The Los Angeles-based J. Paul Getty Trust sold billionaire philanthropist Eli Broad a piece of Brentwood real estate for $2 million in 2002, $700,000 less than it had been appraised for two years earlier, and Getty chief executive Barry Munitz, a friend and professional associate of Broad's, personally directed the early stages of the deal, causing experts to question the legality and ethics of the transaction, the Los Angeles Times reports.

Foundation executives and tax law specialists consulted by the Times about the sale said the legal and ethical questions it raises could trigger scrutiny from the state attorney general's office or the Internal Revenue Service, which regulate tax-exempt organizations. Because their assets are dedicated to public use, not private benefit, private foundations such as the Getty are required to get fair market value whenever they sell property or other assets.

"The obligation is to always put the interests of the trust first," said Arthur Rieman, managing director of the Law Firm for Non-Profits in Los Angeles, a center that advises foundations nationwide. "If someone gets a discount because of a personal relationship, then that duty is violated."

Getty officials said they conducted a proper sale and received full value for the wooded half acre located across the street from the front gate of Broad's estate. The land was worth less than the appraised value because a number of limiting conditions made it costly and difficult to develop, officials said, and Broad received no discount.

"I played no meaningful, no material, no in-any-way-relevant role in the transaction," Munitz told the Times. "Everything I did was to try to have the lawyers and the appraisers and the third-party people be sure that there was no conflict of interest for me."

"We would certainly have it appraised and sell it through an established broker or independent source," said Nancy Feller, associate general counsel of the Ford Foundation. "We would not do it ourselves." Ford Foundation policy prohibits the sale of foundation property to employees, their friends or relatives, even at fair market value, she added.