[NHCOLL-L:3467] Two Smithsonian articles

[Roberta Faul-Zeitler]

RE: Smithsonian Institution

Two articles from the Washington Post - June 19 and 20, 2007. Posted by
Bobbie Faul-Zeitler
************************************

Washington Post, Wednesday, June 20, 2007; A01 "Report Slams Small's Tenure:
Smithsonian Had 'Ill-Suited' Leader," by James V. Grimaldi

Former Smithsonian secretary Lawrence M. Small took nearly 10 weeks of
vacation a year during seven years running the vast museum complex and was
absent from his job 550 workdays while earning $5.7 million on outside work,
according to an independent commission report to be released today.

The Smithsonian's second-ranking official, Sheila P. Burke, was absent from
her job as deputy secretary for 400 days while earning $10 million over six
years on non-museum work.

The report, obtained yesterday by The Washington Post, concluded that Small
"created an imperialistic and insular culture" that discouraged dissent,
kept secrets and limited the flow of information to the Board of Regents,
whose job it was to hire and oversee Small.

"Mr. Small's management style -- limiting his interaction to a small number
of Smithsonian senior executives and discouraging those who disagreed with
him -- was a significant factor in creating the problems faced by the
Smithsonian today," the report concluded. "His attitude and disposition were
ill-suited to public service and to an institution that relies so heavily,
as the Smithsonian does, on federal government support."

The report also found that Small's fundraising ability, which earlier had
been used to justify his salary and housing allowance, was less effective
than that of his predecessor, I. Michael Heyman, who raised more money his
last year on the job than Small did in 2006. The report found that
fundraising declined and business revenues dropped during Small's tenure,
"making the Smithsonian more reliant on federal appropriations and grants."

The 108-page executive report to be released today was prepared by an
independent panel led by former U.S. comptroller general Charles A. Bowsher
with the assistance of the Williams & Connolly and Arnold & Porter law
firms. The panel investigated lavish spending and management at the
nationally revered 160-year-old institution, which encompasses 18 museums
and the National Zoo.

Roger Sant, chairman of the regents' executive committee, said in a
statement last night that the regents were "sobered by the findings on
executive compensation, financial controls and ineffective policies. We take
all the findings very seriously. . . . We have identified and are learning
from our mistakes. We are now turning the corner."

The review committee was formed by the regents following reports about
unauthorized expenditures, including charges for chartered jet travel,
Small's wife's trip to Cambodia, luxury car service, hotel rooms and
expensive gifts. On Monday, in anticipation of the report, the regents
announced management reforms.

Small, while taking substantial time off, earned his full salary -- $915,568
his last year on the job -- because he was permitted unlimited leave. Burke,
who also had no restrictions on leave, earned $400,000 in her last year on
the job. The terms of Burke's employment were known in most instances only
to Small and Burke. Information about Burke's outside employment and
activities on more than a dozen nonprofit boards and commissions was not
shared with the Board of Regents, the report found.

Small resigned in March and Burke announced her resignation on Monday on the
eve of the independent review report.

The investigators found that "Mr. Small placed too much emphasis on his
compensation and expenses." Small's compensation far exceeded that of prior
Smithsonian secretaries -- 42 percent higher than his predecessor's when he
began in 2000 and 250 percent higher when he left seven years later.

Small "aggressively guarded each and every element of what he viewed as his
rightful compensation package," including his $150,000-a-year housing
allowance. Small's contract stated that the allowance was meant to
compensate Small for his use of his home for job-related entertainment, but
the review board determined that it was "simply additional salary."

Earlier this year, the Smithsonian inspector general wrote a confidential
report, later obtained by The Post, finding that Small had $90,000 in
unauthorized expenses. When two top institution officials attempted to
modify the terms of his contract, Small objected.

"I'm not willing to discuss giving up one iota of what the institution
agreed to provide me before I came to work," Small wrote in an e-mail. "It
would represent the highest form of naiveté to think . . . I would entertain
some form of 'give up.' "

Small further demanded that the Smithsonian pay his attorney's fees if he
needed legal counsel and suggested that if he lost his first-class travel he
would demand an increase in his housing allowance. He also insisted that the
two officials, James Hobbins, his executive secretary, and John Huerta, the
general counsel of the Smithsonian, not disclose the discussions to the
Board of Regents or to Sant, who also chairs the board's audit committee.

