Phillips, de Pury & Luxembourg Claes Oldenburg's Soft Light Switches, a pop vinyl sculpture, was bought for $590,000 People take a look at this and you tell me would you pay 590,000 Buying spree now drawing fire By BILL MURPHY Copyright 2002 Houston Chronicle In late 2000, an in-house art committee at Enron Corp. was given a $20 million budget and a mandate to assemble a world-class collection of contemporary art, bold pieces that would promote the company's image as a trendsetter in creating new trading markets for energy, broadband and water. "The ideals were very high," said Barry Walker, a Museum of Fine Arts, Houston, curator who served on the committee. "They wanted an important collection. They were striving to be cutting edge and to represent the Enron culture -- which at that time sounded like a good thing." Over the next year or so, as the company slid quietly toward bankruptcy, committee members spent or committed $4 million acquiring works considered masterpieces of the pop, op and minimalist genres. They purchased a vinyl sculptured light switch for $590,000, for example, and voted to commission a Scandinavian artist to transform the Jetson-like circular walkway linking Enron's towers into a mammoth public artwork. Today, however, the deal is off. Most of the purchased works are in storage, being readied for sale. And while art lovers lament the loss, others view the spending spree as symbolic of the hubris of Enron's leadership. "Here are essentially these crooks who are selling their stock options while not telling Wall Street and their own employees what is going on," said Dr. W. Michael Hoffman, director of the Center for Business Ethics at Bentley College outside Boston. "To be amassing a collection of art while the ship is sinking -- it's the symbol of the thing." Closer to home, Monique Shankle, who was laid off from Enron's compliance section when the company declared bankruptcy, agreed that executives' "priorities were not in order." "The employees' livelihoods should have taken precedence over an art collection," she said. "This money spent on the art collection would have gone a long way in helping (laid-off) employees. That money could have been divided up and paid out to help us." For those unfamiliar with contemporary art and artists, it is hard to convey how good Enron's collection was going to be. "They would have had a collection the likes of which won't be seen for some time," said Sandra Gering, owner of a New York City gallery. The five-member art committee was led by Lea Fastow, wife of Enron's then-Chief Financial Officer Andrew Fastow, now at the center of the scandal surrounding the company's collapse. Off-the-book partnerships designed by him hid Enron's true financial condition and caused the firm's stock to nose-dive when revealed last fall. Lea Fastow worked at Enron for a time, rising to become assistant treasurer. She left the company in 1997, after her first child was born. Other committee members included Jeff Shankman, former president of Enron Global Markets and a decorative and fine arts collector; Enron executive Mike McConnell; and Ned Rifkin, former director of the Menil Collection and now head of the Hirshhorn Museum and Sculpture Garden in Washington, D.C. No one was paid, Walker said. More than 6,000 offers, both for finished pieces and proposals for commissioned works, came in from dealers and artists' agents, exhilarated at the arrival of a deep-pocketed corporate sponsor of new commissions. "What Enron was doing was extremely important for the art world," Gering said. "What they were doing for Houston was very profound." Lea Fastow organized monthly meetings, reviewed slide submissions, traveled to see pieces and did secretarial and "grunt work" for the committee, Walker said. "Lea was the driving force," he said. "We thought we were taking things further than other corporate collections. Fastow is a trustee at the Contemporary Arts Museum and a member of the MFAH's subcommittee on modern and contemporary arts. She and her husband collect contemporary art. Earlier this year, two of their paintings -- recent works by minimalist Agnes Martin and pop artist Ed Ruscha -- were exhibited at the Menil. While some of Martin's and Ruscha's early work has started to fetch more than $1 million, their recent work usually brings six figures, art experts said. Some of the best work was going to be exhibited in a public area on the lobby floor of the new Enron building, designed by renowned architect Cesar Pelli. But the majority would have been on display in corporate offices and other areas on the upper floors, where passes were needed for access. With an initial budget of $20 million and the blessing of senior management, the committee went on an art-buying spree from late 2000 until last fall, when it became clear the company was headed for