Embattled South Portland official Dana Anderson has been placed on indefinite administrative leave pending the outcome of an audit of the departments he supervises.

City Manager Jim Gailey confirmed in an e-mail that he placed Anderson on paid leave.

“It was at my request to give the city time to further explore the allegations being made against Dana and his department,” Gailey wrote.

Mayor Tom Blake said Anderson had simply become too much a distraction to be effective in his job.

“Due to the many stresses and many ongoing factors, Jim Gailey felt it was best to put Mr. Anderson on leave,” Blake said. “Until further notice, it is not productive for anyone to have Mr. Anderson continue, including Mr. Anderson.”

Anderson did not return phone calls to his home in Saco for comment.

On Monday night, the City Council was expected to go into executive session to evaluate how Gailey has managed issues and concerns with Anderson. A motion was printed on the agenda. Councilor Jim Soule had indicated he would request the private meeting at the end of the regularly scheduled workshop. But he was silent on the matter, and no one else brought it up.

Anderson, who has worked for South Portland for more than 30 years, has been at the center of controversy since the city laid off five employees in late February.

Four of the dismissed workers served in departments supervised by Anderson: Parks and Recreation, Public Works and Libraries.

At least one of those employees, former recreation center manager Deb Smith, suggested her layoff was precipitated by disagreements she had with Anderson on management problems since Tim Gato – the former pool supervisor – was elevated to deputy chief, second-in-command to Anderson.

The layoffs, especially those of Smith and young-adult librarian Reta Nappi, have caused ongoing protests by dozens of citizens, who have demanded Gailey reinstate Smith, Nappi and the other employees, who were all career city workers.

Criticism of Anderson intensified two weeks ago, when an embezzlement case he settled in civil court became public. The suit, in Cumberland County Superior Court, was brought by the International Association of Affiliated Basketball Officials, a volunteer referee group.

Anderson had served as treasurer of the organization until 2003. The suit alleged that he embezzled more than $37,000 in the late 1990s. Anderson denied the allegations through his attorney, who said Anderson settled the case for $900 to put it behind him. State Police declined to pursue criminal charges in the case.

The financial audit of departments Anderson heads stems largely from the unrelated civil suit. City officials, noting public concern, say the audit would answer any questions or doubts people may have about Anderson’s management.

“We are working to develop phased auditing process for Parks and Recreation. We are working with other auditing firms for scope of services and will not be using our firm that provides the annual audit. This is in addition to the annual audit,” Gailey wrote in an

e-mail, responding to reporter’s questions.

Gailey also commissioned an independent review of complaints made by Smith regarding her dismissal and a written statement she filed with top city leaders.

Smith confirmed she was interviewed by consultant Mike Wing, who also spoke with other members of the Parks and Recreation Department.

Gailey said there is no timetable for Anderson’s return. Blake said Anderson’s return to work will be contingent upon “how a number of factors develop.”

In the meantime, Gato – deputy director of Parks, Public Works, Recreation and Libraries – is in charge, Gailey confirmed.

Gato’s promotion last fall from aquatics director to the deputy director position has been another source of controversy.

At recent City Council meetings, various citizens have asked the council during public comments sessions to explain Gato’s rise in the departments, which involved the creation of a new job title and did not include an advertised search for a candidate.

The job creation was developed by Gailey, with Anderson’s endorsement and support. Gailey also put the libraries under Anderson’s control. Previously, the library director had reported to the city manager.

Blake said he expects Anderson’s departments to run smoothly during his absence.

“We have approximately 265 well-trained municipal employees, and for any short-term basis I think our community can run efficiently,” he said. “Be it the Library, Public Works or Parks and Recreation, we have staff that can carry on the day-to-day functions. Our employees can all step up to the plate when the need arises.”