California Reprimands J. Paul Getty Trust and Appoints an Independent Monitor

After spending more than a year investigating the J. Paul Getty Trust, California’s attorney general, Bill Lockyer, issued a report concluding that the organization’s trustees wrongly allowed the institution’s president to spend money on travel and other expenses. In addition, he chided the trust for buying artworks for retiring trustees and for other spending not related to the trust’s charitable mission.

However, he said that some of the most contentious charges leveled against the trust — that it paid overly high salaries to its leader and had engaged in a sweetheart deal with a local real-estate developer — concerned actions that were not violations of state law.

The attorney general’s conclusion prompted a key U.S. senator to suggest that new laws and regulations are needed to deal with such matters.

“It’s important to note that even with the attorney general’s good work, he had to take a pass in some troubling areas, like executive compensation and business relations with trustees, because current law is limited or unclear,” said Sen. Charles E. Grassley, Republican of Iowa, who has been investigating abusive practices by nonprofit organizations. “This tells me we need to look at changing the state and federal laws in these areas.”

Mr. Lockyer said the state would not take action against the trust because its board had enacted policy and procedural changes designed to prevent such abuses in the future.

In addition, he said that the resignation of the trust’s president, Barry Munitz, in February, along with his decision to reimburse the trust $250,000 for improper spending and to forfeit $2-million in benefits, was worth more than the sums that were misspent.

Even so, Mr. Lockyer is appointing an independent monitor to oversee the trust’s actions for the next two years. The trust will have to pay the costs of the independent monitor, a former California attorney general, John Van de Kamp. The attorney general’s office said that it had never previously taken such a step in a case involving a charitable organization.

“We are taking extraordinary measures to ensure that the board’s recently adopted reforms take root,” Mr. Lockyer said.

‘A Difficult Period’

After the report was issued, the chairwoman of the Getty Trust, Louise Bryson, issued a statement saying she was pleased with the attorney general’s action.

“This has been a difficult period for the J. Paul Getty Trust. The board has recognized the need for strengthened oversight, and has taken actions to make the Getty a leader in governance,” she said.

The trust is the wealthiest operating foundation in the United States, with assets of $8.6-billion. It runs the J. Paul Getty Museum, in Los Angeles, in addition to other programs.

The misconduct claims arose from articles published in 2004 by the Los Angeles Times. The Times articles raised questions about spending at Getty and a real-estate deal involving the trust and a prominent Los Angeles philanthropist.

Mr. Lockyer’s report concluded that the price that philanthropist Eli Broad paid for the property sold to him by the trust was fair. In addition, the report said the $3-million payment made to Deborah Gribbon, the head of the Getty Museum who resigned after disputes with Mr. Munitz, was not excessive.

Among the specific items that Mr. Lockyer said violated the law:

• Trustees spent more more than $21,500 of the charitable organization’s money to buy artwork for board members who were retiring.

• Mr. Munitz asked employees of the Getty Trust to do personal errands for him.

• The Getty Trust paid the travel expenses of Mr. Munitz’s wife.

• A graduate art student was paid consulting fees even though she did not do any work for the Getty Trust.

The report is available online.