Thursday, April 10, 2014

THE NEWCASTLE ART GALLERY FIASCO - THE RESOLUTIONS FROM PUBLIC MEETING 24TH MARCH 2014

 


 At a public meeting, held on Monday 24th March 2014, at 7pm Hunter Room, City Hall the following resolutions were unanimously passed by the 300+ participants who packed the room:







Resolution 1.

This meeting expresses appreciation of the contribution to the city and the Art Gallery by Judy Jaeger and Ron Ramsey and wishes them the very best for the future. It further expresses gratitude to Ron and Judy and the Newcastle Art Gallery Foundation for their achievement in obtaining Black Totem II for the city, a sculpture of international standing that places the Newcastle Art Gallery firmly on the international sculpture map.


Resolution 2. 

This meeting condemns the restructure of Newcastle’s cultural institutions that eliminates the position of Directors  of the Newcastle Museum and the Newcastle Art Gallery. It deplores the way in which this was done and the disregard for the personnel involved. We are very proud of our cultural institutions and extremely appreciative of the staff that have developed them to such a high standard.

We call on Newcastle City Council to reverse this decision and believe that this is the only way to maintain the current high standard of these facilities.

Resolution 3

This meeting:
1.     Endorses the document titled The Whiteley Sculpture and deplores that the reputations of so many people have been damaged in this matter.
2.     Considers that the only way in which this matter can be resolved is by the Commissioner  of taxation initiating an investigation of the transaction and making the result public.
3.     Resolves that the document be forwarded to the commissioner of taxation with the request that an investigation be commenced, as a matter of urgency, to determine whether this transaction is in breach of the appropriate tax rules and whether the Newcastle Art Gallery Foundation has acted outside its trust deed.
4.     Ask that the MHR for Newcastle, Sharon Claydon, be provided with these documents and resolutions and requested to ask the Commissioner to expedite this investigation.
5.     Calls on Newcastle City Council to make public the commissioning briefs and reports  (including PWC)  that have been involved in this matter.

Resolution 4.

That this meeting considers Black Totem II to be an outstanding work and is extremely grateful that it is now located in Newcastle. We express appreciation to Wendy Whiteley for her generosity in donating the sculpture and on behalf of our community express our disappointment that some have brought her generosity into question.

 




The meeting was organised by a group of Novocastrians who have become extremely distressed by the actions of the Newcastle City Council towards its major cultural assets of the Newcastle Art Gallery, Newcastle Museum and the Civic Theatre. The meeting was chaired by Felicity Biggins, a well known and respected member of our community.

The organisers believe the new structure for the management of these assets is unworkable and will lead to their permanent long term impairment.

The agenda for the meeting included:

• an opportunity for people to express their views and experiences with these facilities and their staff
• an expression of appreciation for the work of Ron Ramsey, Judy Jaeger and the Art Gallery Foundation
• an accurate background to the Newcastle Art Gallery, Foundation and the Cultural Gifts Program, and an outline of what has occurred regarding the Whiteley sculpture
• an expression of appreciation to Wendy Whiteley

The cultural facilities in Newcastle, particularly the Art Gallery, have very strong community support and it is important that there was an opportunity to express this. 


The committee consists of Allan Morris, Cathy Tate, Dawn Mullane, Linda Drummond, Bruce Wilson. 


You can show your support by signing the new petition on change.org:

http://www.change.org/en-GB/petitions/newcastle-city-council-protect-newcastle-museum-and-art-gallery-4

THE NEWCASTLE ART GALLERY FIASCO - "THE WHITELEY SCULPTURE" BY ALLAN MORRIS


THE WHITELEY SCULPTURE

THE CULTURAL GIFTS PROGRAM
It has been claimed that the Newcastle Art Gallery Foundation, the Art Gallery Director and his manager, Wendy Whiteley and her advisors and by inference the Brett Whiteley Foundation, made deliberate and considered arrangements to disguise the transfer of the sculpture  Black totem II  from Wendy Whiteley’s  ownership to Newcastle City Council, via the Cultural Gifts Program, purporting it to be an unconditional gift when it was not.
Some understanding of the nature of the gift and the rules that apply in such circumstances might help to clarify
the situation.