disaster. To anchor the collection, Enron bought some acknowledged masterpieces. Among them: ·Prominent American sculptor Martin Puryear's Bower, a lattice-work abstract sculpture, bought for $766,000. ·Claes Oldenburg's Soft Light Switches, a pop sculpture of a vinyl light switch, bought for $590,000. ·Bridget Riley's In Attendance, an op (for "optical") art painting. ·Retrobot, a piece composed of old television sets, by Nam June Paik, the father of video art. The commissioned pieces were to be among the most cutting-edge in the collection. Many were not completed. In addition to Olafur Eliasson's Milky Way, the installation art envisioned for the ring walk connecting the Enron towers, there would have been an outdoor fountain and sculpture by contemporary artist Anish Kapoor. Company officials hoped the ring walk would be so spectacular that it would become a destination point for tourists and locals. Plans also called for Ruscha to paint a pop word piece -- using the typeface of the The New York Times or Wall Street Journal -- on all four walls of a trading room. Jeff Skilling resigned as Enron's chief executive officer in mid-August. Days later, Ken Lay, who took over as CEO, a post he had formerly held, received the famous memo from Enron Vice President Sherron Watkins, warning that the company could implode if shady accounting practices came to light. The art-collection committee held its last meeting in late summer or early fall, sometime after Skilling resigned. During this meeting, members traveled to Lay's office to give him a brief presentation. Hiring a curator for the collection was on the horizon. We told him what we were doing, gave him a progress report, got his blessing," Walker said. "He said, `Great. Keep going.' I don't think he knew much about (the collection)." Before the committee's next meeting, Enron's stock plummeted, and Andrew Fastow was forced to resign in late October. "Lea called to say that under the circumstances, she had resigned from the committee," Walker said. "It was obvious that (the collection) wasn't going to happen." While the committee was stocking the collection, Walker said, he had no inkling that Enron was in a dire financial state. "I don't think any of us did," he said. "We thought we were doing something good for Houston." Enron and a committee representing its creditors in U.S. Bankruptcy Court in New York now plan to sell pieces in the collection individually, seeking top dollar. One has already been sold. Days before Enron declared bankruptcy early in December, the Smithsonian American Art Museum made arrangements to buy Puryear's Bower. The deal went through earlier this year, with the Smithsonian paying $782,000 for the work -- about $16,000 more than Enron paid. "The (collection) that was acquired may be among Enron's best investments," Walker said. Other committee members declined comment, as did Enron spokespeople. A state grand jury is investigating whether Enron undervalued property in Harris County to lower its tax payments. Part of that probe includes whether Enron undervalued its art collection, said a source familiar with the investigation. Enron reached an agreement with the Harris County Appraisal District that its art, as of January this year, was worth $4.8 million. But the company remains in negotiations over the worth of its art in 2000 and 2001, said HCAD chief appraiser Jim Robinson. Corporate art collections are nothing new. The JP Morgan Chase art collection in New York is museum-quality. Frito Lay in Plano and Paine Webber are other corporations that have valuable collections. Shareholders have often accepted paying for such collections because many believe corporations have a responsibility to give back to society, said Abigail Hubbard, who teaches business ethics as a University of Houston visiting professor. "When you look back at history, all the patrons of the arts have always been merchants and governments," she said. Corporate collections "are a reasonably customary practice," said Duane Windsor, professor at Rice University's Jones Graduate School of Management. "But the purists' position is that the money (spent on philanthropy) belongs to the corporation, and diversion of it is suspect. I'd want to know why money was being spent on art." He added that Enron's collection seems harder to justify because most of the art was bought after company stock began a slow decline. "If I were an investor, the collection is just one more example that executives were doing anything but minding the business," Windsor said. "When running a business, you should be prudent. Spending a lot of money to put your name on a baseball stadium and to start an art collection -- these are signs of hubris and victory disease: `We're very successful, we're doing very, very well.' "But as it turns out, the business was a house of cards."
