Lawton Fitt: Why I had to quit the Royal Academy

As secretary of the RA, the American banker Lawton Fitt was criticised for being too commercial. On the contrary, she tells Simon Tait, it was the arcane practices at the institution that made it impossible for her to stay

The Royal Academy of Arts, the crisis-beset pantheon of Britain's finest living artists, was plunged into turmoil last night with the resignation of its controversial secretary, the banker Lawton Fitt. The 51-year-old Fitt, the first woman and the first American to hold the position, says that frustration with the arcane structures of the RA has forced her out.

The Royal Academy of Arts, the crisis-beset pantheon of Britain's finest living artists, was plunged into turmoil last night with the resignation of its controversial secretary, the banker Lawton Fitt. The 51-year-old Fitt, the first woman and the first American to hold the position, says that frustration with the arcane structures of the RA has forced her out.

Frequently criticised for attempting to impose corporate thinking on the RA, she says: "There's a lot of ambiguity about who is responsible for what. Authority and accountability don't necessarily match up, and it makes it extra-difficult to move anything forward. I have been repeatedly frustrated in my efforts to make changes, to do some things I think the academy would benefit from, and finally that frustration has told."

Fitt, who came to the RA after 23 years at the investment bank Goldman Sachs, where she had risen to be a vice-president and a multimillionaire in her own right, has dropped her bombshell as the academy prepares to elect a new president next week, after the surprise decision by the incumbent, the sculptor Phillip King, to step down early because of ill health. Her announcement coincides with the appointment of Sir David Rowland, the former chairman and chief executive of NatWest, to head a review of the academy's governance procedures. That is something that had to happen if the RA is to survive, Fitt says, but it came too late for her. "I'm hugely supportive of what David is going to do," she says. "I just wish it had come earlier in my tenure. But I'm at the point now where it's time to move on."

Fitt did not come cold into the art world from finance. She is a long-term trustee of PS1, in New York, the leading contemporary art centre in the US, and has successfully seen through its merger this year with the Museum of Modern Art (MoMA), on whose board she also now sits. The RA, she found, is a quite different institution. "The process of determining things like spending priorities is extremely difficult, because who actually determines strategy and how the pros and cons, the risks and rewards, are evaluated is something the structure of the RA isn't well tuned to. It's not anything in particular; it's an everyday thing. The RA has a lot of capital-spending priorities that are very important, and the prioritisation of that is very difficult because the decision-making process is so arcane."

Founded in 1768 by George III to provide permanent exhibition space for members and teaching for their protégés, the RA can be seen as analogous to a corporate company, with 80 elected members (shareholders) forming a general assembly, which elects a president (chairman), a treasurer and a keeper of the RA Schools from its number. For day-to-day decisions, it also forms a council (board) of 20, which rotates every year, each member serving two years, and plans the exhibition programme. The administration of the RA is the job of the secretary, or chief executive.

"But what goes to general assembly/ AGM? What's a council or board decision; what's a president's/chairman's decision? What's a secretary's/CEO's decision?" Fitt asks. "In companies, those things are described, and for very good reasons. The RA, as it has evolved, has not described them, and that has led to, at best, inefficiency."

She will not be drawn on suggestions that her difficult relationship with the RA's exhibitions secretary, Norman Rosenthal, is at least a contributory reason for her departure. In January, she had a well-publicised confrontation with Rosenthal over exhibition costs, after which she demanded his sacking but had to make do with a tightening of his contract. "Norman has never felt it necessary to pay a great deal of attention to the costs of things, and money is something Lawton knows a great deal about," one academician commented drily.

When she arrived, Fitt inherited a deficit in the annual accounts, which she was able to turn into a small surplus for the accounting year 2003-4. The current financial year will be much tighter, she says, with the RA having to take full responsibility for the former Museum of Mankind next door for the first time, at a cost of more than £1m a year. She has already won a postponement of the blockbuster show Citizens and Kings, scheduled for next autumn, on the grounds of cost, and much is riding on the success of the Turks exhibition, opening next month.

The RA was shaken out of its complacency in 1996 when the bursar, Trevor Clark, was found to have stolen £400,000 over a period of years. The former chief executive of ITN, David Gordon, was brought in as secretary, but left in 2002 after falling out with the president, saying, "This is a £20m-a-year business, not a gentlemen's club." For years there has been tension between the members and the administration; the 80 academicians see the growth of the staff to 200 as a challenge to their control of the institution. Reliance on exhibition income is too risky for the academy, Fitt believes, and other means of income must be sought. For instance, as things stand, the schools' students, 20 joining each year for a three-year course, attend for free. Most could afford fees, and an endowment could be created to help those who couldn't.

The RA receives no subsidy and must raise its £23m annual budget from scratch each year. Its expanding activities have put space in the original Burlington House building at an increasing premium, and the acquisition of the Museum of Mankind, now known prosaically as 6 Burlington Gardens, was seen as the answer. It was the main mission of King when he was elected president in 1999, but in 2002, shortly after appointing Fitt, King had to have heart-bypass surgery and was off for four months. The scheme he and the RA member Sir Michael Hopkins had devised was enormously ambitious, costing probably £80m at current prices. When first the Heritage Lottery Fund failed to approve a £20m grant and then the true impact on fundraising of September 11 and the Iraq war struck home, the scheme was put on ice. Meanwhile, the building is costing the RA £300,000 a year closed, as opposed to at least £1m, Fitt estimates, open.

"It's a tremendous opportunity for the academy and almost as tremendous a possible pitfall," she says. "It's large, and it's not as if we're sitting with a big fat staff that can go in and programme 50 per cent more. The plan that had been developed in the pre-Millennium period was a Millennium plan, at a time when money was more available, people more expansive in their thinking.

"That plan is not one that makes sense today. But that doesn't mean there can't be an alternative, and there is a plan that emphasises the academy, rather than exhibition space, and brings forward some of the aspects of the RA that aren't immediately apparent to the public when they walk through that door, something that could be developed in modules over time."

Fitt says the academicians need to grasp that a system of governance based on a firm decision-making structure is essential, but without their commitment it is a near-impossible task. "How do we fix it without losing the character, the soul, the mission, the history? Because it is a unique institution with an awful lot that's terrific. But it is 236 years old, and life has moved on."