The selection of a chairman, set for today, sparks some protests.

Sacramento Bee

LOS ANGELES — The stem cell oversight committee meeting for the first time Friday in San Francisco is already embroiled in controversy over the “coronation” of its chairman, new members’ potential conflicts of interest, and the manner in which the public was told about its first gathering.

The 27 members of the Independent Citizen’s Oversight Committee who will monitor the state’s new $3 billion stem cell research program are set to take their oaths of office Friday.

They are then scheduled to vote for a chair and vice chair.

Critics of the stem cell research initiative voters approved Nov. 2 are urging the committee to delay its vote on Proposition 71 campaign chairman Robert Klein II, the only candidate nominated for the chairman’s job.

They’re also calling for postponing the selection of a vice chair from among three nominees.

A public watchdog group, the Foundation for Taxpayer & Consumer Rights, plans to tell the committee that it will be monitoring the new panel because of its members’ connections to pharmaceutical and biotech firms that could profit from state-funded stem cell studies.

In addition, complaints from a public interest lawyer spurred last-minute changes in Friday’s meeting to avoid violations of the state’s open-meetings law.

“This initiative could be a great boon for California, for science and for treatments,” said Jerry Flanagan, the Foundation for Taxpayer & Consumer Rights health care policy director. “But it is going to take thorough public participation and watch-dogging of the process – not just for California but for the rest of the country.”

The state treasurer’s and controller’s offices had to scuttle plans to address a wide range of issues at the meeting because the attorney general determined the meeting would have otherwise violated open meetings law.

The committee will only vote on Klein and the three vice chair nominees: Edward Penhoet, a biotech pioneer with extensive biotech holdings, Parkinson’s Action Network founder and president Joan Samuelson and Castro Valley urologist Frank Staggers.

Charles Halpern, the lawyer who filed the open-meeting complaint, said he was “grateful” for the change. But he said he still wanted the public to be able to comment before the committee votes, and he’s troubled by the lack of information.

“We have not been given so much as a resume,” he said.

Halpern sent the committee members letters urging them to delay the vote or pick acting officials so a wider search could be conducted.

Marcy Darnovsky, Center for Genetics and Society associate executive director, called the vote on chairman a “coronation… It really just smacks of back-room deals.”

Fiona Hutton, Klein’s spokeswoman, said the four statewide elected officials who nominated the campaign chairman “felt he is an extremely well-qualified candidate.”

Gov. Arnold Schwarzenegger, Lt. Gov. Cruz Bustamante, Treasurer Phil Angelides and Controller Steve Westly nominated Klein, and he can expect to have strong support on the committee.

Committee member Jeff Sheehy said he plans to vote for Klein and believes he may be the best candidate for the fulltime, salaried position.

“But it doesn’t take a rocket scientist to step back and say this doesn’t look good,” Sheehy said. “Bob ran the campaign, he’s the only nominee and he donated to some of the guys who appointed him.”

Klein donated nearly $100,000 altogether to Bustamante’s, Westly’s and Angelides’ campaigns. He also gave $3 million to the stem cell campaign. He still has strong support on the committee, and Sheehy said he believed Klein would be elected.

The four officials who nominated Klein appointed 20 of the 27 committee members. The coalition Klein helped organize to support Proposition 71 included at least 11 of the oversight committee’s members.

Klein also led the $27 million fund-raising drive, collecting more than 40 percent of the donations from venture capitalists, including one of the committee’s members, Michael Goldberg.

Flanagan, with the Foundation for Taxpayer & Consumer Rights, said “it’s difficult to find members who aren’t connected.”

“The field is so small that there is a huge intensity of connections between committee members and pharmaceutical and biotech companies that could reap huge rewards from Proposition 71,” he said.

With California planning to spend about $300 million a year on it, Flanagan predicted most of the state’s biotech and pharmaceutical firms would eventually enter the stem cell business.

Under Proposition 71, the state grants and loans are supposed to go to California universities, teaching hospitals and nonprofit research institutions.

But private firms could team up with these entities and benefit from the state money.

Proposition 71 requires all board members to disclose their financial holdings and recuse themselves from votes on entities in which they have an interest.

For instance, committee member Michael Friedman said he would recuse himself from votes affecting City of Hope, the biomedical center where he is president and chief executive officer.

If he encountered any other conflicts of interest and recusal wasn’t an adequate response, he said he would either divest himself of those interests or step down from the board.

“The citizens of California have invested a lot of money in this at a difficult time for the state,” he said. “We have to be absolutely transparent and attentive to certain details.”