Keeping Up With The Jones’ In New Jersey Part 2

To continue where Part 1 left off, this article will examine more of the NJSO Internal Review Report to help determine why the NJSO decided to buy the Axelrod string instrument collection.

A Review The Short Version

The Trustees responsible for the report, Bill Baroni, Alan Danzis, John Forrest, labored to produce a document that is concise and very easy to read; it says exactly what is needed without unnecessary pontification.  It’s well organized and even contains a small graphic timeline to help the reader establish a linear frame of reference.

That being said, it also comes across as a document which began with the conclusion and then created the remaining content from there.  The report covers the numerous flaws in the procurement process in great detail, however, it fails to assign responsibility to those trusted with the process or produce any recommendations beyond the obvious.

After reading the report, one is left with a sense that it was produced as an attempt at absolution; “Yes, we made mistakes and we’re sorry for that but in this case the ends justify the means.”

There’s no escaping the obvious conflict of interest and lack of complete objectivity by having the investigation conducted internally.  Consequently, this report serves as a good reminder why internal government inquires call for independent investigators to look into matters of possible impropriety.

A Review The Long Version

The report begins with a fundamental flaw; their Key Observations (pg. 3) come across more as conclusions and set the tone for downplaying the host of flaws identified in the procurement process:

“There is no doubt in our minds that the NJSO has in its possession a unique asset, of which the musicians and Orchestra should be justly proud This is a wonderful asset for both the City of Newark and the State of New Jersey, and, over time, it will serve to distinguish the NJSO from its powerful and much respected competitors to the east and south.

We nevertheless wish to make some comments about the process that led to the acquisition of the instruments, about their book value, and about how the Orchestra should exploit more effectively this unique asset.”

This opening sets the tone for another critical failing in the report, a lack of accountability and transference of responsibility.  Throughout the report and in national media outlets, the Trustees single out Larry Tamburri (then NJSO president CEO) as the primary figure responsible for many of the critical errors in the course of the procurement process.

Although I don’t disagree with the Trustees observations in Mr. Tamburri’s failings, I do believe that they are unjustly singling out Mr. Tamburri as a convenient scapegoat.  In an article appearing in the December 23rd edition of the New York Times by Daniel Watkin, one of the Trustees, Bill Baroni, said this when asked about Mr. Tamburri’s role in failing to properly investigate rumors that Mr. Axelrod was under investigation by federal authorities over other instrument transfers,

“Larry [Tamburri] did not do anything, and did not even tell the instrument committee, Mr. Tamburri telephoned an official at the Smithsonian Institution, to which Mr. Axelrod had also made a donation of instruments publicly valued at $50 million, and was told that the talk of an investigation was merely a rumor.
That’s the kind of important piece of information that at least you need to bring to the board and instrument committee Mr. Tamburri would probably have been fired if he were still there.”

However, there is no blame directed toward the one individual actually charged with the responsibility for overseeing the institution, NJSO board Chairman Dr. Victor Parsonnet.  The report even goes so far as to hail Dr. Parsonnet as a visionary while simultaneously absolving him of any inappropriate actions (pg. 7),

“So we wish to applaud the vision of the NJSO Trustees, led by Board Chairman Dr. Victor Parsonnet, who worked hard to secure this deal which, process, valuation and accounting issues aside, is of immense and unmatched musical value.”

In the same New York Times article, when Dr. Parsonnet was asked about his level of culpability surrounding the mistakes made in the procurement process he said,

“I certainly wouldn’t want to blame anyone, I’m an amateur at this. I’m a heart surgeon. I’m not a violin collector.”

Trustee Baroni’s public castigation of former NJSO president and CEO Tamburri while simultaneously praising chairman Parsonnet (as well as failing to single out any other member of the Instrument Committee for their failures, pg. 64) deludes any credibility that this report was impartial.

Conflicting Conclusions

A series of flaws which chips away at the report’s validity are the host of glaring contradictions between their Findings (pgs. 3-5), Recommendations (pgs. 5-6) and Conclusions (pgs. 6-7).

Issue #1 The collection’s value

Report Finding #1 (pgs.3-4): The Instrument Committee did not have a complete and objective appraisal of the Collection.

“We nevertheless do not recommend a complete appraisal now because we believe that it would be impossible to arrive at an objective opinion in the current climate Even if a qualified appraiser could be found, the cost would be substantial and, since the Orchestra already owns the instruments, would be of little consequence.

Reprot Recommendation #2 (pg. 5): The Golden Age Collection should be recorded in the books of the NJSO Instrument Conservancy at the purchase price of $18 million.

“We believe that, in the end, the NJSO negotiated a fair, arm’s length price for the Collection and that this is, therefore, the only appropriate valuation for book purposes. After receipt of the professional recommendations of the independent external auditors, the Orchestra may need to make amendments to other filings.”

Report Conclusions (pg. 6): The [NJSO] Board and the public were not informed of questions of value and provenance. There was no independent appraisal.

Contradictions: Failure to institute a comprehensive appraisal from as wide a variety of experts as possible only perpetuates the questionable nature of the collection’s worth.

How is it possible for the Trustees to recommend that the collection’s value be recorded as $18 million when the Conclusions state that there was no complete independent appraisal in addition to the findings from the selective appraisals they did conduct were incomplete and not entirely objective?

In the Trustee’s review of the examination process, they stated the expert the NJSO did retain to examine the instruments spent a limited amount of time, approximately:

” 10 minutes to examine each instrument, an extraordinarily small amount of time. The Trustee Review Panel is not surprised, therefore, that this was a “very informal” opinion, yet it was the only complete evaluation of the Collection other than that provided by the seller’s dealer, Mr. Machold. (pg. 12)”

To complicate matters even further, the NJSO secured the services of additional appraisers to examine selected instruments, but never the entire collection (pg. 13).  In the end, the value of the collection ranged from $15.33 million – $26.4 million (pg. 13).

Brushing aside the importance of establishing a fair market value for the instruments, if for no other reason than insurance purposes, as the trustees did in Finding #1 (pgs. 3-4) only serves to devalue the instruments even further.

This leads to another major dilemma addressed by the Trustee’s Report, the apparent concern regarding authenticity.  That issue and more will be addressed in Part 3.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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