"I do not want any of my comments passed along to Roger," Small wrote in an
e-mail. "We shouldn't go to Roger until we are completely comfortable that
any proposed amendment is good for the institution, good for me, is
economically equivalent to the existing arrangement and . . . protects
everyone from adverse consequences."

The independent committee criticized Small's hiring by "a very small group
of regents." That group included Chief Justice William Rehnquist, former
senator Howard Baker (R-Tenn.), Rep. Barber B. Conable Jr. (R-N.Y.) and
Wesley S. Williams Jr., a former partner at Covington & Burling law firm.

The report stated that there was little review of Small's salary demands or
of his subsequent increases. In 2001, for example, Small requested that his
salary be placed at the 75th percentile of what Smithsonian management had
chosen as comparable institutions, while other senior staff received
salaries at the 50th percentile.

The independent committee also called on the Smithsonian to audit all
expenditures by Small. The report said that "Mr. Small and his staff
exercised sole discretion in determining which expenses would be charged to
the Smithsonian."

Smithsonian officials had defended Small's salary and housing allowance
earlier this year by saying that Small had been a prolific fundraiser,
"personally" raising about $1 billion. However, the independent review
committee found that many of the largest gifts in Small's tenure had been
initiated by predecessor Heyman.

While Small helped bring in three large donations totaling $155 million,
"those donations originated from the work of others," the report stated.

The committee found that Small, who received a $1.1 million housing
allowance for making his home available for institution fundraising, rarely
did so. Small entertained 47 donors at 18 fundraising events at his home
from 2000 to 2007, mostly in the early years of his tenure.

"Calculated as a per person venue fee for fund-raising, this works out to be
over $25,000 per potential donor or almost $70,000 per fund-raising event,"
the report said. (END)

**************************************

2) Washington Post, June 19, 2007; A01, "Museum's Deputy Secretary Resigns:
Smithsonian Board Raps Own Knuckles," by Jacqueline Trescott and James V.
Grimaldi

The Smithsonian Board of Regents yesterday took steps to overhaul the way
the museum system is managed and accepted the resignation of its
second-ranking executive as it offered stern self-criticism of how the
institution has been run in the past decade.

The regents also acknowledged that they had failed in several key areas of
oversight; significantly changed the duties of the chancellor of the
institution; and took steps to tighten rules by limiting paid service on
corporate boards.

The developments came as Sheila P. Burke offered her resignation as deputy
secretary and chief operating officer, after working for the Smithsonian for
seven years while earning more than $1.2 million in six years for outside
duties, a Washington Post review showed.

Burke's resignation letter said: "I have great respect for the Smithsonian,
and my resignation is tendered in the belief that it is in the best interest
of the Institution and the fine people who work here."

Her resignation was announced by Cristián Samper, the acting secretary of
the Smithsonian, at a briefing of the Board of Regents, which released a new
set of governing policies to make the museum a "more dynamic body."

The review of Smithsonian leadership and management was triggered by
criticism from Congress and public investigations into the employment
agreement and expenses of then-Secretary Lawrence M. Small, who resigned in
March. Also questioned were the outside income of Small and Burke, who both
sat on the board of Chubb Group while the insurer held Smithsonian policies.
The decision to use Chubb was not approved by Small or Burke, according to a
spokeswoman.

Several factors influenced the timing of her decision, Burke said.

"Obviously, I have been very concerned about the criticism. But the more
important thing for me is that the institution be able to move on. We are in
the midst of the appropriations process and with the governance
recommendations, we are turning the page. We need to move on," Burke said.
Burke joined the Smithsonian shortly after Small arrived in 2000 and after a
highly visible role as chief of staff to former Senate majority leader
Robert Dole.

Burke's resignation came on the eve of an independent report that sources
said would criticize her extensive outside activities, including highly
compensated corporate board seats, academic appointments, a federal
commission that oversees Medicare, and numerous nonprofit organizations.

