Janne Sirén, who has served as the director of Buffalo's Albright-Knox Art Gallery since 2013, reportedly utilized a museum loan to assist in purchasing a home valued at $710,000. A state review indicates that a significant portion of this loan, including accrued interest, remains unpaid.
According to a report by Buffalo News, which referenced data from the Erie County Comptroller's Office, the interest rates at the time of the loan fluctuated between 4 and 4.5 percent. However, the Albright-Knox Art Gallery, now known as the Buffalo AKG Art Museum, granted the loan to Sirén at a notably lower rate of just 0.18 percent. It was during a routine examination of financial documents from county-supported cultural organizations that the comptroller's office discovered that Sirén had not made any repayments towards the principal or interest.
Mary Hosler, deputy comptroller of the Audit Division, expressed uncertainty regarding the lack of repayment, stating, "Nobody had, really, any answers." Such loans are not uncommon as incentives for museum directors, yet this particular loan seems to contravene New York's Not-For-Profit Corporation Law Section 716, which prohibits nonprofit organizations from extending loans to their directors or key personnel.
Initially categorized as a "short-term bridge loan" intended to be repaid following the sale of Sirén's previous home, the $335,000 loan was later transformed in 2014 into a 30-year mortgage at the same interest rate. The residence, built in 1920 and encompassing 4,400 square feet, is currently valued at $1.1 million. The report highlights that this mortgage was neither filed nor recorded with the Erie County Clerk's Office, and investigators found no evidence of interest payments since the loan's inception.
Without a lien recorded on the property deed, the museum lacks collateral in the event of a default. The report also noted that Sirén appears to have neglected payment of the county mortgage taxes and federal income taxes typically associated with loans issued at discounted rates.
As of now, neither Sirén nor any member of the AKG board has addressed the comptroller's findings. ARTnews has reached out to the museum for comments.
Woodrow Brown, a spokesperson for the museum, conveyed a statement from the AKG's Board of Directors, which explained, "In 2013, the Buffalo AKG provided a relocation package to Dr. Sirén as part of the terms of his employment as the museum's 11th director. This was and remains a relatively common practice in executive recruitment." The statement emphasized the museum's commitment to governance best practices, including compliance with all relevant laws and audit standards.
The statement further clarified, "We fully cooperated with the auditors over several months, and we are thankful that the auditors confirmed that the Buffalo AKG is 'in compliance with applicable CGF (cultural grant funding) requirements and filing obligations.'"
Although the state law prohibiting loans to key officers was enacted in 2014, a year after Sirén received the initial loan, it was in effect when Sirén transitioned the bridge loan into a long-term mortgage with the museum. While Section 716 restricts corporations from lending to their leadership, Section 715 mandates full board disclosure and approval for any transactions involving a "related party."
The comptroller's report indicated that the use of organizational resources to provide a significant, below-market loan to a key officer raises concerns about the potential misallocation of grant funds that should support the organization's mission.
In addition to the loan, the report underscored that the executive director received annual salary increases averaging around 13 percent, along with a $500,000 bonus distributed over five years, surpassing the typical nonprofit range of 3 to 5 percent per year. During this same timeframe, the museum's director of advancement saw a 29 percent increase in compensation.
In response, the AKG stated that the board determines the director's salary based on various factors, including annual salary surveys published by the Association of Art Museum Directors. The board adjusts the director's salary in accordance with the salary survey, necessary cost of living adjustments, and the New York Not-for-Profit Corporation Law. Bonuses are awarded based on specific performance criteria.
Furthermore, the statement highlighted that during this period, the AKG executive director and director of advancement successfully completed a remarkable $230 million capital campaign aimed at funding the largest expansion in the museum's 163-year history.
The comptroller's report serves as a streamlined audit that reviews county grant expenditures by cultural organizations receiving public funds of $5,000 or more, providing recommendations to enhance oversight and accountability. The financial analysis of the AKG is one of several reports released by the office this year that may require further examination.
According to the comptroller, the county grant funds allocated to the AKG were appropriately documented during the review period, and he does not foresee any further investigation beyond sharing the report's findings, as that falls outside his office's purview.
"I'm satisfied that this money we provided was used appropriately," Hardwick remarked. "These other issues are now out there, and we're reporting them, and I'm sure that others may want to follow up on them."
