

Gardner said he wasn’t making demands, only raising unrelated questions about the possibility of changing Getty’s will, receiving office support as chairman and having his wife’s travel expenses covered.

“Each one seemed to me to be a perfectly reasonable, discrete inquiry, and that’s how I approached it,” Gardner said. “I didn’t say, what can I get out of the Getty?”

Several former Getty officials said that pressure from Gardner for compensation and perks gave staff nowhere to turn with their concerns about Munitz’s lavish spending.

“You felt like there’s no one to go to,” said a former senior official. “It’s like the scene in Chinatown where the guy says, ‘Why don’t you to go the cops?’ and the girl says, ‘My father owns the cops.’ ”

By 2002, Munitz had begun having conversations with staff members about finding some kind of paid position for Gardner after he retired from the board, according to the former Getty officials. By 2003, Munitz was also talking generally to Gardner about the book project, two of the former Getty officials said.

Interviews and records show that by June 2003, as the book idea was taking shape, Getty chief of staff Jill Murphy became concerned about the discussions of work for Gardner and brought them to the attention of Getty general counsel Peter Erichsen.

In anticipation of a meeting between Gardner and Munitz, Erichsen issued a memo warning the chief executive to avoid any “formal exploration” of a book deal with Gardner “while he is a trustee and chair of the board.”

“To do otherwise,” Erichsen wrote, “would expose the trust and its board members to unnecessary legal jeopardy and accusations of self-dealing and conflict of interest, and, worst of all, could embarrass our distinguished chair.”

Erichsen pointed to three legal areas that could be troublesome if his advice was ignored: IRS rules prohibiting self-dealing, the prohibition on trustee compensation in Getty’s will, and conflict-of-interest law.

Two days later, Munitz and Gardner met to discuss complaints about Munitz’s performance. Not long after, according to records and interviews, two key trustees approached Gardner with serious concerns about Munitz’s out-of-town travel and his deteriorating relationship with then-museum director Deborah Gribbon.

Trustee Lewis Bernard, a retired Morgan Stanley executive who chaired the compensation committee, wanted to send a warning to Munitz by extending his contract for just one year, Gardner said. Bernard declined to comment for this story.

Gardner said he told Bernard that such a move would “undermine [Munitz’s] position at the Getty.” Gardner said he coached Munitz on how to be a better manager and then reported back to Bernard and others that Munitz was making progress. By the time the contract vote came up in January 2004, Bernard had changed his mind and recommended that Munitz be given a five-year deal, Gardner said. Gardner signed the contract in February 2004.

Over the next four months, Munitz and Gardner on at least two occasions discussed possible future compensated work for Gardner, a Getty review later found. In the first conversation, they discussed a management consulting job that never came to fruition, the review found.

Munitz’s handwritten notes from the second conversation, which took place days before Gardner stepped down as chairman on June 30, show the two discussed the book project and whether the Getty would pay Gardner’s wife to work as a researcher or editor, the review later found.

Records show that Munitz wrote Biggs in mid-July to report that Gardner was “willing, indeed happy, to consider taking the lead in writing what we discussed as a ... visually attractive ‘coffee-table volume’ ” and accompanying analysis for the board.

Gardner named his price, and Munitz agreed to pay him $8,000 a month for three years starting Sept. 1, 2004. Plans called for him to visit Getty projects in Tunisia, Egypt, China and Italy at trust expense as part of his research, records and interviews show.

Gardner said he met several times with Getty staff to view documents he needed for the project, but he found the records in disarray. The staff eventually sent him a laptop computer containing the records.

Gardner said the trust denied his request for access to its oral history collection, and that Getty officials eventually stopped returning his calls as they dealt with growing controversies.

In the fall, Munitz’s staff proposed narrowing the scope of the book to a series of essays, with Gardner as editor and contributor, Gardner said. He realized the more modest effort was also in trouble when he called Munitz at home in early February, only to discover that the chief executive had resigned the day before, he said.

Gardner said he then called Biggs, who subsequently decided to cancel the project. Gardner, who recently moved to Bellevue, Wash., was taken off the payroll March 31, records show.

“I think they compensated me reasonably for what they asked me to do, and the fact that I wasn’t able to do it was through no fault of my own,” said Gardner. “None.”

Federal tax law requires charitable institutions to disclose any transactions that involve self-dealing, the use of tax-exempt dollars for the personal benefit of top officials. The Getty did not report the book deal in its latest tax filing, but after questions from The Times, trust officials said they may amend the return. Biggs said he asked attorneys with Munger, Tolles & Olson to investigate whether the deal involved a quid pro quo between Munitz and Gardner.

During an internal review of the transaction, one person told investigators that the book deal was intended to reward Gardner for his help with Munitz’s contract, Biggs said. But he added that the statement “doesn’t hold any water” and that the investigation has turned up no credible evidence of a quid pro quo.

“We talked about it and came to the conclusion it was baloney,” Biggs said, declining to disclose the details of the claim. “The person’s not credible.”

Biggs said the decision to terminate Gardner’s contract was made because of other controversies engulfing the Getty. The institution is still recovering from the Munitz resignation, and its former antiquities curator is on trial in Rome for allegedly conspiring to buy looted art.

“We decided given what’s happening, we didn’t think this was a great time to write a history of the Getty,” he said.

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Anatomy of a deal

Discussions of a $300,000 book deal for J. Paul Getty Trust Chairman David Gardner overlapped with contract negotiations for Getty Chief Executive Barry Munitz’s 2004 contract. Experts say the timing raises serious questions.

The chronology:

1992: David Gardner joins the board of the J. Paul Getty Trust.

1997: Munitz is hired as the trust’s chief executive. Gardner is on the search committee that picks him.

October 1999: Gardner inquires about changing J. Paul Getty’s will to allow for the compensation of trustees.

June 2000: Gardner is named chairman of the board.

January 2001: Munitz’s new three-year contract is approved by the full board, granting him a substantial increase in retirement benefits. Gardner sits on the compensation committee and signs the contract.

January 2003: Munitz begins negotiating his next contract. Munitz and his staff also start discussing hiring Gardner to write a Getty book after he leaves the board.

June 2003: Two days before he is scheduled to meet with Gardner, the Getty’s general counsel warns Munitz to avoid “formal exploration” of the project with the board chairman.

November 2003: Gardner discourages compensation committee Chairman Lewis Bernard from limiting Munitz’s next contract to a one-year extension.

January 2004: The Getty board approves a five-year contract for Munitz. Gardner votes for it and later signs it.

June 2004: Six days before Gardner retires from the board, Munitz and Gardner discuss the book project in detail.

Sept. 1, 2004: Gardner is put on the Getty payroll at $8,000 per month plus expenses to write the book.

August 2005: California’s attorney general opens an investigation into Munitz’s use of Getty resources.

February 2006: Munitz resigns as chief executive of the Getty Trust amid allegations he misused trust assets.

March 31, 2006: The book project is canceled by board Chairman John Biggs, after Gardner had been paid $178,000.

Source: Times reporting