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American U. Board Split On Keeping President
Some Negotiating New Deal for Ladner

By Susan Kinzie and Valerie Strauss
Washington Post Staff Writers
Sunday, September 25, 2005

A schism among American University trustees is widening over the future of suspended President Benjamin Ladner, with some beginning private negotiations with his attorneys for a new contract and others pressing for his ouster.

"There have been discussions between a group of trustees and Dr. Ladner, which are designed, we understand and hope, to restore him as president, resolve all of the issues and establish a new contract under which he can go forward," said David Ogden, one of Ladner's attorneys. "We are hopeful those will succeed."

Complicating an already tangled process, Ladner supporters on the board have divided themselves into three strategy groups, according to two sources familiar with the negotiations. One group reviewed some of the more than $500,000 of the president's spending questioned in an independent report and determined that he should reimburse the university roughly $21,000. Another group is bringing in a tax expert for advice. And a third is putting together terms of a new contract for Ladner that would reduce his compensation while adding controls over his spending and other activities, the sources said.

His opponents, meanwhile, said it is time for new leadership.

The 25-member board would have to approve an agreement with Ladner by a majority vote. Some trustees said it's too close to call, with sources estimating that the president's staunch advocates number anywhere from five to a dozen.

Yesterday, trustees, lawyers, students and faculty continued to talk about Ladner, who was put on administrative leave in August, and the future of the private university in Northwest Washington. An investigation of presidential spending was sparked by an anonymous letter sent to some board members in the spring, with complaints of lavish trips and dinners charged to the nonprofit institution.

And lawyers and trustees continued to debate just what terms Ladner had been working under, a question that makes hundreds of thousands of dollars' difference to auditors and that could have a huge impact on whether he stays.

Three years after Ladner came to AU, the then-chairman of the trustees signed a second contract with him that never was presented to or approved by the full board, according to a report by a law firm retained by the board. The second contract added perks and plenty of latitude.

Unlike the original contract, the 1997 agreement included payment for "first-class travel expenses." All costs for dining, housekeeping services and staff at the president's university-owned residence were to be paid by the university. And his wife's expenses "related to her role conducting University business" were to be covered.

So when people look at the spending detailed in the report -- thousands of dollars for limousine service for Nancy Ladner, for example -- they have completely different interpretations.

The university's travel policy requires receipts for reimbursable expenses (which do not include personal expenses or alcohol) and encourages economy when possible -- rental cars only when necessary, shuttles rather than taxis to the airport, moderate hotel costs.

Ladner has argued that the wording in his 1997 contract supercedes the university travel policy and that "first-class travel" doesn't mean just better plane tickets.

"The contract's very clear," Ladner said.

He said he has gotten assurances from some supporters at AU's overseas campuses that they will pick up the tab for his travel there; the report noted that more than $100,000 already has been paid to AU.

AU's credit card policy allows purchases for university-related business only, with anything costing more than $500 requiring pre-approval. Only full-time employees can have cards -- an issue for Nancy Ladner, because she is not an employee but volunteers time for the school. Jewelry and alcohol purchases are not allowed, though both are included in the report of her credit card charges. And the policy requires receipts and documentation of spending.

The report concluded that there is no indication in the 1997 agreement or anywhere else that this credit card policy does not apply to the Ladners.

The Ladners' social secretary, who has been reassigned at the university, told auditors that their receipts were kept for one year and then destroyed.

Attorneys for the president argued that Nancy Ladner's "full-time work managing the residence" would be "rendered hollow" if she could not be reimbursed for personal purchases by the university.

Some trustees said it doesn't matter what Ladner was allowed to do -- that as president of a school without a large endowment, reliant mostly on students for its operating expenses, he should have the judgment and restraint to avoid excesses.

"Sixty percent of our students receive financial aid," Paul Wolff wrote in a letter to fellow trustees. "Many work one or two jobs so that they may attend American University. . . . We have held our faculty to small, single digit salary increases . . ." Yet, he went on, the Ladners' personal chef had average raises of 11 percent over the past five years, and their social secretary got a 26 percent raise in her first year on the job.

Ladner was so pleased with his chef that he encouraged him to take his wife to dinner at the Ritz in Virginia one night, according to the report. The bill, charged to an AU credit card, was more than $500.

The chef's position was eliminated this summer.

Ladner has agreed to pay the university more than $21,000 for expenses including family parties, a luncheon for friends, and meals and groceries taken to their vacation home on Gibson Island.

Ladner is reimbursing the university for his son's engagement dinner, but legally, he said, it's a school expense: "My contract says yes . . . it covers all meals in the residence."

Since his private and business lives are so intertwined, he said, it doesn't make sense to separate out every single personal expense. It's not, "You ate breakfast in the residence -- and you have the nerve not to send us a check for the cereal you ate," he said.

The chef paid by the university routinely prepared lunch and a two- to four-course dinner for the Ladners, whether or not they were entertaining, according to the report, and sometimes packed up meals for them to take to their weekend home on Gibson Island.

Ladner said his wife thought he had paid for such personal events as the birthday parties they had for one another, some costing well over $300 a person, with such things as hand-shucked Maine scallops and vintage Champagne. "I never thought about it," he said. "We don't go downstairs and look through the records."

© 2005 The Washington Post Company