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.
Ladner was suspended with pay in August as the investigation continued.
Trustees are debating whether his expenses were reasonable costs for a university president credited with improving the academics and reputation of the school and expected to court donors round-the-clock, were accounting disagreements that could be repaid, or were the last straw for a president who squandered money at a school where more than 90 percent of operating revenue comes from students.
Until the new report, no detailed accounting had been done of the Ladners' spending, even as bills came in for first-class tickets for overseas trips, a waterfall for the back yard of the president's house and chauffeurs spending much of their time running errands for his wife to jewelers, salons and dry cleaners.
"It galls me to learn that Ben incurred a travel expense for himself alone to Nigeria of $22,345," trustee Paul M. Wolff, a senior partner in the Williams & Connolly law firm in Washington, wrote in a letter sent to board members Tuesday. "Had he bought a business elite ticket, the savings would have covered a student's tuition for one semester." Tuition this year is close to $28,000.
In his letter, a copy of which was seen by Post reporters, Wolff asked trustees to debate the issues rather than continue with emotional arguments, personal attacks and attempts to stop the investigation. He said that although Ladner has been a personal friend and has brought many positive changes to the school, it is time for a new president.
"We do not have enough financial aid to help every student," Wolff wrote. ". . . We have held our faculty to small, single digit salary increases."
But Ladner gave his personal chef raises that averaged 11 percent over the past five years, Wolff wrote.
The letter ended with menus from three birthday dinners for the Ladners, with such delicacies as pan-seared foie gras, BeauSoleil oyster, sabayon and caviar, and white truffle risotto prepared by the Ladners' chef, Rodney Scruggs.
Ladner told the board that the university should pay for all his personal services and other expenses at the campus residence because his 1997 contract not only requires him to live there but also agrees that the university will pay "all costs for maintenance, repair, insurance, utilities, telecommunications, dining, housekeeping services and residence staff." The university-owned house is adjacent to campus in one of Washington's most expensive neighborhoods.
That contract also says the university will provide him with a car and drivers and pay for "entertainment and first-class travel expenses reasonably incurred in the performances of his duties." And it says the university will provide for his wife's membership in an appropriate club, expenses related to her role in conducting university business and expenses for a car.
The spending in dispute includes travel expenses, more than $6,000 in club dues, nearly $54,000 in drivers' costs, more than $220,000 in chef services, more than $100,000 in services from the social secretary and nearly $44,000 in alcohol.
Ladner agreed to reimburse the university for the cost of eight events even though he believed them to be "reasonable."
The U.S. attorney's office in Washington, working with the FBI, is reviewing documents obtained under subpoena, sources said, and the Internal Revenue Service has contacted a top university official to make initial inquiries but is not actively pursuing the matter at the moment.
Ladner's troubles with the board began more than a year ago, when the panel began reviewing his compensation after he demanded an increase, according to sources.
Ladner was paid more last year than the president of George Washington University, which is twice AU's size and includes a medical center. An expert in higher education compensation compared Ladner's package with that of six other presidents of universities of roughly equal size and reputation as American and found Ladner's more than $100,000 higher than the next highest.
Although university presidents often are expected to entertain at home with dinners and other events for donors, the report concludes that the vast majority of the chef's time was not university-related.
Scruggs, who was executive chef at Christo in Bethesda and Bistro Bis in the District, received a salary of $88,000 last year.
The chef's position was eliminated as the investigation continued. And the social secretary, whose duties included serving as a personal assistant to Ladner's wife and as receptionist at the president's house on campus, was reassigned at the university.
The investigation will cost at least $1 million, according to sources who demanded anonymity because of their role in the probe.
The expenses of university presidents are not routinely audited by trustee boards, according to David Ward, president of the nonprofit American Council on Education, although it is somewhat unusual for a decade to pass without such a review.
Board Chairman Leslie E. Bains did not return phone calls seeking comment, nor did Donald L. Myers, the university's vice president of finance.