Whistleblower

"He was excited about the [UCSF] situation, but of course one of his first priorities was to assess what resources he could expect if he took the job," recalls Irwin Birnbaum, the Yale medical school's former chief operating officer. Birnbaum was among the "kitchen cabinet" of Kessler advisers at Yale who helped him vet the UC offer.

The compensation package the university presented was never a sticking point. To get Kessler, the university offered a salary unprecedented for UCSF — $510,000, plus perks, while allowing him to continue to serve on several for-profit and nonprofit boards that would enable him to earn several hundred thousand dollars beyond his UC pay. Still, Kessler hesitated while seeking assurances about the level of resources he would have, Birnbaum and others say.

In June 2003, Kessler got the answer he was waiting for. It came in a spreadsheet produced under the imprimatur of Jaclyne Boyden, UCSF's then-vice dean for administration and finance. It suggested that the prospective new dean could expect at least $48 million a year to spend at his discretion. Kessler was so pleased, associates say, that the only other item for which he negotiated, and to which UCSF's chancellor acquiesced, was that the dean's office retain the institution's full share of patent settlements emanating from medical school research.

But the rosy picture soon faded. In December 2004, after barely 16 months at the helm, Kessler received disturbing news from Boyden's successor, Jed Shivers, whom Kessler had hired away from Yale. Shivers had ordered an in-house analysis of the dean's office finances, and the numbers he got back were shocking. Instead of $48 million being available to the dean, the projected figure was closer to $28 million — adding up to a whopping $100 million difference extrapolated over five years.

Worse, as Shivers soon confided, the financial books were in disarray, with the university inexplicably booking fund balances as income, making the dean's office appear to be flush when it wasn't. Moreover, the analysis showed that in four of the five years before Kessler arrived, the office had spent more than it was taking in. As internal e-mails and other correspondence from late 2004 and early 2005 show, Kessler shared the grim discovery with the chancellor and the university's finance office.

Yet it was Kessler who was soon on the defensive. In February 2005, the university received an anonymous "whistleblower" letter accusing him of lavish spending habits that threatened to wipe out the dean's office reserve funds. It specifically took aim at Kessler's pay and that of about a dozen of his academic appointees.

But for someone suggesting that the dean might have something to hide, the letter writer had a peculiar complaint: "We are now forced by Dean Kessler to open the financial books of the Dean's Office."

From the anonymous letter until Kessler's firing nearly three years later, the drama played out almost entirely in secret, with colleagues and even close friends unaware of the details. "He didn't talk about what was going on, and remarkably it didn't seem to affect the high-quality work he was doing as dean," says Jeanne Robertson, a Kessler friend and former chair of the UCSF Foundation.

But to a handful of people in the know, there were disturbing signs that after persisting in raising questions about the school's finances, Kessler was set up for a fall.

For one thing, there was UCSF's handling of the anonymous letter-writer's complaints. UC auditors found them to be without merit, clearing Kessler. But it took nearly two and a half years, as opposed to the several weeks UCSF officials first announced as a likely timeframe when news of the whistleblower appeared in the press.

"The effect was to damage his reputation internally by dragging out the process," says Nicholas Gimbel, a friend and former assistant U.S. attorney in New York. Kessler retained Gimbel to parse the dean's office numbers before deciding to go public with his allegations.

Kessler's first meeting with Bishop to share what Shivers had uncovered was in late February 2005, Kessler says. Bishop ordered the university auditor, who had already begun to examine the whistleblower's complaints, to review the matter. But the findings were less than compelling. The auditor concluded that while it was "certainly possible" that the dean's interpretation of the information Boyden provided led him to expect a level of resources different from what was intended, there was no "intentional effort" to mislead him.

Meanwhile, in the spring of 2006, the UC general counsel's office informed Kessler that, considering the nature of his allegations, by law the university now considered him a whistleblower.

That September, with Kessler persisting, Bishop appointed an ad hoc group headed by vice chancellor Eugene Washington to look into the allegations. It concluded that the financial condition of the dean's office was currently sound and that Kessler's claims that controls had been lacking were "not supported by the facts."

But something was missing. Based on the deficit spending Kessler had alleged to have uncovered, he projected that unless something was done, the dean's office could run out of money in as little as two or three years. Bishop entrusted the group to project revenue and expenses for five years, "or whatever alternative future horizon the group might find appropriate." Washington's group projected five years' worth of revenues, but disbanded without determining the expense issue, leaving a key question unanswered. Neither could the group reconcile its numbers with those presented to Kessler in 2003.