DATELINE: April 15, 2008, Chicago
Much will be made of the today's article by Washington Post reporters James V. Grimaldi and Jacqueline Trescott regarding the February 2008 resignation of Pilar O'Leary, the head of the Smithsonian's Latino Center. Smithsonian Official Resigns After Ethics Violations. The story is tailor-made for critics of big-spending nonprofit executives. According to Grimaldi and Trescott, O'Leary was taking down about $200,000 in salary from the Smithsonian in 2005 and 2006.
Apparently wondering why O'Leary stepped down, the Post filed a FOIA request for the Smithsonian Inspector General's report covering his investigation of O'Leary. The Inspector General concluded that O'Leary "had...
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solicited and accepted gifts and gratuities from outside companies and contractors." [Quote from the article paraphrasing the Inspector General's findings] The Post article indicates that O'Leary solicited free tickets to concerts, fashion shows, and music award ceremonies. We would know more, but the Post reports that long passages in the report were redacted. O'Leary has denied any wrongdoing, according to the Post.
This all sounds serious to us, but then there is some humor in O'Leary's behavior. She apparently liked the good life, frequently using limousines. In one reported instance, she used a limousine to transport Latino Center board members from the famed Smithsonian Castle to the National Museum of Natural History. Millions of Americans who have visited Washington, D.C. know that this is a relatively short walk.
There were other expense account abuses, according to the Post. O'Leary had a penchant for four- and five-star hotels. In one reported incident, she turned down a government rate at one hotel for a more expensive rate at another hotel. O'Leary told the Post that her travel had been approved. In another incident described by the Post, O'Leary submitted expenses for reimbursement that had already been covered by another organization. Overall, the Inspector General reported that O'Leary had exceeed per diem rates on 23 of 24 occassions.
O'Leary's apparent sense of entitlement may have stemmed from a cover story in Washington Life magazine, a chronicler of the Washington scene. She even was awarded the magazine's Substance and Style award, together with Senator Barack Obama and Philippe Cousteau.
The Inspector General was so troubled by O'Leary's conduct and practices that he referred the matter to the U.S. Attorney. Fortunately for O'Leary, the U.S. Attorney decided not to pursue the matter. In the end, O'Leary reimbursed the Smithsonian for $2,066 in expenses.
For us, the story begins here. It really is the Smithsonian's board of regents that deserves the criticism. The board may have been paralyzed under former Smithsonian Secretary Lawrence Small, but he has now been gone for the better part of a year. The question: After all the good governance talk, why did the board apparently try to cover up O'Leary's conduct and the Inspector General's report? You would think they would have learned something from the sub-prime crisis. Every business reporter noted that John Thain, Merrill Lynch's new CEO, deliberately loaded up the bad news when he took over so that he could clear the decks for his new stewardship of the once venerable investment bank and broker. Many other titans of Wall Street did the same thing, taking huge write downs to get the bad news behind them. There is nothing worse than death by a thousand cuts. So why didn't the Smithsonian's board do the same thing? It would have been much smarter to say, "We are cleaning house and here are all the abuses we have uncovered. We've learned our lesson and we now are ready to improve practices."
But no, the Smithsonian's leadership apparently chose to hide the facts. Did they really think these juicy tidbits wouldn't find their way to the press? Experience teaches that the press always learns about this stuff. You can bet that Grimaldi and Trescott are busy today looking under more rocks, hoping to find another reason to file a second or third FOIA request.
This glaring tone deafness by the regents raises serious questions whether they are truly committed to governance reforms. Oh, they have all sorts of charts and governance plans on the Smithsonian's Web site, showing in detail how improvements to practices are progressing. But in light of the O'Leary incident, those charts and schedules now appear to be more style than substance. Transparency certainly didn't carry the day at the Smithsonian today.
The Lesson: When you have bad news, release it and move on.
