Controller will audit stem-cell institute

Published on


San Jose Mercury News (California)

California Controller John Chiang on Tuesday joined a consumer group in requesting an investigation of a board member of the state’s $3 billion stem-cell institute and said he will audit the institute to ensure it is spending its money appropriately.

Chiang said he has asked the Fair Political Practices Commission to investigate John Reed, chief executive of the Burnham Institute of La Jolla and a board member with the California Institute for Regenerative Medicine. A similar complaint was lodged against Reed last week by the Foundation for Taxpayer and Consumer Rights.

“I want a full review,” Chiang said during a meeting in San Francisco of a committee he chairs that reviews the institute’s finances.

Reed has acknowledged he made a mistake in August when he wrote the institute’s officials to quibble with their disallowing a $638,000 grant to a Burnham researcher. The agency’s rules prohibit board members from lobbying for grants affecting their organizations. Reed, who abstained from voting on the grant application, said he didn’t realize at the time that it would be improper to send the letter.

Robert Klein, chairman of the California Institute for Regenerative Medicine, said he also made a mistake in advising Reed that “a letter should be written” about Reed’s concerns. Klein said he should have made it clear to Reed that the letter should have been sent by someone who wasn’t an institute board member.

Klein added that he welcomed having the Fair Political Practices Commission look into the matter. Commission spokesman Roman Porter said the agency has 14 days after receiving a formal complaint to decide whether to launch an investigation.

The institute already hires a firm to conduct annual audits of its operations. In February, California State Auditor Elaine Howle also issued a report that faulted the institute for using questionable data to justify its salaries, and letting its officials sometimes use chauffeured rental cars, eat expensive meals and fly first class.

Since Howle’s audit was a one-time inquiry, Chiang said he felt it was important to conduct his own independent audit this year, given the amount of public money being invested in the institute. Chiang said he plans to focus in part on how the agency awards grants and how it ensures the money is well spent.

Created by a statewide voter initiative three years ago, the institute is authorized to spend $3 billion on stem-cell research and laboratories over the next decade. By the time the state pays the interest on the government bonds it will sell to finance the research, the total cost is expected to be about $6 billion.
Contact Steve Johnson at [email protected] or (408) 920-5043.

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