AU's Ladner Defends His Spending

"Did I use some bad judgment? Sure. I'm the first one to say I've made mistakes," he said. But there's a new climate of oversight in the post-Enron, post-WorldCom America, he said, and board members got worried about their responsibilities. He wasn't getting questioned about contracts and spending years ago, he said. "Ten or 15 years ago, a lot of presidents did this by handshake," Ladner said. "Over four or five years, the context of financial arrangements changed so dramatically."

Pete Smith was chairman of the board's audit committee until late last year. "In my 30 years as a compensation consultant with Watson Wyatt, I have never had a more difficult client," he wrote in his resignation letter, which was obtained by The Post from someone other than Smith, who would not comment. Its authenticity was verified by three people. "More important, Ben wanted to control all information pertaining to his compensation very closely. At first I thought this was just a quirk. But as things evolved, I began to wonder if the intent was to hide the full scope of his compensation. . . . Important elements of his pay were not understood or explained to the board. His own CFO was in the dark concerning some elements of his pay; and the reporting of Ben's compensation on [the IRS] Form 990 was incomplete . . .

"As the committee wrestled with this problem, dealing with Ben became increasingly difficult and it began to feel like the board reported to Ben rather than the reverse. It was then that I decided to resign as a trustee."

Tensions with the board began last year, two trustees said, when Ladner asked for a $1 million bonus and several millions more in other compensation. The audit began last spring after an anonymous letter was sent to the board alleging expense violations.

Ladner denied yesterday that he had asked the board to raise his compensation.

But George Collins, the board chairman whose rotation ended last spring and a member of the compensation committee, said yesterday, "He most certainly did. I can say as chairman of the compensation [committee] and as a chairman of the board, he asked for an annual increase and review because it was [in] his contract. It was in the '94 contract as well as the new '97 contract, which I didn't see until a year ago."

When asked whether it made sense for a university president to spend money on first-class travel, multi-course meals and the best hotels, Ladner said he did not always do so, and he never knew anybody thought it was unacceptable because no one on the board ever told him. "The trustees knew because the trustees flew with me. We stayed at the same hotels," he said.

Two trustees, speaking anonymously to protect their position, said they had no idea that Ladner was not paying those expenses -- such things as extended layovers in some of the best hotels in Paris and London, chauffeurs waiting outside private events, meals at expensive restaurants in New York with his wife -- himself.

Ladner said he has written a check for $21,000 to pay the university for some of the events in question, including more than $1,000 in limousine bills for his wife, Nancy Ladner. He said a trip to Nigeria never cost the university anything. Others have stepped forward to cover some of the travel bills to the AU campus in the United Arab Emirates, according to his lawyers' response to the report. And Ladner said that in many ways, he and his wife were very generous, paying half the rental cost of the car the university leased for his wife, for example. He said he has been completely transparent in his spending.

The report contradicted that again and again, citing difficulty getting documents and receipts from him, or verification of Ladner's assertions that his wife went to 240 university-related events last year. Nancy Ladner's time that was documented in chauffeur's logs and the social secretary's calendar includes frequent trips to a salon, jewelry shops and engagements on Gibson Island, where they have a weekend home.

Ladner said he's heard from many supporters, including donors who have told him that if he goes, their gift does, too. Two people close to the investigation said they also have heard from donors threatening the opposite.

Carolyne Berry, the father of a 2005 graduate, said he and his wife had planned to make a "significant endowment" to AU, but they have changed their minds. "The Board of Trustees has apparently condoned Mr. Ladner's free spending and unilaterally decided that the mission of the university is to enrich the president's lifestyle and NOT provide competitive salaries for professors or scholarships for deserving students," he wrote in an e-mail.

Ladner was asked what he was most proud of in his time at AU. He came to a school fractured by leadership problems, with four presidents in four years and over time helped people renew the school, he said, "building community."