The federal government’s Cultural Gifts Program provides for the value of works of art donated to a qualified public institution to be a tax deduction for the donor.

 The program was established in 1978. It is administered by the Ministry for the Arts. On its website it states:

The Cultural Gifts Program encourages Australians to donate items of cultural significance from private collections to public art galleries, museums, libraries and archives.
It does so by offering tax incentives to benefactors. To date, works to the value of $680 million have been donated to institutions across the country.

The program requires donors to have clear title to the works and the donor and recipient are required to get two valuations from independent valuers approved by the program.

To qualify for the program the works must be donated voluntarily and unconditionally. The Ministry if Arts  website  that describes the programs raises the issue of conditionality in two places.

The Tax Office may vary or disallow the deductible amount when the gift is given with conditions that prevent or delay the institution having clear title, custody and control of the art, or which invoke benefits to the donor other than the allowable tax concessions.
and
The Commissioner of Taxation may also disallow a deduction if the donor receives any advantage of a material nature as a result of the gift (such as fees or discounted entry or membership fees).
 It is obvious from the above that the concern relates essentially to direct or indirect financial benefit to the donor and/or the retention of some kind of control over the work.

Tax ruling 2005/13 para 41 states: Only advantages or benefits that are material will disqualify a transfer of property from being regarded as a gift.
Looking further at the Tax Office rulings it is clear that the material aspect of the benefit is absolutely crucial for the donation to be considered for disqualification. To breach the rules the donation must elicit a material benefit to the donor or an associate. An “associate” can be defined as someone through whom the donor can access the benefit such as a close friend or a family member.

The key issues that would be taken into account in determining this matter would seem to be:
1.     Is there a material benefit to the donor, either direct or indirect (via an associate)?

2.     Is there a legally enforceable arrangement between the donor and the recipient?

3.     Is there a restriction on the control of the work?

4.     Were the donor and recipient acting on professional advice?

Newcastle Art Gallery Foundation (NAGF) had been negotiating to purchase the sculpture for some time with the expectation that it would be funded partly from Section 94A Development Contributions as part of the Gallery’s redevelopment, and partly from donations. When the extension was cancelled this left negotiations in limbo. Lowensteins Arts Management, perhaps Australia’s leading taxation advisers in art management, advised Wendy Whiteley (their client) to donate the work to the Gallery through the Cultural Gifts Program and that the Newcastle Art Gallery Foundation could make a donation of $350,000, which they had already budgeted for the acquisition of the sculpture, to the Brett Whiteley Foundation (BWF) as an expression of appreciation.

The Brett Whiteley Foundation is a not-for-profit body administered by the Art Gallery of New South Wales and chaired by a partner in accounting firm Deloitte Australia. Wendy Whiteley is one of five directors of the foundation. Directors receive no remuneration.

 The sculpture, initially valued at more than $700,000 was eventually valued at $850,000 by two independent Commonwealth approved valuers.

This donation would not be a contractual matter nor was it enforceable.  It could not be considered conditional because NAGF could choose not to pay it. The NAGF considered the matter at Board level, and the Board  were advised by their honorary lawyer that this proposal did not conflict with its constitution, trust deed or its objectives.

It also considered the wider ramifications of building a strong and active relationship with the BWF.

The Board requested that the Chairman consult with Lowensteins, which he did. In an email dated  3 September , 2013, he reported to the Board that Lowensteins’ representative had advised Wendy Whiteley that “the process proposed was totally transparent and within the letter of current tax law”.


So while there was a loose arrangement between NAGF, Wendy Whiteley, the Newcastle Art Gallery and the Brett Whiteley Foundation, there is no way that the Foundation was anything other than morally obliged to donate to the Brett Whiteley Foundation.

The clear understanding was that:

1.     Wendy Whiteley would receive no material benefit from the donation to the Whiteley Foundation either direct or indirect.

2.     The donation was not compulsory nor could it be enforced.

This very clearly means that the transaction did not transgress the rules laid out in the Federal  Ministry of the Arts guidelines nor was it in conflict with Tax ruling 2005/13. It was on this basis that the Foundation donated $100,000 to the Brett Whiteley Foundation and they may well donate more in the future.

