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MStuart
02-25-2007, 08:46 PM
Audit Assails Smithsonian Head's Expenses

Report Finds Possibly 'Lavish And Extravagant' Expenditures As Facilities Crumble

(CBS News) WASHINGTON Smithsonian Secretary Lawrence M. Small is living a lifestyle more like a corporate CEO than the steward of a charity funded by donors and taxpayer dollars, according to a watchdog Senator after an independent audit and an Inspector General's report, both obtained by CBS News.

While Smithsonian museums suffer leaky roofs and wait for funding for repairs and restorations, the reports find possibly "lavish and extravagant" expenditures by and for Secretary Small.

The disclosure comes after a recent GAO report indicated that the institution's facilities would require $255 million a year for the next 9 years (or $2.3 billion in total) for repairs and maintenance.

Among the questionable expenses cited:

• Small's salary was increased from $356,000 in 2000 to $819,000 in 2005 and, according to Senator Charles Grassley who's investigating the Smithsonian's Board of Regents, that increase was without any apparent justification or benchmarks;

• In 2005 Small received up to $179,322 in additional compensation for housing costs, including a subsidy based on a fixed 30-year mortgage rate to occupy the house he already owns;

• Small is allowed premium first class travel (which is usually disallowed and/or deemed inappropriate for charities);

• Small's wife accompanied him to a Board meeting in China, expenses paid, then took a side business trip to Cambodia without him which she expensed for $5,764 — such expenses are supposed to be approved in advance, but this was not;

• Small booked a $14,509 charter flight from San Antonio, Tex., in 2001 when he could have flown first class commercial for $2000. Small then told the press that he'd paid for the flight out of his own pocket when in fact it had been paid for with Smithsonian funds, against their rules;

• Unauthorized gift transactions totaling $14,387 when Institution policy does not permit the expenditure of Trust funds for gifts. Small also made a $4,811 cash award to an assistant in 2000, whose purpose the IG indicated did not meet Smithsonian standards.

Although Small has made no comments, Roger Sant, chair of the Smithsonian Board of Regents' executive committee, said, "We have great confidence in Larry’s leadership and the Regents’ actions reflect our confidence. The events described leave open the possibility of misunderstanding, which is unacceptable for an institution so reliant on the public trust. We have taken steps that we feel will remove the possibility of similar misunderstandings in the future."

Sen. Charles Grassley, R-IA, who requested the Inspector General's review of the Smithsonian, called Small's a "champagne lifestyle." But what has angered him the most was what happened after the facts were uncovered.

Once the Inspector General's report detailing these disallowed transactions was forwarded to the Smithsonian Board of Regents last month, the Board merely changed its policies to allow them.

Furthermore, when questions were raised about the propriety of Small's housing allowance, the Board increased it.

The Washington Post reported that Small did reimburse the Smithsonian for approximately $700 – for some meals and for a club membership fee for his wife – but not for other expenses, such as dinners for staff including alcohol, and flowers for staff and donors.

Grassley has asked Chief Justice of the Supreme Court John Roberts (who by law is chancellor of the Smithsonian) to look into all of it. He wrote Roberts, in a recent letter obtained by CBS News, that "justifications for the expenses don't pass the laugh test."

Grassley wrote that the Smithsonian is among the worst tax-exempt boards he's ever investigated.

"I am shocked at what the Smithsonian is spending its money on when it comes to food, flowers, alcohol and other items," he wrote. "I find it unconscionable that, at a time when the Smithsonian can't find the money to fix a leaky roof, it can find the money to spend $212 for flowers for an individual, $334 for lunch for the Secretary and guest, $2,700 for Cosmos Club membership for the Secretary and his wife, and $27,000 in car service for the Secretary."

The IG report states that "according to the Secretary’s staff, they believed that all these expenditures were allowed under Smithsonian policy or that the Secretary could waive any policy if it applied" — upon which the IG remarked, "We are aware of no written authority for the Secretary to waive Smithsonian policies."

Prior to running the Smithsonian, Small was head of Fannie Mae, where in his last year he earned $4.2 million plus bonuses.

In his time at the Smithsonian, Small has been credited by some for boosting the museum's fundraising ability, while also being criticized for cutting back on staff and programs. In June 2006, for example, the Institution's own Inspector General Debra Ritt resigned, in part over concerns that internal oversight was being reduced while the Smithsonian was growing.
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I'm told it's good to be the king.

Mark

Ken
02-26-2007, 06:17 PM
Just another example of tax payer and donors dollars being pissed away by another bureaucrat. There is so much wasteful spending in general that if they could recoup all the lost funding Social Security would be solvent and everyone in America would have health care coverage. I've written my representatives in Washington several times on this subject basically saying that finding out about wasteful and in many cases criminal misappropriation of funds after the damage is done is too little too late. Tax payers deserve better oversight from their elected officials. Some of these people need to be put in jail.

bob 125th nysvi
02-27-2007, 04:40 PM
Some of these people need to be put in jail.

