News Column

Audit reveals major problems at McAllen museum

June 7, 2014

By Dave Hendricks, The Monitor, McAllen, Texas

June 08--MCALLEN -- Problems at the dysfunctional, taxpayer-funded International Museum of Art and Science largely stemmed from the museum board, according to a lengthy report prepared by the city auditor, which alleged ethically questionable behavior and inappropriate meddling by the all-volunteer governing body.

Auditors also discovered that the museum didn't fix a leaky roof for roughly 18 months, which allowed water to seep through the art vault's ceiling -- and onto the floor, yards from a Picasso worth approximately $1.7 million. Workers placed a bucket on the floor to collect the water.

"I think that the audit was one of the more significant audits we've had as far as finding errors," said City Commissioner John Ingram, who requested the special audit. "It's very concerning and I hope they can correct all these multiple problems that they have."

While a private non-profit organization, the museum depends heavily on taxpayer funding.

McAllen budgeted $751,000 for the museum -- more than any other agency funded through the city's Culture and Recreation budget -- for the current fiscal year, which started Oct. 1. For comparison, the museum's proposed $1.8 million budget included just $185,000 from private donations.

Ingram requested the audit last summer, following a particularly chaotic period for the museum.

Executive Director Joseph Bravo, who clashed with museum board President Juan Carlos Suarez, abruptly resigned in April 2013. Afterward, the museum board started running day-to-day operations itself.

Board member Kevin Graham replaced Bravo on a volunteer basis, but stepped down when Ingram started aggressively asking questions. The museum board responded by hiring a fellow board member -- Danella Hughes, who previously worked for the Magic Valley Electric Cooperative -- and paying her $60,000 annually to become interim executive director.

Amid the management turmoil, the museum requested an additional $41,288 from the McAllen City Commission for the next executive director. The extra money would bump the executive director's pay from about $84,000 to $125,000 annually and help attract qualified candidates.

After hearing the museum's request for additional funding, Ingram balked and requested the audit. The City Commission approved the additional funding.

City Auditor Cathy Jones started her investigation on Sept. 24, but stopped a week later. The city Audit Committee, concerned about tension between Ingram and the museum board, asked her to wait until January.

Jones completed the audit on March 30 and the city Audit Committee approved her report on May 12. Key findings included:

--Ethically questionable behavior by museum board members.

"Former and current professional staff claimed that a board representative 1) asked them to arrange discounts or special prices for art from artists doing business with IMAS; 2) asked professional staff to exhibit artwork of specified individuals that did not meet the standards or criteria of the IMAS collection policy (such as individuals collecting antique furniture and a young artist from the University of Texas-Pan American)," according to the audit report. "3) asked professional staff to make and sell prints of art on exhibit with a 3-D copier donated to the museum; and 4) asked a professional staff member to administer a new science and technology educational program when it knew it had a financial interest in the project being proposed."

Other ethical problems identified by the audit included art donations that weren't properly appraised before the museum accepted them and issued a formal "Letter of Charitable Contribution," which allowed the donor -- a museum employee's spouse -- to claim an income tax deduction.

"They were pretty free and easy about issuing those letters," Ingram said. "And the problem was when an individual donates to the museum art or some kind of service, there has to be a third-party appraisal of the value of that donation."

The audit doesn't identify the museum employees or board members involved.

"Due to the stated several violations, an investigation was conducted and it was determined that these issues were limited to select board representatives acting on their own behalf," according to the museum's formal reply to the auditor's findings. "Subsequently, as the curator became aware of the dealings, IMAS immediately ceased discussions and did not participate in any of the stated violations. As of April 2014, the board representatives in question are no longer agents of the museum and likewise have withdrawn their association with the museum."

Initial drafts, though, included identifying information about the board member, referencing him by title. The city Audit Committee requested that Jones remove that information from the final report, apparently concerned about the potential for a lawsuit.

"As a matter of fact, that audit report was scrubbed a little bit," said Ingram, who attended several Audit Committee meetings. "Some of the more sharp findings were polished out to protect the museum's reputation. And we did it at their request."

Museum board President Ito Deutsch and City Commissioner Trey Pebley, who also attended the Audit Committee meetings, described the final report similarly. Deutsch said details were removed to avoid a potential lawsuit. Pebley said details were removed to avoid pointing fingers at individual members of the all-volunteer board and focus on organizational problems.

The museum simply can't have it both ways, Ingram said, asking McAllen to remove details from the audit report and complaining about vague allegations.

"They know who it is," Ingram said. "They know what was going on."

Former board member Kevin Graham, who served on the executive committee and briefly as interim executive director, said he believes the allegation about seeking a discount on art was leveled at him -- and denied it.

"I have to laugh. First of all, if you collect art seriously, you don't want any discounting going on because it just undermines the value of your collection," Graham said, adding that the auditor never called him for comment. "I think it's symptomatic of a behavior that exists within the museum, kind of a tattletale culture."

Graham said he resigned afterward, following an unfriendly call from Deutsch.