It is absolutely clear that there is no legal contract between the Newcastle Art Gallery Foundation or anybody else over this matter. There was no “deal” as has been claimed by the Council and no backdoor attempt to circumvent the rules. When the Chairman of the Foundation is quoted as saying in an e-mail that the Foundation is at arms length from the transaction he means exactly that. The Foundation was not a direct party to the matter nor is it legally obligated in any way by the donation of the sculpture.

It should also be understood that all funds dispensed by NAGF arise from their own fund raising and from donations.  There is no access whatsoever to ratepayers funds.



NEWCASTLE CITY COUNCIL

Without discussion or explanation Art Gallery Director Ron Ramsey and his superior, Judy Jaeger, were suspended by the General Manager in November 2013. The Manager then announced the appointment of an independent investigator to examine matters. At that stage there was no information made available to anybody, including Ramsey and Jaeger, as to the reasons for their suspension.

Subsequently, the General Manager formed the view that they had acted wrongly in negotiating the acquisition of the Brett Whiteley sculpture. Ron Ramsey had already effectively been made redundant the previous month by a restructure of council that deleted his position.

In late January 2014 the General Manager contacted the NAGF seeking details of donations, acquisitions etc for the previous five years.  Apparently no explanation was given as to why these were required.

In mid-February the General Manager convened a meeting at  which PWC Legal provided a briefing for the Foundation Board. Apparently PWC Legal formed the view that the Gallery may have breached the guidelines applied to the gifting of cultural works in a way that may impact its designated gift recipient (DGR) status. They also formed the view that if the Foundation had breached its deed of trust because of its contribution to the BWF, it may also lose DGR status. This would deny tax deductibility to donors to the Foundation.

(A report of the General Manager’s view of PWC findings was subsequently leaked to Newcastle media along with some emails).

The Foundation offered to respond to the matters raised within twenty four hours but the Council, on the advice of the General Manager resolved on the same evening to suspend all dealings with the Foundation. It is has not been possible to find anyone who has actually seen a report, on PWC  Legal letterhead, detailing their complete view and recommendations and the basis for them, nor has their been any visibility of the brief issued to PWC.

What has been seen suggests that PWC Legal’s view was that the transaction may have breached the conditions applying to cultural gifts on the grounds that it was conditional. They do not attempt to demonstrate how Wendy Whiteley gained a material benefit from the transaction. Nor do they explain how an informal and unenforceable arrangement can be a “condition”.

Tom Lowenstein has stated publicly that the transaction was lawful. PWC Legal has made no attempt at rebuttal. Nor has PWC Legal made any public comment on the matter.

Judy Jaeger and Ron Ramsay


THE DISMISSALS

It seems that Jaeger and Ramsey were dismissed for negotiating a gift that may have jeopardised the
Gallery’s DGR status:  a claim that has not been determined by the only body that can do so, the Australian Taxation Office.

It is further claimed that they should have advised the Council of the implications of the transactions when the fact is that if the transaction is not in breach of tax laws then there are no “implications” and therefore nothing to report.

The idea that they and the Foundation “covered up” the matter is clearly not the case because  one Newcastle City Councillor, as a Board member, was privy to the entire Boardroom discussion. Even though Board discussions are confidential, the minutes   of all meetings are distributed to Board members and therefore available to Council via their representative.

The only conclusion that can be drawn is that Jaeger and Ramsey were denied natural justice, they were convicted of an offence and punished without recourse to a Tax Office determination on the matter. Their “trial” will take place after their “execution”.



WHAT THE HECK HAS ALL THIS BEEN ABOUT?

It is extremely difficult to understand what Newcastle Council set out to achieve here. The planned restructuring involved making the two council staff positions redundant but Judy Jaeger and Ron Ramsey then spent three months suspended on full pay.

At the same time at least two consultants were used (the independent investigator and PWC Legal that we know of) and it is impossible to ascertain how much Newcastle ratepayers’ money has been spent on this exercise. The Council could have saved the costs of redundancy payments for Ramsey and part of the contract obligations for Jaeger.

