After Public Pressure, Five Research Institutions Are Identified During Grant Award Discussion

Los Angeles, CA — The California stem cell agency’s decision today to reveal the names of five research institutions whose applications for research grants were rejected because of possible conflict of interest violations was correct, the Foundation for Taxpayer and Consumer Rights (FTCR) said. But the non-partisan, non-profit organization stressed that the names of the institutions should have been released as soon as the problem came to light.

“Holding back the details simply undermines the public’s trust in the stem cell agency,” said John M. Simpson, FTCR’s Stem Cell Project Director. “I don’t understand their propensity for secrecy. It serves neither the board nor the agency nor the public.”

The institutions involved are: UC-San Francisco, UC-San Diego, UCLA, University of Southern California (USC) and the Burnham Institute for Medical Research. Officials at the institutions who are also members of the stem cell board signed letters supporting applications for research grants.

The 29-member oversight committee met at UCLA today and awarded $54.4 million in grants for young faculty members beginning their research careers. After 10 applications were rejected because of the conflict problem, 48 applications were under consideration. The board approved 22 grants.

It is expected that another call for young faculty grants will be approved at the board’s January meeting. The 10 rejected applicants, as well as others, could apply in that round. Before the applications were tossed out, the board expected to authorize $85 million in grants.

“The stem cell agency continues too frequently to operate as if it were a private club or foundation, not the $6 billion state agency it in fact is,” said Simpson. “This unwarranted veil of secrecy undermines public trust in the agency and ultimately undercuts faith in vital, lifesaving research.”

The problems involving the young faculty grants are the second conflict of interest problems to come to light at the stem cell agency in two weeks. Under the law, board members cannot take part in decisions about grants to their institutions. Despite those rules some board members who are university deans wrote letters supporting applicants from their schools.

Earlier it was discovered that John Reed, board member and president of the Burnham Institute for Medical Research, had improperly intervened seeking to overcome the rejection of a $638,000 grant to his institution. On Monday, California’s Fair Political Practices Commission agreed to investigate a conflict of interest complaint against Reed brought by FTCR.

FTCR said an announcement Tuesday from Reed that he would recuse himself from all stem cell board deliberations until the investigation is concluded was only a step in the right direction.

“The stem cell board would be best served if Reed simply resigned,” said John M. Simpson, FTCR’s Stem Cell Project director. Simpson has also called for stem cell committee Chairman Robert Klein to step aside as chairman of the oversight board.

“Klein got the stem cell agency off the ground with great entrepreneurial spirit,” said Simpson. “There is much to thank him for. However, he has never demonstrated he understands that the California Institute for Regenerative Medicine (CIRM) is a state agency. It’s time he passed the torch to someone who gets it. CIRM is not a private club or foundation and cannot be run as if it were.”

After the Reed case surfaced and FTCR filed its complaint, State Controller John Chiang announced plans to audit the agency and also called for an FPPC investigation.

“Failure to act promptly and appropriately to restore the public’s trust can only damage the institute,” said Simpson. “The members of the oversight board are intelligent people. I cannot fathom their propensity to keep shooting themselves in the foot.”

Proposition 71, passed by 59 percent of Californians in 2004, created an oversight board fraught with potential conflicts of interest. “Most of the people handing out the money are the very same people from the institutions that get the money,” said Simpson. “That means the conflict rules in place must be strictly followed and there must be consequences if they are violated. ‘Golly, we meant well and will do better next time’ simply does not cut it.”

FTCR’s Stem Cell Oversight and Accountability Project is working to ensure that California’s landmark stem cell research program offers accessible and affordable cures and treatments to the taxpayers who have funded it. The program will award $3 billion in grants over a decade. Bond financing charges mean the project, the largest source of stem cell research funding in the world, will cost California taxpayers $6 billion.

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The Foundation for Taxpayer and Consumer Rights is California’s leading non-profit and non-partisan consumer watchdog group. For more information visit us on the web at: www.ConsumerWatchdog.org.