At Getty Trust, the trust part is lacking

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 protege. 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.

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