The chairman of the Senate Finance Committee on Wednesday is giving American University 10 days to respond to allegations that the school’s trustees withheld information, disregarded federal laws and attempted to punish the whistleblower who ignited an investigation into school President Benjamin Ladner’s spending habits.
In a four-page letter, Sen. Charles Grassley, R-Iowa, said he is poised to call for significant reforms on American University’s governing board, which could include removal of several members — unless he can be convinced otherwise.
Ladner resigned in October after auditors raised flags over hundreds of thousands of dollars in expenditures by Ladner and his wife, Nancy. Ladner, who has never been charged with a crime, reimbursed the university $134,000 and agreed to declare and pay taxes on an additional $398,000 income.
Grassley, chairman of the committee, is using the decision to give Ladner a $3.75 million departure package as a case study in his review of tax-exempt nonprofit institutions.
“I’m not here to direct the management of the affairs of AU or its board, I do want you to know that I am considering proposing federal legislation that would require changes in the structure, composition and governance of the AU board,” Grassley wrote.
AU trustees are expected to hold a series of closed-door meetings beginning today to discuss reform efforts and develop a response to the letter, officials said.
In his letter, Grassley said he is “frustrated” that the university “continues to redact material provided and most frustratingly labels key documents ‘confidential.’ ” Grassley said this is not what he expects “from a university that benefits from tax-exempt status and was chartered by [an] act of Congress.”
The committee also released a slew of internal documents, including e-mails between board members that reveal efforts by one board member to search out the whistleblower whose March 2005 letter ignited the investigation into Ladner’s spending habits. The letter also raises concerns over a controlling bloc of trustees who ignored several outside consultants in trying to boost Ladner’s compensation, although it would have broken federal laws.
E-mail evidence
» Several e-mails sent by AU Trustee David Carmen, head of the powerful lobbying firm The Carmen Group, released from the committee on Thursday suggest he was trying to punish the “whistleblower.”
» “No one is so naive anymore to think that unidentified ‘whistleblowers’ are public servants,” Carmen wrote in an August 4 e-mail. “It’s a matter of hauling all participants with the information in and explaining that it won’t be tolerated … just like you get your 7 year old to admit you know who did it.”
» Carmen said he “never suggested going after the whistleblower.”
Carmen’s attorney, Tom Green, says the e-mails released Wednesday are taken out of context and “whistleblower” refers to trustees who were leaking information to the media, not to the March 2005 letter writer.
