Wednesday, September 2, 2015


Montsalvat - Australia is extremely lucky to have Montsalvat.  Make no mistake, this ‘artist’s colony’ built through the vision of Justus Jörgensen early last century has survived to this day and is a place people go to marvel at just how a French Gothic village could be created on a hillside in Eltham.  Not just a French low-line thatched affair but grand architecture inclusive of a great Baronial hall, a beautiful chapel, a delightful pool and some of the best ‘balanced’ architecture one could hope to see.  We are still lucky enough to have residing at the property the man who helped build this icon with his father, Mr Sigmund Jörgensen as patriarch, arts advisor, multi-hat-restaurateur and board member.
It is approaching 50 years ago, when I first stepped onto the property marvelling at the community feel by just wandering aimlessly around dodging killer geese and surly peacocks and stopping to watch artists at work perhaps to buy their wares. 
In my mind, Montsalvat must be both protected as a national icon and cherished by celebrating its history and making sure it continues in the manner visioned by Justus Jörgensen all those years ago.  In this way a zillion new people over the next 80 years can go and gawk and admire and experience a slice of living history without Walt Disney like exuberance. 
Ethos discomfort - But now, Montsalvat seems to be in some degree of ‘ethos-discomfort’.  Whilst the buildings remain and are most certainly worth a visit or ten, I am concerned that the current board and management do not understand the raison d'être behind Montsalvat and are failing to manage critical business aspects and heritage responsibilities.
As the saying goes, there is no free lunch!  To preserve Montsalvat requires vision and money and focus and clear strategies all leading to informed decisions by a coherent and transparent board.  Decisions which ensure working capital for infrastructure maintenance and development.
Board and management have failed - As I watch events unfold, monitor blog and change sites, read publicly available documents, watch everything and listen to all and sundry it seems to be increasingly clear that the current board and management are failing in their primary duty to make sure Montsalvat is protected, cherished and financially sound.  Unfortunately, there are many board and management decisions seemingly incongruous to these three very basic visions leading to profit diminishing year on year thereby curtailing infrastructure repairs let alone being able to take advantage of any ongoing strategic initiatives. 
Directors are required to make informed and independent judgments on decisions put to them [AWA Ltd v Daniels (t/as Deloitte Haskins & Sells) (1992) 7 ACSR 759] and are required to place themselves in a position to guide the company and monitor its management but Montsalvat seems to have a board riven with infighting whilst making questionable [even ultra vires] decisions in possible breach of the Corporations Act [2001] S180 etal. All board decisions seem to be treated as confidential subject to secrecy provisions inserted within the constitution. The result being the ‘self elected’ board only answers to itself with no members other than the actual board members - so there are no checks and balances.
Just a cursory look at the 2013 financial reports indicates problems like consultant’s fees, employment expenses and professional fees amounting to around 87% of gross profit, non current liabilities increased by $103,000 and the loss of a $600,000 revenue stream through gifting the popular albeit badly managed restaurant to a third party by tender for a fraction of its worth as that revenue stream. As directors have a lawful duty to be informed of the companies actual financial affairs [Statewide Tobacco Services Ltd v Morley (1990) 2 ACSR 405], how can this happen?
Just three examples:
Deliberate sacrifice of a major revenue stream - Money was and is critical to the survival of Montsalvat but revenue streams are limited.  A few years ago we worked with Mr Sigmund Jörgensen to reinvigorate the restaurant establishing a vision, mission, strategic directions, strategic objectives, change plans, spatial changes, and cuisine changes all financially documented with timelines.  We estimated a nett profit to Montsalvat from the restaurant of some $3,000 to $4,000 per week and, based on later published turnover of up to $14,000 per week, they should have easily achieved that profit and more - providing it was properly managed.  Unfortunately, management did not take any of our advice apart from some spatial changes [since destroyed] resulting in losses roughly equivalent to profits foregone in as much as $300,000 per annum was lost to forecast.  That’s a lot of maintenance and marketing money just gone.  Management must have actually budgeted for wages etal  near 90% of gross profit and a cost of sales well above industry norms to screw this up.  Much worse, instead of fixing the problems, as a board and senior management should, and given they had all the information we gave them, decided instead of actually managing the restaurant to profit, to lease the space out for a fraction of its worth as a revenue stream for Montsalvat.  How can that be acceptable?  These are not the actions of a competent board and/or management given that under the Corporations Act each and every director must exercise their power and discharge their duties with the degree of care and diligence that any reasonable person would exercise.
Wasted marketing opportunities - Mr Jörgensen had just written a book on Montsalvat launching it a couple of weeks ago at Montsalvat itself.  This major event should have been embraced by board and management, but no.  Sigmund had to do his own marketing, beg entertainment, seek his own speakers and believe it or not the entry doors remained locked until after the advertised start time leaving guests outside in the dust for no reason. I was there, being extremely underwhelmed by the board and management in their conduct towards the launch and Mr Jörgensen but far far worse, their ambivalence if not rejection of the huge marketing opportunity this launch could have provided for the future benefit of the property they purport to direct and manage.  It is shameful as this conduct seems to be driven by board dysfunction and infighting to the detriment of Montsalvat.
Destruction of heritage - An example which really strikes at the heart of Montsalvat.  When Justus Jörgensen designed and built Montsalvat he designed a beautiful pool gated from the outside world and surrounded by artist accommodation and galleries.  This pool is an integral part of the ethos of Montsalvat as are the pools at Ripponlea and Mooramong.  Indeed we were at the National Trust property, Mooramong, a little while ago enjoying afternoon tea around the unfenced pool and have enjoyed many a visit to Ripponlea around their also unfenced pool which they use for functions and receptions. These heritage pools are unfenced for heritage reasons with no requirements by council or anyone to fence same.  Yet the board and management at Montsalvat decided to erect a glass fence [which they can’t afford to pay for] around their heritage pool.  This they are doing against significant objections [] and no lawful imperative or need [no council requirement].  It is public information that the Board even lied to protect their decision to erect the fence by stating there was indeed a lawful requirement.  Heritage aesthetics are ignored and a vital part of Montsalvat’s ethos is being ripped away by a board who just doesn’t understand Montsalvat.
There are many more such examples - Montsalvat has lost its direction.

Three things need to happen starting right now to ensure Montsalvat’s protection and survival:
Stop - The current riven and dysfunctional board along with senior management must resign forthwith apart from Mr Jörgensen who, pursuant to Montsalvat’s constitution as a family member, must remain. 
Assess - An independent administrator / chair / chief executive needs to be appointed for a period of 12 months to instigate a totally independent assessment of all finances and decisions for the last 5 years.
Plan -  Develop a proper strategic plan.  During this time the board needs to be rebuilt with appropriate people after which senior management need to be appointed. 
As I said, I am very concerned about Montsalvat and its future.

Jon Langevad MBA

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