The San Diego Union-Tribune
A conflict of interest issue has hit the state’s stem cell institute for the second time in two weeks.
The California Institute for Regenerative Medicine announced yesterday that it would not consider 10 of the 59 grant applications it received from researchers hoping to participate in the latest round of state stem cell funding because of potential conflicts of interest with its board members.
The initial incident involved John Reed, chief executive officer of the Burnham Institute in La Jolla and a member of the stem cell institute’s board, who sent a letter to the institute’s staff in an attempt to appeal the denial of a grant to Burnham.
The latest problem involved applications from 10 scientists who sought a piece of the $85 million in faculty grants that the stem cell institute’s board is expected to divvy up at a meeting in Los Angeles on Wednesday. The five-year grants aim to support new or young stem cell researchers.
As required by the grant application rules, all 10 applications had a letter of recommendation from either the dean of the institute where the researchers planned to work, or the chair of the researcher’s department.
The problem was, the 10 letters of recommendation were from deans or department heads who also sit on the stem cell institute’s board.
Accepting the applications with such a letter would violate the institute’s conflict of interest policy, which says board members should not attempt to use their official position to influence a decision regarding a grant to their institution.
The applications were reviewed and scored on scientific merit by a committee of scientists from outside California before the institute’s staff noticed the recommendation letters and the problem they created, spokeswoman Ellen Rose said.
The problems appear to have been innocent mistakes by people who were trying to follow the requirements set out for obtaining grant money, she said. The stem cell institute would not identify which institutes sent the recommendation letters that were problematic.
However, the University of California San Diego appears to be one. The dean sends a recommendation letter with all grant applications, a UCSD spokeswoman said. However, the stem cell institute has not told the university that its grant has been disqualified.
“Our priority at UCSD is that all our grant applications are done with the utmost of integrity and that not only is there no conflict of interest, but no perceived conflict — we overemphasize this in all our applications,” spokeswoman Stacie Spector said. “We will work with (the institute) to make sure that any and all stem cell grant applications have no conflicts of interest.”
Representatives of the Burnham, Salk and Scripps Research institutes said none of their applications for faculty grants was rejected because they included a recommendation letter from anyone who is a stem cell institute board member.
“The checks and balances that we have in place worked and detected this potential problem,” said Richard Murphy, the stem cell institute’s interim president.
But Murphy said the stem cell institute is still a fledgling organization and its staff and board are still developing and learning its policies and procedures.
“Although we have successfully processed more than 400 applications for funding, we are learning continuously about the hurdles and ambiguities in this complex area, and refining our procedures and policies accordingly.”
Taxpayer advocates who hammered the stem cell institute on the Reed matter were stymied as to how leaders of academic institutions did not identify the letters of recommendation as a potential conflict of interest.
“It’s simple. Stem cell board members cannot take part in any way in grants to their institutions,” said John Simpson of the nonprofit Foundation for Taxpayer and Consumer Rights in Santa Monica. “Perhaps a few of these deans need to enroll in Ethics 101 at their universities and get the basics down.”
Simpson has called for Reed’s resignation for violating conflict of interest rules, which were revealed Nov. 21. He has filed a complaint with the state’s Fair Political Practices Committee. State Controller John Chiang has asked the committee to investigate the Reed matter.
Reed sent a six-page letter to the stem cell institute’s staff after it decided that Burnham did not qualify for a grant because the principal investigator applying for the funding is not a full-time staffer at the institute. Robert Klein, chairman of the stem cell institute, had recommended that Reed send the letter.
A stem cell institute attorney said Reed’s letter was a conflict of interest, and the staff did not change its decision. Reed and Klein have both said that sending the letter was a mistake.
Some board members think that is not enough to assure the public that the stem cell institute takes its mission, and its charge with $3 billion in taxpayer funds, seriously.
“I think it would be best that Dr. Reed resign because his continued presence undermines the public’s confidence in our work,” said stem cell institute board member David Serrano-Sewell, a multiple sclerosis activist.
Board member and AIDS activist Jeff Sheehy said he is not clamoring for Reed’s resignation, but he wants an acknowledgment that there was a “serious violation of an important rule.”
“My problem is that we are acting like nothing happened,” Sheehy said.
He has asked for a discussion of the matter to be placed on the agenda for the meeting Wednesday.
Also that day, the board will decide what to do with the remaining 49 faculty grant applications. It could vote to award all or some of the grant money. Or it could decide to toss out the entire grant round and start over.
In a written statement released yesterday, the stem cell institute outlined steps it is putting in place to avoid a repeat of the problems with the faculty grants.
The rules for each round of grants will undergo two levels of legal review to ensure the process is clear of potential conflicts prior to issuance. During each grant round, board members will receive specific guidance to ensure that they understand the process.
During each grant cycle, attorneys for the board and the institute will answer any questions about compliance with the application process, Klein said.
“These three steps would likely have eliminated the problems identified to date in the grant process and are designed to avoid problems in the future, rather than deal with issues remedially,” he said.
Taxpayer advocates want another step added to the process: Identify the universities and stem cell board members involved.
“The only way to fix this is complete transparency,” Simpson said. “People have a right to know which board members still don’t understand conflict of interest rules.”
Terri Somers: (619) 293-2028; [email protected]
