Tuesday, July 10, 2007

Private Sector Practices Wreak Havoc at the Smithsonian

If I had a dollar for every time I’ve heard someone say that educational institutions and government need to be more like the private sector, I’d be a very rich man; although probably not as rich as Larry M. Small!

Mr. Small is a former Citicorp/Citibank executive and president and chief operating officer of Fannie Mae. The Smithsonian, our venerable national museum, hired him to bring corporate practices to the public sector.

Mr. Small, unlike previous secretaries, had zero credentials as a scholar and no experience with nonprofit research or educational institutions. He was recently forced to resign after disclosures about lavish spending, the misuse of public funds and, incredibly, a decline in private donati0ns!

The “private sector practices” Mr. Small implemented included spending $15,000 to replace two French doors at his home and $48,000 for two chairs, a conference table and upholstery for his office suite. He also used public funds to clean his chandelier, heat his pool, and pay his chauffeur; took 70 vacation days a year; denied crucial information to the Smithsonian’s general counsel, inspector general and chief financial officer; earned $5.7 million serving on other corporate boards; and decorated his office with a stuffed Bengal tiger from the Natural History Museum.

Among the Small housing invoices sent to the Smithsonian was a $5,700 bill from a contractor to patch a roof, repair a skylight and redo walls in Mr. Small's house in January 2005.

Those repairs came three months before the Government Accountability Office reported that roof leaks were plaguing Smithsonian art museums, archives and the National Air and Space Museum.

Small's spending came to light amidst reports describing a broad decline in the Smithsonian's physical plant and the implementation of institution-wide austerity measures.

During Mr. Small’s tenure, directors of seven museums submitted their resignations. Congress also intervened after Small's cutbacks included the proposed closure of the institution's animal biodiversity research facility.

Commercial sponsorship of museum exhibitions has been another bone of contention. Donations from Fujifilm, Kmart, General Motors, and Catherine B. Reynolds for a "Hall of Achievers," sparked a flurry of letters, including an open letter from a group of 170 scholars, authors, and academics to Chief Justice William H. Rehnquist, the chancellor of the Smithsonian's Board of Regents. "If Mr. Small is permitted to continue his agenda," it read, "the Smithsonian will become much like a shopping mall, with virtually every inch devoted to the promotion of a corporation or its product."

These and other practices were criticized in two damning reports that according to the New York Times “…describe a chief executive run amok…” who “…took the corporate approach too far by concentrating power in his office and abusing perks.”

Iowa Republican Senator Charles Grassley commented: "Mr. Small's champagne lifestyle turns out to be Dom Perignon…The authorized expenses are over-the-top by any measure. The manipulation of the audit might be even worse."

With a salary of more than $900,000, one would think that Mr. Small could afford to pay for cleaning his chandelier or the entire house for that matter.

But that isn’t the way the private sector works as the sordid details of corporate CEO compensation practices and malfeasance at Worldcom, Tyco, Enron and Healthsouth among others have been exposed. At least, that isn’t how the private sector works if you’re a CEO!

The next time you hear someone say government needs to do it more like the private sector remind them about that happened at the Smithsonian, when accepted corporate CEO practices were adopted! Then ask them who picks up the bill for cleaning their chandeliers?

1 comment:

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