IF YOU spent the past week wagering on whether Alberto Gonzalez will still be attorney general come April, you may have missed another Washington scandal almost as depressing as the secret campaign by the Bush administration to replace federal prosecutors perceived as politically disloyal. At the center of the squall, which ended almost as soon as it began, was Smithsonian Secretary Lawrence Small, who resigned yesterday amid allegations that he misused institutional funds throughout his tenure in office.
According to a report by the Smithsonian inspector general, details of which were published recently in the Washington Post, Small pocketed $1.15 million in housing allowances during his six years on the job. This was pursuant to terms in his contract that authorized reimbursement of half his actual housing costs up to a maximum amount that began at $150,000 and grew to $193,000 this year. The expenses ranged from the opulent to the mundane, with Small claiming reimbursement for tens of thousands in painting and contracting costs, as well as $788 in pest control costs, at his home in Washington's Woodley Park neighborhood. But the most novel item, by far, was the $1.67 million in expenses related to a "hypothetical mortgage" on the 6,500 square foot home, which Small in fact owns outright.
It should go without saying that you can't claim a real, cash reimbursement for a hypothetical expense without crossing an ethical, if not legal, red line. But it gets even worse. According to the report, the hypothetical mortgage was devised by Small's staff only after the inspector general's inquiry determined that his documented expenses fell far short of those necessary to collect the maximum housing allowance under his contract for the year in question. And when the inspector general criticized the imaginary expense, the Board of Regents, which hires the Smithsonian Secretary and sets his compensation, revised Small's contract to provide a $193,000 lump sum payment for housing expenses.
The story of the greedy executive and the compliant board is depressingly familiar these days, although until now it has mostly played out in the corporate world. From the $6,000 shower curtain charged to Tyco International by former CEO Dennis Kozlowski to the flowers, food, wine, sports tickets, club memberships and laundry services doled out as retirement perks to former General Electric CEO Jack Welch, it became common in recent years for deep pocketed institutions to fund the lavish lifestyles of their leaders while also providing them with multimillion-dollar pay packages. The fundamental mystery of these scandals is why highly paid executives, whether of corporations or museums, believe that their employers must not only provide a big paycheck, but also cover the trivial expenses they incur in the course of their lives. Small, a former executive at Citigroup and Fannie Mae, was to take home more than $915,000 in total compensation this year, yet he charged his exterminator's fees to the Smithsonian.
Many corporate executives have been paraded about in handcuffs for such behavior, but it's even worse when it happens in the public sector. If a corporate executive wants to live large on the company dime, the shareholders can always cash out, but the Smithsonian is a quasi-public institution that receives 70 percent of its annual funding from the federal treasury. In some figurative sense we may all be shareholders in the United States Government, but if the Board of Regents decides to reimburse the secretary for his hypothetical housing expenses, we can't individually decide to invest our tax dollars in something better. Sen. Charles Grassley (R-IA), the ranking Republican on the Senate Finance Committee, froze a proposed increase in the Smithsonian budget and took Small to task for his misbehavior, but Congressional action is usually an imperfect remedy.
In a government where billions in expenditures are ill conceived and poorly scrutinized, the costs claimed by Small were small indeed, but it is nonetheless disappointing that such chicanery should occur at the Smithsonian. Small was no crooked contractor or money grubbing lobbyist, but a sophisticated and presumably successful businessman tapped to lead a nonprofit academic institution for the benefit of the nation at large. Yet during his time at the Smithsonian, Small pushed his contractual rights to the breaking point, claiming reimbursement for even hypothetical expenses in a show of greed that was wrong and tacky in equal parts. We can but hope that the next secretary of the Smithsonian is possessed of better morals and, perhaps, better manners.
Alec Solotorovsky's column appears Tuesdays in The Cavalier Daily. He can be reached at asolotorovsky@cavalierdaily.com.
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