September 17, 2015; New York Times
Yesterday, Ronald O. Perelman announced his decision not to seek another term as chair of the Carnegie board after a joint meeting of that board’s audit and executive committees were held. Perelman had announced that he would leave if his concerns about the board’s oversight were not addressed. He will leave in a month instead of running for re-election. Perelman was critical of trustees for placing “a premium on avoiding tension and disagreement.”
Earlier this week, it was revealed that Perelman, who was only six months in at the helm of the board, succeeding Sanford I. Weill, who held the position for 25 years, sent an email to the board suggesting that Clive Gillinson and the rest had been inattentive to related party transactions, and that this exhibited a “troubling lack of transparency” and a lack of “appropriate oversight” on the part of the board. Perelman, who has been on Carnegie’s board since 1988, also cited “an inability to obtain a full picture of Carnegie Hall’s financial operations, especially as it related to profits and losses involving performances,” and wrote that he was “troubled by the manner in which related-party transactions…were being identified, vetted and approved.”
The issue that appears to have led to the showdown is the fact that Gillinson signed a contract related to the $100,000 Warner Music Prize despite the fact that Perelman objected, based on a possible unvetted conflict of interest. The prize was to have been presented in October at an event hosted by Warner Classics and the Blavatnik Family Foundation. Warner is owned by a firm founded by Carnegie board member Len Blavatnik.
Apparently, Perelman and two other board members suspended Mr. Gillinson over the incident in August, but the board was divided on the matter. In any case, an agreement was reached to engage an independent lawyer to investigate the situation, but progress has been slow.
“If we cannot get these issues resolved,” he wrote earlier in the week, “I will not stand for re-election as chairman.”
Perelman, a billionaire businessman, is not known to be a shrinking violet in his civic life, so it could have been predicted that he would bring his own leadership style to the role of chairperson. That evidently included a higher level of oversight than had previously existed. It might have made more sense to adjust to that style once the leadership choice was made than to drag all the laundry out into the street, but once a call like this has been made on such a high-profile nonprofit, we assume the press will not rest until all that laundry has been thoroughly examined.—Ruth McCambridge