Burke, whose responsibilities included oversight of Smithsonian building
projects and many aspects of its infrastructure, earned $400,000 from the
Smithsonian in 2006. During her tenure, she served on 10 boards for which
she was not paid. Her outside earnings in 2006 included cash and stock from
Chubb valued at $169,675 and options to purchase 56,000 shares. She also
received $395,381 last year from WellPoint, a health-care company.

Dealing directly with this aspect of the recent controversies, the regents
yesterday eliminated paid board memberships for senior executives.

The new policy says: "To avoid even an appearance of conflict of interest or
divided loyalty, the Regents adopt the policy that, beginning October 1,
2007, Smithsonian senior executives should not be permitted to serve on the
board of a for-profit company."

Roger W. Sant, chairman of the regents' executive committee, said the
regents' action "probably was connected but that wasn't the real reason
[Burke resigned]. She felt it was probably time to have a leadership change
at the Smithsonian. She regretfully came to that conclusion and we
regretfully came to the conclusion that we should accept that. It wasn't
principally that."

Burke said her corporate board memberships have "clearly been an issue," but
she didn't think the new rule would discourage recruitment of executives. "I
think this is such an extraordinary place that there are an enormous amount
of people who would want to work here."

The regents yesterday approved a plan to have their leadership handled by
two executives in distinct positions, the chancellor and the chairman.

For more than 150 years, the regents have been led by a chancellor, a post
held by the chief justice of the United States. The chief justice had
delegated a number of duties to the chairman of the executive committee.
Under the proposal, which requires a bylaw change in the next 30 days, the
two would split duties. The chancellor would continue to chair meetings and
the chairman would have day-to-day duties overseeing the Smithsonian.

The report released yesterday was prepared by the regents. A second report,
by outside experts, is to be released tomorrow.

Patricia Stonesifer, the former chairwoman of the governance committee, said
the Smithsonian would "get the best of both worlds" by having the top
judicial official and a leader from the private sector.

The 25 recommendations on ethics, transparency, communications and other
issues were contained in a 55-page report from the regents' governance
committee.

The report admitted the regents were often asleep at the wheel. "We realize
in many areas we should have applied much more due diligence, but I can't
say strongly enough that we are doing everything we know how not to let this
happen again," Sant said.

In response to criticism that some of them did not know the terms of Small's
employment and that other regents had retroactively approved some of his
expenses, the regents said they had learned a lesson. "The regents should
have been made aware of all of the provisions of the secretary's contract,
outside activities of senior executives, any significant problems in
Smithsonian Business Ventures, and deviations from normal travel and expense
policies," said the report.

"Many of the things that happened," Stonesifer said, "were about mistakes in
either leadership choices or leadership practices."

As they talked about the need for more transparency, the regents pledged to
start with themselves. They announced they would hold an annual public
forum, beginning next year, and launch their own Web page to explain what
they do. They would also post summaries of the minutes of their meeting.

"The committee recognizes that the Institution is best served by an engaged
board comprised of members who understand their roles, are knowledgeable
about the Smithsonian, and creatively address both challenges and
opportunities," the report said.

The regents moved to establish direct lines of communication with the
Smithsonian's management, giving the general counsel, chief financial
officer and inspector general direct access to the board.

The regents said they would take sole responsibility for setting executive
compensation.

Stonesifer said more details about changes in the regents' structure, such
as the number of committees, would be made by January.

They decided to create a permanent committee on facilities revitalization,
which would set priorities for the enormous backlog of repairs.

The regents assigned the secretary the task of developing by year's end a
museum-wide code of ethics and a plan for better communication with
Congress, the staff and other constituencies. A public ombudsman is also
under consideration, as well as complaint hotlines.

To refresh the board, the regents approved the appointment of new chairmen
for each of the committees.

The regents also pledged to have four regular business meetings, an increase
of one.

"Despite regular attendance by most Regents and active participation in
meetings, in the end the Regents did not provide the level of leadership and
oversight that they had intended," the report said.

Research director Lucy Shackelford contributed to this report. (END)