Background Information:

On February 25, 2007, the Washington Post reported that a review by the Smithsonian Institution’s Inspector General found that the Smithsonian’s top official, Lawrence M. Small, accumulated nearly $90,000 in unauthorized expenses from 2000 to 2005.  Combined with his then salary of $915,698, reimbursements totaling $1.15 million for making his house available for official functions over the past seven years, inappropriate use of chartered jets, and other expenditures that might seem lavish, this report marked the beginning of the end for Small.

Within two days of the article in the Post, Citizens for Responsibility and Ethics in Washington called on U.S. Attorney General Alberto R. Gonzales to investigate Small for possible criminal violations.  The following month, Senator Charles E. Grassley persuaded the Senate to freeze a $17 million appropriations increase for the Smithsonian based on "out-of-control spending."  On March 26, 2007, Small resigned.

Small was not the only person under fire.  Indeed, the entire governance of the Smithsonian was put in question.  In response to all of the criticism, the Board of Regents formed a Governance Committee with a mandate to comprehensively review the policies and practices of the Smithsonian and how the Board conducts its oversight of the Institution.  In addition, the Board established the Independent Review Committee (IRC) to review the issues arising from the Inspector General’s report and the Regents’ response.

Future posts will look at some of the recommendations made by the Governance Committee and the IRC, and what lessons in governance we may learn from the Smithsonian case. 

The Smithsonian Institution was established by an Act of Congress in 1846.  It includes 19 museums and galleries, the National Zoo, and a number of research facilities.  About 70 percent of its $1 billion annual budget comes from federal funding.  The Smithsonian is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.

As Secretary, Small reported to the Smithsonian’s 17-member Board of Regents.  The Regents include two statutorily mandated members, Chief Justice and Chancellor John G. Roberts and Vice President Dick Cheney, and six legislators, three of whom are chosen by the Senate and three of whom are chosen by the House of Representatives.