Barnes: Keep audit closed

By Don Steinberg, Inquirer Staff Writer
April 12, 2003

In telling a judge why it does not want to release an audit of its 1990s finances, the Barnes Foundation produced a surprise yesterday.

The financial report contains "candid discussions about former personnel... that might be embarrassing to these individuals if publicly disclosed," attorneys for the Barnes said in a legal filing.

The filing also said that Richard Glanton, who was president of the Barnes from June 1990 to February 1998, "explicitly threatened" the accounting firm and the law firm that prepared the report "with suit if allegations investigated in connection with the report were made public."

That was the latest bit of intrigue in the court case surrounding the Barnes Foundation's proposal to move its multibillion-dollar art collection from Lower Merion to Philadelphia.

As a public trust, the foundation must convince Montgomery County Orphans' Court Judge Stanley Ott that moving the art to a more accessible location along Benjamin Franklin Parkway and rewriting the foundation's bylaws are necessary to its survival.

Glanton, a partner at a Center City law firm, did not respond to phone calls and e-mail yesterday.

Contents of the forensic audit performed by accounting firm Deloitte & Touche in 1999 have never been disclosed publicly, although the audit is known to document the Barnes' finances during a turbulent period when it was engaged in several lawsuits, its reported expenses rose dramatically, and it began running a budget deficit.

The Barnes argued in its filing that "what happened in 1993 through 1998 is old history" and unrelated to the current plan. It also said the report's privacy is protected by attorney-client privilege because it was prepared in collaboration with the foundation's law firm at the time, Paul, Weiss, Rifkind, Wharton & Garrison.

The Barnes has rebuffed requests by outsiders to see the report, including one in 1999 by the state Attorney General.

But Lincoln University, which is involved in the case because some of the proposed bylaw changes would diminish its role in governing the Barnes, has asked to see the report.

Ott, who last month ordered the Barnes to give good reason why the report should stay private, yesterday seemed inclined to order its release.

"They are using their financial circumstances to justify a move," he said in an interview. "It seems to me this document may shed light on that question."

If it is released, however, it is likely to be done under a confidentiality agreement that would make it available only to the judge, the attorney general, and Lincoln's attorneys. Ott said he did not want to order that the report be made public before he saw it himself.

Ott said he expects to issue a ruling on whether the report should be released, and under what conditions, before the next hearing in the case, which he scheduled for May 5.

"It may be that someday this is a public document," Ott said. "There's a lot at stake here... I'm peeling back the layers of this onion one by one."

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