$500,000 In Ladner Spending Itemized

By Susan Kinzie and Valerie Strauss
Washington Post Staff Writers
Thursday, September 22, 2005

An independent report on the personal and travel expenses of suspended American University President Benjamin A. Ladner and his wife questions more than a half-million dollars spent over the past three years, including a family engagement party that cost hundreds of dollars per person, "professional development" trips for the couple's personal chef to Paris, London and Rome, and a lunch of more than $5,000 hosted by Nancy Ladner for a garden club.

The report, a copy of which was obtained by The Washington Post, also reveals that Ladner was operating under a second contract, negotiated a few years after he arrived at AU in 1994 by William I. Jacobs, then board of trustees chairman, but unknown to some on the board. The university's vice president of finance told auditors that he had repeatedly asked Ladner to let him see the second contract and that Ladner finally did, three years after it went into effect.

Now, attorneys are arguing over whether the second contract, which confers more benefits on the president, is legally binding.

Board members asked for an audit after receiving an anonymous letter this spring that complained of lavish spending by the Ladners. The report, prepared by Arnold & Porter LLP, a law firm brought in by the board's executive committee to help with the probe, provides a detailed accounting of the Ladners' spending, an issue that has spurred an internal inquiry and questions from federal law enforcement officials.

The inquiry has opened up a range of issues for AU, a private, 10,000-student university in Northwest Washington that emphasizes public service. The board -- made up of lawyers, corporate executives and religious and financial leaders -- not only is facing a decision on Ladner's future but also is considering its own responsibility in stewardship of a nonprofit institution. The school is bound by federal laws governing how much charities and universities can legally pay their executives.

Board members are deeply divided, sources close to the inquiry said. At issue is how much of the spending is university-related and whether it should be reimbursed to the school or reported by the Ladners as personal income.

Ladner, who is also a member of the board, has declined to comment. His attorney, David Ogden, said: "There is an ongoing process. We are confident that when the process is complete, it will be clear that Dr. Ladner hasn't done anything wrong, and the university will be just fine and will be a vibrant and successful institution."

In a Sept. 10 letter that Ladner sent to trustees and was read to a Post reporter by someone close to the investigation, he wrote, "I believe I am still the right person to lead the university."

He suggested that he meet informally with board members -- outside lawyers' offices -- to resolve these "legally disruptive issues."

And, he wrote, "We need first and foremost to restore the board's full compliance with all legal requirements but also to resolve questions triggered by the anonymous letter."

Ladner's total compensation in 2004 was more than $800,000, well above that of presidents at comparable schools, according to outside analysts. He and his wife, according to the report, were charging antiques and cashmere to the university as well.

The audit committee of the board will present a final report for the full board to consider when it meets early next month to try to decide on Ladner's future at the institution.

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