October 20, 2005
|TO:||American University Parents
|FROM:||Cornelius Kerwin, Acting President
On Monday, October 10, the American University 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 his travel and personal expenses. Since August, I have been acting president, a role that I have been asked to continue to fulfill until the Board completes a search and appoints a new president.
As a long time member of the AU community, an AU alumnus, donor, and parent of an alumnus, I understand your desire for timely information about board activities that have implications for the entire community. The complexity of the matters before the board required confidential deliberations, which limited the information that was available to share with concerned parents, alumni and others. I realize that most of what you know probably came from the local or national news media. You may wish to add to our background information by browsing the AU web-pages, where statements released by the Board of Trustees and me are posted on the president’s web-page, and articles from campus publications such as the American Weekly and the Eagle are available online.
Throughout this challenging situation, AU students, faculty, staff, alumni and friends have been exemplary in their support of American University. The board has responded and continues to respond to the campus voices as it looks to AU’s future. In the weeks ahead, the trustees will continue their efforts to conclude their inquiry and begin to address the questions this experience has raised about our institution’s governance. The audit and related discussions have dominated the board’s agenda for months and has 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.
This may be the first communication you have received directly from American University that addresses the events that have transpired. Based on the many letters and inquiries we have received, I am providing the following answers to frequently asked questions that I hope will add to your understanding of these events.
Meanwhile, I can assure you that our values are intact, our principles are strong, and I appreciate your support of American University.
Q. What was the focus of the board audit and the chain of events that ensued?
A. The board received an anonymous letter alleging concerns about personal and travel expenditures of the AU president. The board responded by hiring independent auditors (Protiviti) and counsel (Arnold and Porter) to conduct an investigation into the president’s expenses. On August 24, the Executive Committee of the Board placed Dr. Ladner on administrative leave and I was named acting president. 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 gauge campus opinion. On October 10, the full 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 met with members of the campus community and 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 for the years 2002-2005 and to seek reimbursement from Dr. Ladner for certain personal expenses.
- 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 to be the remaining issues.
Q. Has this had an impact on campus operations and finances?
A. The university’s senior leadership team responsible for academics and campus operations -- the acting provost, vice presidents, deans, and others – were not the focus of the inquiry, which was limited to the personal and travel expenses of the president. The audit focused on one particular office and involved a very small part of the university’s over all budget. One outcome of the audit that was that appropriately determined amounts will be reimbursed to the university.
Q. What effect will this have on the reputation of American University?
A. While these events have increased public scrutiny of American University, I am confident that we will soon move beyond these issues and continue to build on our successes. 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.”
Woven throughout the recent news stories was one consistent theme – that American University has made tremendous progress on numerous fronts, and that our reputation is “ascendant.” This is supported by the recent Middle States accreditation report, which is available for public review online.
I am committed to moving AU forward with renewed vision, dedication to our educational mission, and focus on achieving success in the Campaign for AnewAU. I anticipate an emphasis on improving transparency to our alumni, students, faculty, parents, staff, and donors and will assist the board in their connections with the campus and community. 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 the search for a new president will engage all of American University’s constituencies. The Board of Trustees Board members were impressed with the voices they heard during their recent deliberations, and the board has an enhanced appreciation for our community’s love for this institution and interest in its well being.