Board Stiffed

In January 2001, the nominating committee of the Whitney Museum of American Art met at the Manhattan offices of its chairman at the time, leveraged-buyout kingpin Thomas H. Lee. The committee included Goldman Sachs vice-chairman Robert Hurst (now president of the Whitney board) and J. Tomilson Hill, a senior managing director at the Blackstone Group, the advisory and LBO boutique. Heading the day’s agenda was a topic familiar to nominating committees at all of the top cultural institutions in New York: where and how to find the next CEO with a yen for art. The bull market had created a new wave of multimillionaire corporate chieftains, many of whom were eager to smooth the rougher edges off their new money with a seat on the Met, Modern, or Whitney board. But the competition to corral these characters was stiff.

Global Crossing’s Gary Winnick, for example, had been lured onto MoMA’s board earlier that year by David Rockefeller and had responded with a $5 million pledge. The Whitney board had no Rockefeller, alas, but in Lee, Hurst, and Hill, it had three Wall Street players with a collective Rolodex of impressive proportions and something more as well: the competitive zeal and street wisdom to know where the big elephants came to drink.

More than its larger cousins, the Whitney, with its puny $45.5 million endowment (the MoMA has $400 million, and the Met $1.7 billion), has been beholden to the creative and financial energies of its trustees. That fact was underscored last week with the announcement that the Whitney’s board had solicited the donation of 86 paintings, including works by Jasper Johns, Mark Rothko, Andy Warhol, and Roy Lichtenstein, a gift worth $200 million. Truly an example of what the combination of art smarts and money – board chairman Leonard Lauder and Lee also donated from their own world-class personal collections – can do for a museum.

The three executives in Lee’s office that day perused a list of twenty or so CEOs. Then Hill proposed another name. “How about Tyco’s Dennis Kozlowski?” He was a generous guy, Hill said, and he was establishing a presence in New York, plus – who knows? – he might even be interested in American art.

It was an inspired choice, all agreed. Kozlowski was well known on Wall Street for commanding a salary package so outrageous that it stood out even in such exuberant times. (Within one four-day period in early September 2000, he had cashed in $268 million worth of Tyco stock.) And here was the kicker: In the spring of 2000, Kozlowski had paid $18 million for a thirteen-room apartment at 950 Fifth Avenue, outbidding Michael Dell in the process. The seller? Hill’s partner and boss Stephen Schwarzman, president and CEO of Blackstone (and a former Whitney board member himself).

For the nominating-committee members, this all seemed very propitious.

“I wish I had thought of that,” remarked Hurst. Indeed, one wonders why he hadn’t. Goldman Sachs had long been one of Tyco’s primary investment banks, and Hurst, as the firm’s most senior relationship banker, had cultivated a close business relationship with Kozlowski. Not to mention lucrative: Rival bankers estimate that Goldman Sachs has collected more than $100 million in fees from Tyco and the deal-driven Kozlowski over the years. “If Goldman needed to talk to Dennis, they would get Hurst,” says a banker familiar with Tyco. What’s more, Hurst was a resident of 950 Fifth Avenue, and as a member of the co-op board, he no doubt vouched for Kozlowski’s bona fides when the Tyco chief presented himself to the building in March 2000.

The wheels were set in motion. A number of fellow board members say Hurst volunteered to broach the idea with Kozlowski – though Hurst declines to comment on the matter – and by July 2001, a meeting had been arranged whereby Hurst introduced Kozlowski to then– board president Joel Ehrenkranz and Lee. As with all incoming Whitney board members, Kozlowski was apprised of the conditions: $100,000 in personal donations and, in Kozlowski’s case, the expectation of much larger doses of corporate giving to come.

The fact is that the Whitney – if it is to accomplish its ambitious agenda of adding a building extension – will need to find a fresh batch of corporate and Wall Street patrons, beyond the Lauders and Lees, to support and sustain its grand mission. It is perhaps no surprise, then, that the museum’s board has so aggressively courted some of the flashier and more unpredictable money in town – like that of Vivendi’s Jean-Marie Messier, who is still a board member with Kozlowski, and Veronique Pittman, second wife to AOL Time Warner’s Bob.

“You have to be realistic. This is not like putting together a cocktail party,” says trustee and artist Chuck Close. “You are looking at the future of the museum. When you are the Avis in town to everyone else’s Hertz, you do try harder. We cannot rest on our laurels in the same way that the Met or the Modern can.”

