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    Neil Kerwin
    President

Mailing Address

MEMORANDUM
October 20, 2005


TO: American University Alumni
FROM: Cornelius Kerwin, Acting President
SUBJECT: Campus Update

               
               

  On Monday, October 10, following an all-day meeting, the Board of Trustees announced that Dr. Benjamin Ladner would not return as president of American University. He had been on administrative leave since August 24, pending the outcome of the board deliberations based on the audit of the travel and personal expenses of the AU president.

               

As acting president, as well as an AU alumnus, parent of an alumnus, and donor, I want to respond to some questions that arose in recent weeks. For some of you, this may be the first account you have received from American University versus what you have seen in the local or national news media. Additional details are available via the AU web-pages through statements released by the Board of Trustees, by me, or as published in the American Weekly and The Eagle.

               

While closure has been reached on the basic issue of the president, the board will continue to work through issues related to their inquiry and future governance. The audit and related discussions have dominated the board’s agenda for months, and have been the focus of considerable public scrutiny. In responding to this complex matter and considerable pressures, the board has taken its fiduciary responsibilities very seriously and continues to do so.

               

I reiterate what I said in my statement to campus on October 10, that “the way that our students, faculty, staff, alumni, and friends responded to these issues between the board and the president proved that our values are intact, our principles strong, and campus voices are heard on matters of significance.”

               

I am providing the following answers to frequently asked questions:

               

Q. What was the focus of the board audit and the chain of events that ensued?

               

A. Based on information conveyed in an anonymous letter, the board hired independent auditors (Protiviti) and counsel (Arnold and Porter) to conduct an investigation into the personal and travel expenditures of the president. The Executive Committee of the Board placed Dr. Ladner on administrative leave on August 24. The full board met on September 12 to review the situation. On September 28, about half of the board met on campus with representatives from the faculty, staff, students, alumni, and academic leadership to hear from campus leaders and gauge campus opinion. And on October 10, the board met again to reach closure on Dr. Ladner’s status. The board will continue its work until all matters related to the probe into the president’s expenses are resolved.

             

Q. What outcomes were announced after the October 10 trustees meeting?

               

A. At the conclusion of the meeting, Board Vice Chair Thomas A. Gottschalk announced the following actions:

               
  • Dr. Ladner would not return as president.
  • I would continue as acting president, until a search has been conducted and a new president named.
  • The board adopted the findings of its audit committee and authorized the university to report additional taxable income for Dr. Ladner in the amount of approximately $398,000 from the years 2002-2005; and to seek reimbursement from Dr. Ladner for certain personal expenses of approximately $125,000.
  • The board expressed gratitude for the accomplishments of AU during Dr. Ladner’s tenure and for his service of during his 11 years as president.
  • The board appointed three trustee committees:
    • Search Process Committee – to meet with constituencies of the university and recommend an inclusive process for finding the next president;
    • Board Nominating Committee – to consider candidates as the new board chair resulting from the resignation of former chair Leslie Bains;
    • Board Governance Committee – to examine and recommend improvements of the board’s governance processes going forward.
               

In addition to the formal board actions, two other events of note occurred. As noted above, Leslie Bains resigned both as chair and from the board prior to the Oct. 10 meeting; and trustee Paul Wolff resigned from the board after the meeting. The board will work to appoint a new chair in the next few weeks when the trustees reconvene for scheduled meetings.

               

Q. What remains to be done?

               

A. The board did not complete the work on the terms of Dr. Ladner’s separation. A committee will work on these details and make recommendations to the full board. Various campus constituencies have made their views known on what they consider the remaining issues.

               

Q. What is the involvement of the Department of Justice?

               

A. On October 4, the U.S. Department of Justice informed counsel for the board and the university that it has initiated an investigation into matters uncovered by the board inquiry. American University will cooperate fully, and has already taken steps to do so.

               

Q. What effect will this have on the reputation of American University?

               

A. I am committed to moving forward with renewed vision and a concentrated effort. Our focus is on our education mission and building AnewAU through the capital campaign. Our values are intact, our principles are strong, and we will continue to listen to the voices of AU on matters of significance. These events have increased the scrutiny of American University. Regarding the potential impact on AU, an article in the October 21 Chronicle of Higher Education quoted two higher education experts on the matter. Shelden E. Steinbach, vice president and general counsel of the American Council on Education, said ”the controversy would have only ‘minimal’ long-term negative consequences;” and Thomas C. Longin, former vice president of the Association of Governing Boards of Universities and Colleges and a current higher education consultant, commented “They (AU) will move forward very quickly. This is not an institution that’s very fragile.”

               

I anticipate an emphasis on improving transparency to our alumni, students, faculty, parents, staff, and donors and to assist the board in their connections with the campus and community. Some immediate indicators include the posting of the board bylaws and act of incorporation on the President’s Website; and the creation of an e-mail box < AUBOT@american.edu> for anyone wishing to send a message to the board. I will continue the dialogue with students, parents, alumni, faculty, and staff to improve communication with all members of the AU community.

               

Q. What role will members of the AU community have in selecting the new president and on the board?

               

A. I expect that AU community members will be asked to participate in the search process and offer their opinions. The trustees heard the voices from alumni, students, faculty, and staff during their recent deliberations. Opinions will continue to flow to the board for their review. Please feel free to share your opinions.

 

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