Smithsonian Officials Serve On Board Of Its Insurer

Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said having two people from the same organization on a major board can be problematic, particularly if the two organizations do business with each other.

"This commercial relationship is frankly to be avoided," Elson said, "and cosmetically the question is of all the insurance companies out there, why are they doing business with Chubb? Why are there two people on the board from the same organization?"

A spokeswoman for Chubb declined to talk about the Smithsonian or the two directors. Roger Sant, chairman of the executive committee of the Smithsonian's Board of Regents, did not return calls yesterday.

Acting secretary Cristián Samper, who took over for Small last month, will answer questions at today's hearing before the Senate Rules and Administration Committee, chaired by Dianne Feinstein (D-Calif.). The agenda includes the Smithsonian's management practices as well as executive compensation.

The institution's employment agreement with Small, signed by the regents in 1999, permitted him to serve on outside boards. It stated, "it is understood that the Secretary may continue to accept income from service on as many as two corporate boards as long as such service does not interfere with the effective performance of his official duties and does not conflict with the interests of the Institution."

Burke does not have a written employment agreement but was told by Small she could continue to be a director at Chubb as well as Wellpoint Inc., a health benefits network, said a Smithsonian spokeswoman.

All Smithsonian employees are governed by the institution's official standards of conduct. "In conducting an outside activity, employees must ensure that the activity will not create a conflict of interest or the appearance of a conflict of interest for the employee," the rules state.

Chubb has pledged $800,000 to the National Zoo, part of the Smithsonian's complex of 18 museums and research centers.

Elson, director of the corporate governance center in Delaware, said, "Typically you want to avoid substantial contributions to the director's charity."

Chubb is one of the most important insurers of museums and their collections, but its policies with the Smithsonian cover business auto liability, break-ins and lawsuits. When the artifacts from the museum travel to other places, they are insured by the Arts and Artifacts Indemnity Act, a federal program.

Chubb is not the only board Small and Burke serve on.

Small sits on the board of Marriott International and received $208,697 in compensation last year. He is a member of its audit committee.

Burke, who has had a seat on the Wellpoint board since November 2004 and serves on its compensation committee, received $395,381 in director's fees from the company last year. Neither Marriott or Wellpoint has business contracts with the Smithsonian.

The salaries of Smithsonian officials have come under scrutiny by Congress. Some members have suggested a salary cap and others have tried to take away some federal money as a protest against executives' salaries and recently publicized expenses.

Small was not given any additional payments or severance pay after his resignation March 24.

At today's hearing the Smithsonian will also be represented by board chairman Sant and another member, Patricia Stonesifer, as well as by Inspector General A. Sprightley Ryan, who uncovered undocumented expenses of $90,000 that were first reported in The Washington Post in February. The expenses in question were retroactively approved by the regents.

Mark Goldstein, an investigator for the Government Accountability Office, is also scheduled to testify.