American University president resigns following investigation
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Benjamin Ladner |
Oct. 26, 2005
A UMNS Report
By Linda Green*
The president of United Methodist-related American University in
Washington has resigned following an investigation of his personal and
travel expenses.
Benjamin Ladner, 63, president for the past 11 years, resigned Oct.
24 after an audit committee found that he and his wife allegedly spent
more than $500,000 inappropriately in the past three years.
An anonymous letter to the board of trustees alleging concerns about
Benjamin Ladner’s travel and personal expenses prompted an independent
audit into those items.
The trustees placed Ladner on administrative leave in August while
the investigation was under way and named university Provost Cornelius
Kerwin acting president. They decided Oct. 10 that Ladner would not
return as president and that Kerwin would continue to fill that role
until a permanent replacement could be found.
Kerwin told university alumni and parents that “while closure has
been reached on the basic issue of the president,” the trustees would
examine issues related to governance. The trustees formed a committee
that will recommend improvements in the governance process.
At subsequent board meetings, trustees reviewed the president’s
situation and hosted conversations with faculty, students, staff, alumni
and academic leadership for comments.
Faculty in some of the university’s academic disciplines had returned
a no-confidence vote against the embattled president and called for his
immediate resignation, stating that Ladner would be unable to provide
the leadership needed to carry the institution through its current $200
million campaign. The campaign, called “AnewAU,” will raise funds for
new facilities, scholarships, the endowment, new faculty chairs and
professorships.
During the Oct. 10 meeting, the trustees also adopted the audit
committee’s findings. The investigation found that Ladner’s alleged
expenses included an engagement party for his son, trips for the
couple’s chef, drivers’ costs and alcohol purchases.
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Cornelius Kerwin |
The trustees’ investigation caught the attention of the U.S. Department
of Justice, which informed the counsel for the board of trustees and the
university Oct. 4 that it had launched an investigation based on their
inquiries.
The trustees authorized the university to seek reimbursement for
certain personal expenses from Ladner. The board asked that he repay
$125,000 for what were deemed inappropriately charged expenses and pay
taxes on about $398,000 in income from 2002-2005.
Although his attorneys disagreed with the audit committee’s findings
and said Ladner’s spending was consistent with his contract terms,
Ladner offered to repay $21,000 to cover some questioned expenditures
and to pay taxes on indirect income for the years the auditors examined.
Ladner resigned from the presidency and as a professor at the
university Oct. 24, and he agreed to relinquish any claim to tenure or
faculty appointment.
He was not available for comment Oct. 25 but in correspondence with the Washington Post
said: “Nancy and I will always regard the opportunity we had to serve
American University for 11 years as a great honor and privilege. We are
especially grateful for the quiet but strong support expressed by so
many friends, colleagues and students.”
In an Oct. 24 statement from the board of trustees, Ladner released
the university from any and all claims arising under his contract. The
university agreed to pay a one-time settlement payment of $950,000,
stated Thomas Gottschalk, acting chairperson of the board of trustees.
The university, he said, will deduct withholding taxes on an additional
$398,000 in income reported for Ladner for the years 2002-2005 and
$125,000 in reimbursable personal expenses due the university for the
same period, as determined by the trustees’ audit committee and accepted
by the board, he stated.
Gottschalk said Ladner will also keep the compensation that he had
deferred — or set aside — annually during his 11 years in office. “This
deferred compensation includes approximately $1 million which is the
present cash value of a split-dollar insurance policy for which Dr.
Ladner is named beneficiary,” Gottschalk said. “It also includes current
account balances in two deferred compensation trusts established for
Dr. Ladner's benefit, which now total about $1.75 million.”
Ladner will vacate the presidential residence in 90 days, and the
university has agreed to reimburse him for relocation expenses up to
$20,000.
“The board felt it was in the best interests of the entire university
community to put the controversy surrounding the audit committee’s
investigation and Dr. Ladner’s employment behind it,” Gottschalk said.
“I along with many others have been saddened that recent events have
overshadowed the great achievements of American University during Dr.
Ladner’s presidency, and I hope over time some balance and perspective
will enable people to focus on the positives of his presidency as this
controversy recedes into the past,” he said.
The Rev. Jerome King Del Pino, top staff executive of the United
Methodist Board of Higher Education and Ministry, agreed with Gottschalk
about Ladner’s contributions to the university. He said he is convinced
that Ladner’s presidency “will be noted in its (American University’s)
history books as one of the most significant periods of growth as well
as consolidation of research to pursue academics and research in the
higher education enterprise.”
Del Pino, a member of the board of trustees, told United Methodist
News Service that “it is very difficult not to conclude that President
Ladner has exercised poor judgment regarding his responsibility as a
fiduciary of the university, and to the extent that he has done this, he
has failed to give the leadership that should be expected.”
He also put the lack of governance of the president’s office on the
shoulders of the trustees. “It is equally true that the American
University Board of Trustees is accountable for its failure of proper
governance and giving essential oversight for the work of the office of
the president.”
Six of the school’s academic deans and the university librarian
condemned the trustees’ decision to provide Ladner with a settlement
package.
“As academic leaders of American University, we condemn the decision
of the Board of Trustees to offer former President Ladner a
multimillion-dollar settlement package and the closed process by which
that decision was reached. We do not believe this is an appropriate way
to manage the university. We must have transparency and accountability
consistent with principles of good governance and the values of American
University,” the deans and librarian said in a statement.
A search committee for a new president of the 112-year-old university
will likely be formed at the board of trustees’ Nov. 11 meeting, but
until a successor is found, Kerwin said he is “committed to moving
forward with renewed vision and a concentrated effort.”
“Our focus is on education mission and rebuilding a new AU through
the capital campaign. Our values are intact, our principles are strong,
and we will continue to listen to the voices of AU on matters of
significance.”
He also emphasized the importance of improving transparency and communication with all the university’s constituencies.
*Green is a United Methodist News Service news writer based in Nashville, Tenn.
News media contact: Linda Green, (615) 742-5470 or newsdesk@umcom.org
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