said this week.

Disturbed by an article in The Royal Gazette on Monday which described the foundation's financial difficulties, the board issued a statement aimed at dispelling concerns about its future.

"The article implies that Masterworks is financially threatened to a degree far greater than a regular charity,'' said Mr. Michael Naess, a trustee and chairman of the finance committee. But "it's business as usual''.

The foundation, he said, had a mission to repatriate art about Bermuda or by Bermudians, thus awakening "a sense of the unique character of Bermuda, its history and its culture''.

In a prepared statement, the board said it was not disputing the facts in the article, though it felt it was erroneous to describe the 41 Front Street location Masterworks must leave when a lease expires this summer as the foundation's headquarters.

"In fact, our headquarters should more accurately be described as the place where the majority of our collection is hung, meaning our leased premises at the National Gallery,'' the statement said.

It is true that the foundation is in debt and strapped for cash, but: "So what?'' the trustees asked.

"The Masterworks collection is young and has grown very rapidly, particularly over the last few years. As a natural consequence, we owe money. But the value of the assets is still more than double the debt.'' The board pays no salaries, the statement added. "Virtually all our workers, from (president) Tom Butterfield at the top all the way to the bottom, are strictly volunteers.'' The board agreed the $700,000 Winslow Homer masterpiece "Inland Waterways'' is not owned by the foundation. "Indeed, every artwork which has ever been purchased and paid for by Masterworks belongs to the people of Bermuda, but the Homer does not fit this category. "It was purchased by private interests on our behalf and has been loaned to the collection,'' the statement said.

"In this way, at the very least, the people of Bermuda enjoy possession of a masterpiece which would otherwise reside elsewhere.'' As for Georgia O'Keeffe's pencil drawing of a Bermuda banyan tree trunk, $22,500 of the $75,000 purchase price is still owed and due on June 30, Mr.

Naess said.

While it was true the foundation could lose ownership of the Charles Demuth painting "Trees and Houses, Bermuda'' when a $120,000 bank loan becomes due on August 31, that was very unlikely, Mr. Naess said.

It was unlikely the support of a donor who had been paying interest on the loan would be lost, and unlikely the bank would not roll the loan over for another year provided the interest was paid, he said.

The board repeated Mr. Butterfield's earlier statement that failure to file annual financial statements with the Registrar General as required under the Charities Act was an oversight, "probably of the kind which frequently occurs in all-volunteer organisations''.

The trustees were concerned the article could result in a loss of support.

"As the article discloses, we need all the help we can get from people who believe in our mission.'' The board said it was competing for donations with the National Gallery.

"Faced with conflicting requests for funds, donors simply refuse to support either side,'' the statement said. "This is obviously not in the interests of the community as a whole.

"We also differ in terms of collection philosophy and management style.'' There were early talks about amalgamating Masterworks and the National Gallery, but "the talks broke down as a result of policy differences'', the board said.

"The National Gallery representatives seemed to resent, as trivial in some inexplicable way, our focus upon `things Bermudian.'' There is also a difference in style, the board said. Masterworks was "creative, imaginative, spontaneous, and sometimes a bit crazy'', while the National Gallery is "more structured, more subdued, and definitely more conventional.''