Indeed, there is a long history of Whitney trustees’ trolling for larger-than-life corporate titans. Flora Miller Biddle, the granddaughter of museum founder Gertrude Vanderbilt Whitney and board president from 1977 to 1985, cultivated financier Larry Tisch and a pre-Sotheby’s Alfred Taubman. Bob Greenhill, an eighties-era M&A star at Morgan Stanley, was also lured onto the board in the late eighties.  

On October 2, 2001, Kozlowski was voted in unanimously. And that would be the last time that most of the Whitney trustees would take up the name of Dennis Kozlowski until his sunbaked face and gleaming dome began appearing in all the papers earlier this spring. Yes, he was accused of being a tax cheat, but more galling still were the stories describing his $13 million art-buying binge – the purchases he tried to avoid paying taxes on. They all seemed to be second-rate, overpriced European offerings. Not a Johns or an Edward Hopper among them.

For Dennis Kozlowski, acquiring an art collection was – like most things he did – something to be done quickly, with price being no object. It was the summer of 2001, his stock was soaring, he was sitting on nearly $300 million in cash, and he had recently married his girlfriend of ten years’ standing, Karen Mayo, a statuesque 40-year-old former ski instructor and tennis buff. It seemed like the right thing to do.

To find out where to start, he went to the people at Fine Collections Management, a West Palm Beach–based wine, fine-arts, and antiques consultancy run by the family that manages the extensive art and wine collection of billionaire collector and yachtsman Bill Koch. The Kozlowskis were put in touch with Christine Berry, a 32-year-old art director – and former assistant registrar at the Whitney – at Fine Collections.

That August, just a month after he met members of the Whitney board, the buying began. Later, Kozlowski was given a tour of Koch’s private collection of Monets, Renoirs, and Cezannes at his house in Palm Beach. Kozlowski liked what he saw, and the paintings he went on to acquire – a $3.9 million Monet; $8 million for a Renoir, a Beert, and a Caillebotte – seemed, if anything, to ape the paintings in Koch’s collection. Those close to the matter say that Mayo, in the process of a massive eighteen-month redecoration of the newlyweds’ Fifth Avenue apartment, picked paintings on the basis of how the colors matched her furniture schemes. Back at the Whitney, people who heard about the new collection were not altogether impressed. “It was obvious that he was very proud and happy to have these paintings,” says Whitney director Maxwell Anderson, who spoke briefly to Kozlowski about his collection. “Beyond that, I would not say that he was an active student of the arts. He was clearly someone who saw virtue in having them, and that was as far as it went.”

In November 2001, Kozlowski was honored by the Christopher Reeve Paralysis Foundation. Standing arm-in-arm with Kevin Bacon, he mugged for the society photographers. With his new wife standing by his side, showing off her Florida tan, and his Columbia-business-school-student daughter smiling up at him from a nearby table, he seemed the very picture of the happy corporate man. To be sure, he had much to beam about: a beautiful wife, his surging stock hitting new highs every day, brand-new art on his brand-new walls, and a board seat at the Vanderbilt-family museum.

As for the Whitney board members, they, too, were beaming: Kozlowski had agreed to a corporate grant of $4.5 million to fund traveling Whitney art exhibits. It was a stunning number – 10 percent of the museum’s endowment. In addition, Kozlowski had Tyco sponsor the entertainment at the museum’s fall gala, a deluxe affair held on October 15 at the museum’s Marcel Breuer building at 945 Madison Avenue.

It was a glorious night: Designer Todd Oldham spun discs as the D.J., and Sandra Bernhard cracked jokes for the crowd. Many of the top trustees were there – including Lauder and Hurst. But one man who wasn’t there was Kozlowski himself. Following his appointment that October, he did not attend a single board meeting or museum event.

For, as would soon become clear, he had much larger concerns to address. After Tyco’s stock peaked at $59 on December 28, it began its plunge in January 2002 as doubts about the company’s accounts emerged. Suddenly, an all-day board meeting at the Whitney seemed quite unimportant. Kozlowski unloaded his last chunk of stock – $14 million worth – on January 30, and then called once again on Hurst and the Goldman bankers, to unravel his thousands of deals and restructure the company. The markets would have none of it – Tyco’s stock sank to the low twenties, and after Kozlowski’s arrest on June 2, it sank even further.

As for the $4.5 million grant, it does not officially kick in until next year. Talks are now ongoing between museum and Tyco officials as to how much, if anything at all, the Whitney will be able to collect. Kozlowski still sits as a member of the board and has given no indication as to what his future intentions might be with regard to his trusteeship.

“We need to ask ourselves: What is the motivation for these people to join the board, particularly if they are not interested in art?” says one trustee. “I’m not sure that we need this tainted money. I really think we can work harder to raise money in more creative ways.”


Board Stiffed