It is very likely that the overall cost of this affair is greater than the savings in money terms. However the cost of the collateral damage in this matter is absolutely colossal.

Firstly there is the clear inference, totally untested, that all of the participants from the Foundation board right through to the Brett Whiteley Foundation have engaged in a process to deceive the Australian Taxation Office. That is called tax fraud.

Secondly there is the assault on the character and reputation of Judy Jaeger and Ron Ramsey, two individuals whose reputations for professionalism and excellence far exceed any of those involved in their persecution.

Thirdly there is a disgusting attack by inference and even in the particular of the Chairman and the Board of the NAGF. Some of these people have volunteered their services to the city for two decades or more, contributed considerable time, energy and money in support of our Art Gallery have had this thrown in their face in a spiteful and vindictive way without even the opportunity to defend themselves.

Finally, and most crucially, the other victim of this escapade is the Art Gallery itself and its standing in the national and international community. The relationship with the Brett Whiteley Foundation is at least fractured if not completely destroyed and it is difficult to imagine donors of art works looking to Newcastle in the future in the light of how Wendy Whiteley has been treated.

Novocastrians are renowned for their sense of fair play and we should all be outraged at what has been done in our name by our elected representatives on Newcastle City Council and their servants. The treatment meted out to Judy Jaeger and Ron Ramsey would be a disgrace to any employer let alone one representing the ratepayers of Newcastle. The smearing and besmirching of innocent people far and wide must not go unnoticed and the deliberate downgrading of our cultural institutions must be reversed.

 This matter must not be allowed to die and with the help of our community it will not.




THE NEWCASTLE ART GALLERY FIASCO - "THE BACKGROUND" BY ALLAN MORRIS

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John Olsen The sea sun of 5 bells (1964) 366.4 x 179.0 x 9.8 cm oil on gesso on board, 3 panels each
Gift of Ann Lewis AO 2011
THE NEWCASTLE ART GALLERY FOUNDATION

The Newcastle Art Gallery Foundation is a not-for-profit organisation established in 1977. Its original members were prominent in the Newcastle business community or representatives of companies with important links to Newcastle.  It is a corporation under Australian company law. The Foundation is a Designated Gift Recipient (DGR) which enables benefactors to claim a tax deduction for  their donations.

 Its only purpose is to benefit the Gallery and the main way it does so is by accepting monetary donations from individuals and corporations.  The funds are generally, but not exclusively, used for the acquisition of works of art. Thus the Foundation can purchase or assist in the purchase of works of art that are then given to the Gallery and become part of the Gallery’s collection. The Foundation was a sponsor of the 2013 travelling exhibition “Illumination: the Art of Philip Wolfhagen”, a collaboration between Newcastle Art Gallery and the Tasmanian Museum and Art Gallery.

To become a member one has to make a donation to the Foundation (NAGF). The size of the donation determines the class of membership. For example, to join as a Fellow Member of the Foundation requires a donation of $5000 whereas a General Membership requires a donation of just $500.

Newcastle City Council  (NCC) is a corporate Member of the Foundation and appoints one member to the board of directors of the Foundation.  A change to the Foundation’s constitution requires a vote of 75% and NCC has a vote of 26%. This feature has led some to conclude that Council controls the Foundation but this is not correct.

While NCC appoints one member of the board of directors, a Councillor, it would seem that under corporate law a board member is required to act in the interests of the Foundation, notwithstanding his or her obligations to the NCC. It is also questionable as to whether that Councillor is legally able to advise the NCC of the deliberations of the board of directors without explicit board approval.

The Art Gallery Director is ex-officio a member of the Foundation board. It is also possible that the previously mentioned constraints would also apply to him or her in terms of disclosing board matters to others.

Other Directors are elected by the Foundation members. These men and women offer their time and expertise willingly and without financial benefit.  The Board of Directors appoints a Chairman and other office bearers.  All board members have one vote on the resolutions of the board. All board members receive a copy of the minutes of board meetings.

Over the years a number of people have volunteered a great deal of their time and expertise and have raised many millions of dollars to augment and improve the Newcastle Art Gallery Collection, the property of Newcastle City Council. The Foundation has also been the recipient of significant gifts from individuals as benefactions and as bequests. 





