An investigation by the state attorney general's office found nothing improper with $972,135 in low-interest loans by a private tax-exempt arm of the Los Angeles County Museum of Art to museum Director Earl A. Powell III, a report disclosed Wednesday.
The loans were used to purchase and furnish a Hancock Park home for Powell and his wife where museum events, including fund-raisers, were held. The loans complied with the law and were justified because the Wilshire Blvd. museum benefits from Powell's entertaining, the report by the attorney general's office concluded.
"It appears that art museums must necessarily entertain wealthy members of society," the report noted after checking with other major museums.
Powell is paid about half his $130,000 annual salary by the Los Angeles County Board of Supervisors and the other half by Museum Associates, the private group--composed mostly of art patrons and local dignitaries--that guides fund-raising and advises Powell.
The attorney general's office routinely audits the financial activities of tax exempt groups such as Museum Associates. The loans to Powell were investigated because of their large size and the low 3% interest rate, a spokesman for the attorney general's office said when the probe began last November.
A small portion of the loans used by Powell to purchase furniture required prior state approval and should be repaid, the report said. But the president of the museum board, Daniel N. Belin, said the amount in question is less than 5% of the total loans.
"There really never was a doubt about the legitimacy of making a loan to the director," Belin said Wednesday. "The trustees saw it as necessary and appropriate to keep a first-rate director for a first-rate museum."
Atty. Gen. John K. Van de Kamp took no role in the investigation because his wife, Andrea Van de Kamp, is a board member of the museum and of Museum Associates, a spokesman said Wednesday.