October 27, 2005 | Read Time: 2 minutes
American University, which fired its president, Benjamin Ladner, after a controversy over his spending and compensation, still faces serious problems. Among them: a federal inquiry into Mr. Ladner’s spending and the impact of the resignation of influential members of its Board of Trustees amid closed-door negotiations over Mr. Ladner’s dismissal and possible severance package.
The governing board dismissed Mr. Ladner after it endorsed an audit alleging that he had inappropriately charged $125,000 in personal and travel expenses to the university and that he should report $398,000 in other charges to the Internal Revenue Service as part of his taxable income.
Mr. Ladner, who had been American’s president for 11 years, had come under criticism for spending university funds on lavish personal parties, a highly paid chef, and other amenities, including a car service for his wife (The Chronicle, October 13).
“We felt that Dr. Ladner could not continue to lead the university effectively,” said Thomas A. Gottschalk, vice chairman of the 22-member board.
Mr. Ladner’s spending practices prompted the Justice Department to ask the university for records related to the audit of Mr. Ladner’s accounts, said Cornelius M. Kerwin, American’s former provost who is now acting president.
Mr. Ladner was not available for comment. However, he has denied the gist of the allegations made against him in recent weeks, saying the few mistakes he made were minor and inadvertent.
Board Divided
Meanwhile, the Board of Trustees faced turmoil within its own ranks. The weekend before the board met to consider Mr. Ladner’s dismissal, the board chairwoman, Leslie E. Bains, resigned. After the meeting, Paul M. Wolff, another trustee, also quit. Both Ms. Bains and Mr. Wolff distributed fiery letters in which they accused trustees sympathetic to Mr. Ladner of attempting to derail the investigation of him and to manipulate proceedings to Mr. Ladner’s advantage.
Later, Michael D. Capellas, president of MCI, resigned from the board, citing a need to devote more time to his company, according to an account in The Washington Post.
Following its vote to remove Mr. Ladner, the board announced that it would create a governance committee that will examine and recommend improvements to the board’s operation.
The turmoil at American puts its board in a difficult position. If trustees have provided Mr. Ladner with overly generous financial benefits, they and the former president could be fined by the IRS.
The terms of Mr. Ladner’s departure remain to be worked out, most likely in a series of contentious legal maneuvers that will occur behind closed doors, and the terms of any settlement might not be made public.
Grant Williams contributed to this article.