"I feel I was bullied into resigning from the board," Graham said. "It's something I feel passionate about, you know."

--Meddling by museum board members

Former Executive Director Joseph Bravo, who abruptly resigned in April 2013, had warned about meddling by the museum board. After interviewing unidentified current and former museum employees, auditors reached a similar conclusion.

"The results were dissatisfied board members and city officials, resentful staff and a lack of attention to planning and accountability matters," according to the audit report.

Former board President Juan Carlos Suarez, who headed the executive committee during the period covered by the audit, resigned from the board.

"I have the read the city's audit of IMAS," Suarez said in a statement emailed to The Monitor. "I would like to make clear that I was never consulted or interviewed by the auditors at any time, nor was I given the opportunity to provide input or explanation to clarify the inaccuracies contained in the audit. Each of the allegations concerning me in the audit is untrue and, in my opinion, deliberately misleading and taken out of context. I am astounded at the lack of depth and lax due diligence taken by the auditors."

Auditors recommended the museum board avoid micromanaging employees and meddling in day-to-day operations. For example, members of the executive committee had requested museum employees copy them on all emails, according to the audit report. Employees also told auditors they were instructed to delete emails during the city audit process.

"The bylaws should carefully articulate this procedure so that future problems with key personnel and city officials can be avoided," according to the audit report.

Interim Executive Director Danella Hughes -- who stepped down from the board's executive committee to take the museum's top job, which pays $60,000 annually -- said she didn't know anything about deleted emails.

"Some of the issues were difficult and challenging to resolve because there was a lack of information. There wasn't a who-what-when-where-why during the issues and situations that were brought up," Hughes said, adding that the vague audit report hampered the museum's ability to respond. "So when the audit comes out and says 'Well, staff said emails were deleted.' Ok, well which staff? From who? Was it the board? Was it the past executive director? I mean, let's narrow it down a little bit. And that never showed up in the audit."

Ingram called Hughes' comments disingenuous, considering the museum requested that McAllen remove details from the audit report.

"So for Danella to say something like that is speaking out of both sides of her mouth," Ingram said, adding that the museum had every opportunity to contest the auditor's findings during Audit Committee meetings and with formal, written responses incorporated into the audit report.

"What really concerns me the most about that audit? While it was going on, it doesn't appear that they were acting in good faith from the beginning," Ingram said. "Because they were deleting emails while it was going on."

--Problems with the museum's art collection

Auditors visited the museum vault, where they found water dripping from the ceiling. Workers had placed a bucket underneath.

"Collection items close to the leak have been covered with paper and plastic and tape to shield them," according to the audit report.

Hughes said a major hailstorm damaged the museum roof two years ago, and problems with the insurance claim delayed repairs. When The Monitor toured the vault in May, the bucket had vanished.

Auditors also criticized how the museum stored and catalogued art.

"Of the 9,265 permanent collection items, only 38% have an assigned value. The registrar is the only person assigned to maintaining the collection. The storage vault is somewhat disorganized. Prints that have not been framed are stacked on tables," according to the audit report. "Paintings are leaning against one another."

Auditors also questioned how the museum stored a Picasso.

"The $1.7 million Picasso (on loan through 2015) is stored on the bottom level of a two-level wood cabinet," according to the audit report. "The upper shelf is loaded with paintings, prints and wood separators that are extremely heavy."

Both Hughes and museum Registrar Aleida Garcia disputed that account, saying they had never stored the Picasso on the bottom shelf. They said the Picasso had always been stored on the top shelf of a two-level wood cabinet, with a few items stacked on top.

Museum board President Ito Deutsch also disagreed with how the audit report described the situation.

"The Picasso was never in any danger, the city just didn't like where it was placed during the audit," Deutsch said.

City Auditor Cathy Jones, though, said her audit report was accurate and documented with photos. Additionally, the museum's management response to the audit didn't dispute details about the Picasso. Instead, the museum simply provided part of the collection policy, which didn't address the audit findings.

The museum board reviewed the completed audit on May 27, about two weeks after the city approved the document. Hughes said they plan to approve updated bylaws during June, which will address many problems identified by the auditors.

"And, you know, when I think about it, I'm actually thankful for the Commission and the Audit Committee to bring up such concerns," Hughes said "Because sometimes it takes an authority figure to make some changes."

The city Audit Committee wanted the audit report to provide constructive criticism, said City Commissioner Trey Pebley, and wasn't intended to point fingers at the all-volunteer board.

"The results of the audit were troubling to me, but the response and the attention that we received from the chairman, Ito Deutsch, and the rest of the board to recognize and help resolve the issues was very, very encouraging to me," Pebley said.

While the auditors will follow up with the museum, the board wants to move forward, Deutsch said, and regain public trust.

"They need to understand the museum is fully functional and is running stronger and better than it ever has," Deutsch said, after correcting problems identified during the audit. "And we will make sure things like that never happen again."

dhendricks@themonitor.com

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(c)2014 The Monitor (McAllen, Texas)

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