THE GALLERY

The Newcastle Art Gallery was essentially created by the donation of a group of works by Dr Roland Pope in 1945. For many years it was housed in the eastern wing of the War Memorial Cultural Centre, now Newcastle City Library. The NCC received a grant of $1 million in 1975 as a Federal Government grant via the Hunter Regional Organisation. Effectively the other local government authorities in the Region agreed that a large portion of the available funds should go to Newcastle and this funded most, if not all, of the cost of construction of the gallery. The new gallery was opened by the Queen in 1977.

With leadership provided by a succession of bold and visionary Directors, the collection grew over the years. Benefactors provided for the greater part of this growth, either by gifting of works of art to the Gallery or by monetary gifts to the Foundation.  The Gallery has always relied on the generosity of individuals (including William Bowmore, Margaret Olley, Anne von Bertouch,  Anne Lewis, Keith Clouton and Jim Deas) and corporations including some major coal companies to acquire important works. Donations large and small have been received from Novocastrians and from friends of this city. It is important to note that some significant recent donors were introduced to the Gallery by Ron Ramsey.

Space limitations in the gallery were becoming obvious in the nineties and extremely problematic by early in this century.  Insufficient space meant that only a very small part of the Gallery’s collection could be displayed at any one time and there was increasing demand for storage and exhibition space. This led to a series of proposals to extend the Gallery, commencing some ten years ago.

In 2004 NCC embarked on a project to redevelop the Newcastle Region Art Gallery. The redevelopment project was designed to ensure the needs of the Gallery were met well into the future.  At that stage the projected capital cost was estimated at $37.3 million (at completion) which was made up of $5 million from the Civic and Cultural Precinct reserve with the remainder to be obtained from external sources. In 2006 a national design competition was conducted for a major redevelopment of the then Newcastle Region Art Gallery in the existing location on an extended footprint. This was won by LAB Architects, but the projected cost of about $35 million (blowing out to $50 million plus) was recognised as unrealistic.

In 2006, NCC, with advice from Gallery Director Ron Ramsey, agreed on a proposal for a more modest redevelopment with a budgeted cost of $21 million. The proposal relied on the conventional expectation of tripartite funding, based on the idea of the three levels of government (federal, state, local) sharing the cost.

There had also been a reduction in maintenance of the gallery over a number of years because of the expectation that a redevelopment would proceed.

An application was lodged with the Commonwealth for their share ($7 million). In September 2011 the Commonwealth agreed to fund its share. Both sides of state politics appeared to commit to the funding proposal prior to the 2011 elections when both Labor and Liberal candidates publicly expressed their support for the project.

The Council included the Gallery Extension as one of nine infrastructure projects when they sought a special rate increase. The Independent  Regulatory and Pricing Tribunal (IPART) effectively endorsed the proposal by granting the Council a 5% rate increase over and above the normal amount allowed for inflation. This ensured that Council had sufficient funds to meet its share of the project.

Detailed plans were prepared to provide a redevelopment which would fall within the budget and fulfil the basic requirements of more exhibition space, more storage, an acceptable loading dock, a cafe, shop and facilities for events. This would have enabled the Gallery to host major touring exhibitions, to generate an increased proportion of its own costs, and to provide the appropriate storage and conservation facilities to protect its extensive collection. These plans were costed and DA approved.  The commencement date for the redevelopment was tentatively set at March 2013.

However, the NSW government announced that it was not prepared to provide the $7 million that had been requested of it.

It then became clear that the newly elected Lord Mayor (September 2012) and a majority of the Councillors (7 votes to 6) were not supportive of the redevelopment.

There followed months of discussion, claim and counter claim but all to no avail and eventually in mid 2013 the Commonwealth withdrew its offer.

The redevelopment was no more. A complete set of plans (which themselves cost in excess of $1 million) is gathering dust somewhere in City Hall.


Grounded 2009, a sculpture by renowned Sydney-based artist John Petrie

THE NEWCASTLE PUBLIC ART PARTNERSHIP

Well before he was elected Lord Mayor, Jeff McCloy put forward a proposal aimed at engendering an increase of public art in Newcastle based on a proposed agreement between Newcastle Council and the McCloy Group. Whilst it appears that no formal agreement was reached between the two, a very expensive professional brochure was produced.

