By Jacqueline Trescott and James V. Grimaldi
Washington Post Staff Writers
Tuesday, June 19, 2007
The Smithsonian Board of Regents yesterday took steps to overhaul the way the museum system is managed and accepted the resignation of its second-ranking executive as it offered stern self-criticism of how the institution has been run in the past decade.
The regents also acknowledged that they had failed in several key areas of oversight; significantly changed the duties of the chancellor of the institution; and took steps to tighten rules by limiting paid service on corporate boards.
The developments came as Sheila P. Burke offered her resignation as deputy secretary and chief operating officer, after working for the Smithsonian for seven years while earning more than $1.2 million in six years for outside duties, a Washington Post review showed.
Burke's resignation letter said: "I have great respect for the Smithsonian, and my resignation is tendered in the belief that it is in the best interest of the Institution and the fine people who work here."
Her resignation was announced by Cristián Samper, the acting secretary of the Smithsonian, at a briefing of the Board of Regents, which released a new set of governing policies to make the museum a "more dynamic body."
The review of Smithsonian leadership and management was triggered by criticism from Congress and public investigations into the employment agreement and expenses of then-Secretary Lawrence M. Small, who resigned in March. Also questioned were the outside income of Small and Burke, who both sat on the board of Chubb Group while the insurer held Smithsonian policies. The decision to use Chubb was not approved by Small or Burke, according to a spokeswoman.
Several factors influenced the timing of her decision, Burke said.
"Obviously, I have been very concerned about the criticism. But the more important thing for me is that the institution be able to move on. We are in the midst of the appropriations process and with the governance recommendations, we are turning the page. We need to move on," Burke said. Burke joined the Smithsonian shortly after Small arrived in 2000 and after a highly visible role as chief of staff to former Senate majority leader Robert Dole.
Burke's resignation came on the eve of an independent report that sources said would criticize her extensive outside activities, including highly compensated corporate board seats, academic appointments, a federal commission that oversees Medicare, and numerous nonprofit organizations.
Burke, whose responsibilities included oversight of Smithsonian building projects and many aspects of its infrastructure, earned $400,000 from the Smithsonian in 2006. During her tenure, she served on 10 boards for which she was not paid. Her outside earnings in 2006 included cash and stock from Chubb valued at $169,675 and options to purchase 56,000 shares. She also received $395,381 last year from WellPoint, a health-care company.
Dealing directly with this aspect of the recent controversies, the regents yesterday eliminated paid board memberships for senior executives.
The new policy says: "To avoid even an appearance of conflict of interest or divided loyalty, the Regents adopt the policy that, beginning October 1, 2007, Smithsonian senior executives should not be permitted to serve on the board of a for-profit company."
Roger W. Sant, chairman of the regents' executive committee, said the regents' action "probably was connected but that wasn't the real reason [Burke resigned]. She felt it was probably time to have a leadership change at the Smithsonian. She regretfully came to that conclusion and we regretfully came to the conclusion that we should accept that. It wasn't principally that."
Burke said her corporate board memberships have "clearly been an issue," but she didn't think the new rule would discourage recruitment of executives. "I think this is such an extraordinary place that there are an enormous amount of people who would want to work here."
The regents yesterday approved a plan to have their leadership handled by two executives in distinct positions, the chancellor and the chairman.
For more than 150 years, the regents have been led by a chancellor, a post held by the chief justice of the United States. The chief justice had delegated a number of duties to the chairman of the executive committee. Under the proposal, which requires a bylaw change in the next 30 days, the two would split duties. The chancellor would continue to chair meetings and the chairman would have day-to-day duties overseeing the Smithsonian.
The report released yesterday was prepared by the regents. A second report, by outside experts, is to be released tomorrow.
Patricia Stonesifer, the former chairwoman of the governance committee, said the Smithsonian would "get the best of both worlds" by having the top judicial official and a leader from the private sector.
The 25 recommendations on ethics, transparency, communications and other issues were contained in a 55-page report from the regents' governance committee.
The report admitted the regents were often asleep at the wheel. "We realize in many areas we should have applied much more due diligence, but I can't say strongly enough that we are doing everything we know how not to let this happen again," Sant said.
In response to criticism that some of them did not know the terms of Small's employment and that other regents had retroactively approved some of his expenses, the regents said they had learned a lesson. "The regents should have been made aware of all of the provisions of the secretary's contract, outside activities of senior executives, any significant problems in Smithsonian Business Ventures, and deviations from normal travel and expense policies," said the report.
"Many of the things that happened," Stonesifer said, "were about mistakes in either leadership choices or leadership practices."
As they talked about the need for more transparency, the regents pledged to start with themselves. They announced they would hold an annual public forum, beginning next year, and launch their own Web page to explain what they do. They would also post summaries of the minutes of their meeting.
"The committee recognizes that the Institution is best served by an engaged board comprised of members who understand their roles, are knowledgeable about the Smithsonian, and creatively address both challenges and opportunities," the report said.
The regents moved to establish direct lines of communication with the Smithsonian's management, giving the general counsel, chief financial officer and inspector general direct access to the board.
The regents said they would take sole responsibility for setting executive compensation.
Stonesifer said more details about changes in the regents' structure, such as the number of committees, would be made by January.
They decided to create a permanent committee on facilities revitalization, which would set priorities for the enormous backlog of repairs.
The regents assigned the secretary the task of developing by year's end a museum-wide code of ethics and a plan for better communication with Congress, the staff and other constituencies. A public ombudsman is also under consideration, as well as complaint hotlines.
To refresh the board, the regents approved the appointment of new chairmen for each of the committees.
The regents also pledged to have four regular business meetings, an increase of one.
"Despite regular attendance by most Regents and active participation in meetings, in the end the Regents did not provide the level of leadership and oversight that they had intended," the report said.
Research director Lucy Shackelford contributed to this report.