ALL of these people need to be put in jail.

Its the only way it will ever stop.

tompritchett
03-01-2007, 08:57 AM
I'm told it's good to be the king.

Unfortunately, that is the lifestyle of the current crop of CEO's, of which Small is in essence a member. Everything is about "me" because I "deserve it". Oh, and sometimes, I will worry about doing good for the organization that I am overseeing. We may find Small's priorities offensive, but they are not that unusual. What is even scarier is that many of us can look in the mirror and see those same attitudes in ourselves in a lesser degree only because we are not in a position to exploit them to the same level as Small and his COE colleagues.

bob 125th nysvi
03-05-2007, 03:19 PM
nothing these guys do surprises me anymore.

I can still remember the speechs: "We had a great year (Economy going like great guns.) because of my genius (read hideously large bonus) and your hardwork."

"I thank you for all your hard work but because of the economy (downturn) we had a lousy year and bonuses (except mine and my friends) will be small this year."

The only corrolation, year to year, is that the company did as well as the economy did and nothing the CEO did had much effect.

Most CEO's are sort of like the government. The government can't help the economy it can only hurt it. Most CEO's can't really do anything for a company, they can only hurt it.

I worked for a company that made a billion a year in profit almost by accident and a monkey could have been CEO. (Well in fact the CEO was a monkey).

But as a stock holder/tax payer you only have yourself to blame for it. You either voted for the shmuck or didn't vote against him so he gets free reign to do whatever he wants and you get holding the bag.

I remember one year Bank of America PAID a former CEO whose decisions had cost the bank over $700 Mil another $300+ Mil to go away.

Criminal just criminal.

But in a perverse way it shows how strong the Amrican economy is. It can be plundered to the tune of trillions a year by the various levels of government, quasi-government and amoral/incompetant business people and it still hums along as the (by far) strongest econmy in the world.

Think of how rich we'd be if these people did the best they could.

Sgt_Pepper
03-05-2007, 10:56 PM
Think of how rich we'd be if these people did the best they could.

Many of them are doing the best they can... looking out for themselves.

Union Navy
03-06-2007, 09:49 AM
while I get up on my soapbox:

This has always and will always be the case when humans recognize no power greater than themselves. If there is no one higher than you to whom you must give account (read morality here), then "I've got mine, Jack" makes perfect sense. Many of our famous founding fathers believed that morality, especially as related to belief in someone higher that us (read God here), was the very cornerstone of our Republic. Even more than the Constitution.

I suppose I could figure it out if given the opportunity, but how can someone possibly fritter away that much money, and why would he need to? I guess they think nothing is too good for them.

I also suppose I could say "If riches are a curse, may I be struck down and never recover."

tompritchett
03-06-2007, 10:34 AM
Think of how rich we'd be if these people did the best they could.

Actually, they are doing the best that they can and they are doing exactly what the stock-holders want them to do - maximize reported quarterly profits, regardless of what that means in terms of long-term survivability of the their firms. Just think of how many investors now invest in thrift funds that maximize their returns by moving funds around to those stocks that show the fastest short-time growth rather than investing in firms that are focussed on long-term growth and profitability. When my brother and I were talking about the stock market many years ago, he made a comment that has stuck with me and basically now reflects a major philosophy around my own investments. To paraphrase him as best as my memory will allow:

Remember, when you buy stock in a company you are buying partial ownership in that company. Rather than focus strictly on returns, ask yourself whether or not the company's policies are such that you can be proud of having ownership of them.

bob 125th nysvi
03-06-2007, 11:33 AM
Actually, they are doing the best that they can and they are doing exactly what the stock-holders want them to do - maximize reported quarterly profits, regardless of what that means in terms of long-term survivability of the their firms. Just think of how many investors now invest in thrift funds that maximize their returns by moving funds around to those stocks that show the fastest short-time growth rather than investing in firms that are focussed on long-term growth and profitability. When my brother and I were talking about the stock market many years ago, he made a comment that has stuck with me and basically now reflects a major philosophy around my own investments. To paraphrase him as best as my memory will allow:

this stock holder wants.

When I invest I want to know that company is going to be going strong 100 years from now (got to finance my aged veteran impression somehow). I'm not in it for the quick buck just the long haul.

How many times have people lost fortunes in the history of speculation? Whether it was railroads, land booms, gold mines or dot-coms, if they are not sound sooner or later they go bust.

My favorite stock/investing quote is:

Remember a bull can make money and a bear can make money. A hog just gets slaughtered.