Audit Assails Smithsonian Head's Expenses
By CBS News Capitol Hill correspondent Sharyl Attkisson
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."
Read: The Smithsonian Acting Inspector General's report
Read: An Independent Accountant's Report
Read: The Smithsonian Board of Regents' response to charges
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.