Institutions, Board Members Involved Must Be Identified, Consumer Advocates Say

Santa Monica, CA — California’s stem cell agency made the correct decision today when it announced it was rejecting 10 applications for research grants because of apparent conflict of interest violations in California’s $6 billion stem cell program, the Foundation for Taxpayer and Consumer Rights (FTCR) said.

The non-partisan, non-profit consumer advocacy organization added that to completely resolve the matter, the stem cell agency must identify the universities and stem cell board members involved.

“The only way to fix this is complete transparency,” said John M. Simpson, FTCR’s Stem Cell Project director. “People have a right to know which board members still don’t understand conflict of interest rules.”

The latest improprieties were revealed by the San Francisco Chronicle and came in the wake of the revelation that John Reed, Burnham Institute president and stem cell board member, had lobbied to reverse the rejection of a grant to his institution. Read the Chronicle story here.

“It’s simple: stem cell board members cannot take part in any way in grants to their institutions,” said John M. Simpson, FTCR’s Stem Cell Project Director. “The board is not some old-boys’ club for the benefit of the state’s universities. They are public officials and stewards of the public interest. Perhaps a few of these deans need to enroll in Ethics 101 at their universities and get the basics down.”

The new violations of stem cell board ethics rules came when some university deans who also serve on the stem cell board wrote letters supporting applications for research grants. The grants in question could total $3 million each over five years. During its meeting in Los Angeles next week, the stem cell board plans to award up to $85 million for the grants which are aimed at faculty members just starting their independent research careers.

The Chronicle said applications from UC San Diego, UC San Francisco, UC Los Angeles and the University of Southern California were affected.

“There could be more or the Chronicle could be wrong,” said Simpson. “The only fair thing is for the stem cell agency to lay everything out in the open. We don’t need to name the scientists, but the public has a right to know what institutions and board members made mistakes.”

FTCR has filed a complaint with the Fair Political Practices Commission (FPPC) about the Reed incident and called for both him and stem cell chairman Robert Klein to resign. Stem cell board members Jeff Sheehy and David Serrano Sewell have also called for Reed to step down from the board. State Controller John Chiang has announced plans to audit the agency and asked the FPPC to investigate.

The latest improprieties, though serious, are not as egregious as the Reed affair, FTCR said. The agency’s call for applications asked for a letter of support either from the dean or department chairman. “Board members have signed conflict of interest rules and clearly should know what’s right and what they can do,” said Simpson. “However, this is not the same flagrant violation as actively lobbying to overturn a decision. Throwing out the tainted applications should be an adequate punishment.”

FTCR also said that the stem cell committee should discuss at its meeting Wednesday what penalties are right for violations of its rules by board members. “They’ve got all these supposed rules that Chairman Klein likes to call ‘the gold-standard,’ but they are absolutely meaningless unless there are consequences when they are broken,” said Simpson.

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 adhered to and there must be consequences when 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.