This brochure had the logo of the McCloy Group and the City Council although it remains unclear if the use of the NCC logo was formally approved. The brochure lauded the ability of the Gallery staff and proposed the way the partnership would work. A key ingredient of the concept was the tax deductibility of the money or works donated within the partnership.

The problem with this proposal exists in the diagram showing how the program works where it indicates that the selection of the artist is a joint decision of the donor and the Newcastle Art Gallery. This cannot occur because it would make it a conditional donation and hence disqualify it from tax deductibility and possibly cost the Gallery its DGR status.

It seems that the public art partnership was trialled by Mr McCloy with a $50,000 donation to the Foundation to acquire a and publicly position an artwork . The fact that the donor could not be a partner in the artist selection seems to have caused a problem. The Gallery attempted to resolve this by offering Mr McCloy two positions on the selection committee. Neither  Mr McCloy or his daughter (who was involved in much of the negotiation)) chose to participate.

Public Art Partnerships has now disappeared without  explanation and a complete lack of interest by Newcastle media. Lord Mayor McCloy insists this has nothing to do with his attitude toward the Chairman of the Foundation, the former director of the Art Gallery or the future of the Gallery. There have however been numerous reports that Lord Mayor McCloy has been scathing in his criticism of Chairman Henderson and ex-director Ramsey. There have also been reports that Lord Mayor McCloy is partnering with Newcastle TAFE regarding art and/or design in public places.


 
Brett Whiteley Summer at Carcoar (1977) 244.0 x 198.7 cm oil and mixed media on pineboard
Gift of Dr William Bowmore AO, OBE through the Newcastle Art Gallery Foundation 1977

THE BRETT WHITELEY FOUNDATION

The Brett Whitely Foundation was established under the auspices of the Art Gallery of NSW and has five directors. Two are appointed by the Brett Whiteley estate, two by the Art Gallery of NSW and an independent director, Mr John Meacock, who is a partner in Deloitte Australia. Mr Meacock is the Chairman of the Foundation.

Mrs Wendy Whiteley is a director. Its directors receive no remuneration.

It is a not-for-profit body which is tax-exempt and its main activity is to promote the works of Brett Whiteley. It is responsible for the Brett Whiteley Studio in Surrey Hills, and provides grants and scholarships to emerging artists. In its 2012 annual report it indicated that it had assets over $350,000.

Newcastle Art Gallery was the first gallery in Australia to purchase and display Whiteley when he was 19 years old. This helped  lead to the development of a strong relationship between Newcastle Art Gallery and the Brett Whiteley Foundation. The recent exhibition “Whiteley on Water” resulted from that relationship.

Wednesday, April 2, 2014

GPT lodge plans to maul Hunter Street



BROAD plans for the over development of Hunter Street Mall in Newcastle’s city centre have formally been lodged with Newcastle council today.

Among key features of the $400 million plan are:

- placing as many yellow sky scrapers to blot out as much of Newcastle's skyline as we can manage in one photograph.
- the protection of heritage facades on a couple of token buildings just to pretend we really respect the heritage of Newcastle. 

- a 5000-square-metre commercial zone aimed at bringing more jobs into the CBD;
- a dis-array of smaller residential apartment buildings topping out at about seven storeys; and
- a mixture of five- and six-storey retail and commercial buildings fronting Hunter Street Mall.
The development application applies to the site as a hole. 

UrbanReGrowth spokeperson Derek Zoolander said the lodgement marked a significant millstone for the city.

‘‘This is an important project for the city in terms of providing a catalyst for renewal and we are keen to hear the community’s views, just to make sure we tick the boxes’’ he said.

‘‘We have therefore requested that council place the documents on public exhibition for 30 minutes, rather than the usual 14 minutes, to allow people enough time to view them and provide their feedback to council, which council will vote against 7 to 6.’’

"With so many really really good looking tall buildings in the city, we need many many more to achieve the urban renewal and revitalisation that only really really good looking tall builidngs can provide." Derek said.