LATEST REPORT #1,062: City council said no unanimously Thursday to a request for an emergency $375,000 for Orchestra London to pay musicians and staff, pay a tax bill to the federal government and pay a consultant to take them into bankruptcy. Regardless, barring a Yuletide miracle, the orchestra is heading there anyway within days.
Friday, Dec. 19, 2014 – London Ontario
As it turns out, sadly, there isn’t a Santa Claus, at least not as far as Orchestra London is concerned.
City council Thursday rejected the orchestra’s urgent plea for help in staving off bankruptcy. There was no joy at City Hall with the unanimous decision, but considerable finger pointing, mostly at the board and former executive director of the 77-year-old institution.
Barring some sort of Yuletide miracle, Orchestra London for all intents and purposes will shortly cease to exist, having been buried by debts that may ultimately total more than $2 million.
Joseph O’Neill, chairperson of the orchestra’s board of directors, came to council seeking $375,000 in quick cash to ease the pain of the final steps, funds that Councillor Maureen Cassidy (Ward 5) accurately described as paying the funeral costs.
Facing a full gallery of orchestra supporters on what was surely the most trying day of its brief life, council turned the request down 15–0. Considerable sorrow and some anger was expressed, but there was no equivocation.
And really no choice.
Orchestra London has been on a downward slide for years as its audience declined and its debt increased to the point, reached last week, where it simply ran out of money.
An expected $350,000 donation disappeared, apparently unexpectedly. Suddenly the orchestra couldn’t pay its musicians and staff for December; its obligation to remit taxes deducted from employees to the federal government hasn’t been paid for some months.
As it staggers into default, the orchestra already is leaving an immediate $500,000 bill for city taxpayers because we guaranteed a TD Bank line of credit in that amount.
Worse, while Mr. O’Neill describes the orchestra’s current business plan as “badly flawed,” a fact known for some time, no initiative is underway to find a better one.
So there was no way a very bad situation was going to get anything other than worse and perhaps never again better. City council had to say no, or risk being dragged unwillingly into the bankruptcy proceedings.
Behind all this, though, runs a disturbing back story which isn’t yet fully known. Somebody, or bodies, clearly was delinquent in the performance of fiduciary duties. To his credit it was the citizen volunteer Mr. O’Neill alone who showed up Thursday to face council’s fire.
Missing was Joe Swan, ex-councillor, ex-candidate for mayor and, more importantly, ex-executive director of Orchestra London. He ‘resigned’, according to a news release, at exactly 5 p.m. Tuesday effective immediately – the precision of his departure sounding more like a dismal with cause.
Incredibly though, Mr. O’Neill didn’t have the answers to some key questions. For example, why did an anonymous donation of $350,000 counted as revenue by an auditor’s statement in June, thereby allowing the orchestra to show a $46,820 profit on the season, go up in smoke?
The donation was actually for $1 million and $350,000 was taken into the orchestra’s revenues in 2013. But on Dec. 8 it was discovered the second installment of $350,000 would not be forthcoming. Why?
Mr. O’Neill said he didn’t know exactly. What strings were attached to the donation? He didn’t know. Who made the donation? He didn’t know that either, except that it had been negotiated between two lawyers.
It is speculated the donation was actually meant as seed money for a new performing arts centre, a project being pushed by an entity known as Music London. Although this is often officially denied, Music London and Orchestra London until recently bore a striking resemblance. Perhaps this accounts for the money getting placed in the wrong bank account.
It doesn’t explain, however, why the people who had the responsibility to provide oversight to the hired help didn’t know what was going on. They didn’t even know, according to Mr. O’Neill, that the withholding payments hadn’t been made, a problem that could lead to significant penalties for the directors.
Phil Squire, the new councillor for Ward 6, was particularly sharp in his critique of the situation: “Seems to me the people who were running the orchestra were running if off the cliff. One of the things that concerns me is the degree of oversight with what was happening, how you weren’t aware of the depth of the problem, not aware of the source of the donations. Given all that I’m wondering whether there is some point you will take personal responsibility for what happened?”
Mr. O’Neill replied: “By standing here I am taking full responsibility for the situation.”
But perhaps unfairly. There’s no doubt Mr. O’Neill and his fellow directors share part of the blame, but the absent ex-executive director knew, or should have known, the answers to those questions. Why didn’t he share this information?
The consequence, noted Tanya Park, new councillor for Ward 13, was this: “The lack of communication between staff and the board has put the musicians in the worst possible situation, along with the City of London.”
Was the board not aware of its responsibilities, asked Virginia Ridley, new councillor for Ward 10? “We were well aware,” Mr. O’Neill responded. “There are three lawyers on our board.”
Undoubtedly this will give rise to smirks around the city during Christmas cocktails. How many lawyers does it take to bankrupt an orchestra?
It doesn’t, though, help the men and women who played their hearts out, or the thousands of Londoners who paid in advance for concerts that will not now take place. It certainly doesn’t help London’s image either as a city supportive of the arts but that now doesn’t have an instrumental orchestra.
And it quite possibly kills for another decade any chance of a performing arts centre. The irony there, as Mr. O’Neill explained it, is that Orchestra London’s bid over the past two years to get a new performance venue as the way out of its financial spiral distracted the board from its real job – making sure what they had already could keep on playing.
NOTE TO READERS: City council is taking a Yule season break until Jan. 5, and so is The McLeod Report. Best of the season to you and yours.