City Audit Deems Wilsey's $450k Former Employee Payout Improper

The San Francisco Controller’s Office has released an audit finding the Fine Arts Museums of San Francisco (FAMSF) “inappropriately” paid nearly half a million dollars to a former employee.

Auditors evaluated payroll and cash disbursements over the last three years (2013-15), during which period Diane “Dede” Wilsey was the CEO and president of the board at the de Young Museum and the Legion of Honor.

Wilsey got in hot water over a 2014 decision to order a $450,773 check cut to an ailing former employee. At the time, Wilsey said she didn’t need approval for the payment.

But the chief financial officer disagreed, was placed on administrative leave, left and then sued, claiming whistleblower protections. That was followed by a $2 million settlement, and attempts by Wilsey to get board members to help reimburse the museums for the payment. Four board members resigned.

San Francisco’s director of audits Tonia Lediju says city rules don’t really speak to Wilsey’s decision, but it’s “improper” under federal guidelines, as defined by  the Government Accountability Office (GAO).

“We use this as our guideline oftentimes when we cannot find best practices or a particular city legislation or laws around a particular business practice,” Lediju says.

Wilsey agreed earlier this year to switch from president and CEO to board chair at FAMSF. The CEO title is now attached to director Max Hollein, and the organization now has a new CFO. Lediju says the changes suggest the partially city-funded FAMSF will be in a good position to avoid issues of this kind in the future.

“They have a new CFO who has a strong background in helping organizations run appropriately,” Lediju says, adding that auditors had no trouble getting requested documents from the arts organization in a timely fashion.

The office of Attorney General Kamala Harris, whose senate campaign has received $5,400 in contributions from Wilsey, according to the Federal Election Commission, confirmed that its own investigation is still ongoing.

A spokesman for Wilsey did not immediately respond to KQED’s requests for comment.