California AG: Getty Trust Has Suffered Enough

Improprieties are found, but no crimes, and no further penalties or reimbursements are proposed either for the trust or for ex-CEO Barry Munitz.

The California Attorney General's office has issued a report in its investigation of the J. Paul Getty Trust after the resignation of its CEO Barry Munitz earlier this year, who had agreed to forego $2 million on his employment contract and reimburse the museum $250,000 following a series of reports in the LA Times about questionable spending. 

The report found some of the items noted in the LA Times to be inappropriate spending, but also concluded that the settlement by Mr. Munitz had made the museum whole and no further action was needed.  No fraud was found because there was no deceit (false statements or false billings).

A few months ago, the LA Times reported that Attorney General Bill Lockyer had met with Mr. Munitz in January, a month before his resignation.  Mr. Lockyer and Mr. Munitz are old friends.  It leaves me with the impression that Mr. Munitz' resignation and severance agreement were designed with this result in mind—that if certain steps were taken the AG would forego additional penalties. 

A few items from the report, which shows the peculiar nature of what is and isn't legally acceptable for a charity foundation.  It doesn't have much to do with the amount of money involved:

• The AG found no rule against trust employees flying first class and staying in luxury hotels.  The report notes that first class air is arguably reasonable for transcontinental and overseas flights.  However, it is clearly unreasonable on shorter flights, concludes the AG.  (Elsewhere, the report notes that Mr. Munitz had repaid the trust only for the first class differential on short flights.)
• In any event, paying for spouse travel is unreasonable, even for the CEO of the Getty. 
• Gifts of artwork for four retiring trustees (cost: $21,561.16) constituted unreasonable personal gain.
• On the other hand, paying retired trustee David Gardner $70,000 to write a book about the museum was reasonable, even though the book was never produced, because it was an employment arrangement and he had performed work.   
• A $3 million separation agreement with former museum director Deborah Gribbon was reasonable, because if she had filed suit for unlawful discharge she might have won much more.
• A $350,000 separation agreement Mr. Munitz made with former chief of staff Jill Murphy was reasonable, because he had the authority to make such agreements at the time that he made it and the organization could have been sued if they refused to pay.