Wednesday, April 06, 2005

A Tale of Two Codes

The California stem cell agency on Thursday will consider two conflict of interest policies – one for the bosses (the Oversight Committee) and one for their employees, which some might argue is tougher than the one for the bosses.

Both policies appear straight forward and relatively strong, given that the Prop. 71 has inherent conflict of interest problems written into it. What is mainly different is language in the code for employees that declares the agency must “conduct its activities in a way that is perceived to be open, fair and free from bias.”

“CIRM employees must be free from both real and apparent conflicts of interest,” the code says.

The code for the bosses -- the CIRM Oversight Committee -- makes no mention of perceptions or “apparent conflicts of interest.” In fact, it specifically exempts deans of medical schools from situations that appear to raise perception issues.

“Deans of medical schools and executive officers of research institutions oversee and advise researchers in their institutions and sign off on all grants as part of the basic duties of their position. This activity shall not be deemed to be a conflict of interest,” the policy states. But it does require such oversight committee members to recuse themselves from decisions on such grants.

One wonders why the “perception” language was not included in policy for the Oversight Committee. It may be that the code writers came to the conclusion that the committee members could never avoid the possibility of perception problems.

Another interesting aspect of the employee code is the ban on financial interests in a organizations with a “substantial” interest in stem cell therapy.” That is defined as “one in which more than 5% of the research budget is known to be devoted to stem cell therapy.”

Could the “known-to-be” language be construed to exempt investments in privately held enterprises, whose budgets are secret?

The policy for employees also presumably applies to consultants to the agency, such as attorneys and computer security analysts. However, there is a provision in the language approved at the last meeting that gives vast leeway to an aide to the chairman (not the president) to exempt consultants from the type of disclosure that ordinary employees would have to make.

Not dealt with in the two codes are perceptions involving entities seeking the permanent headquarters of the agency. Earlier the agency said one of the requirements of the lease is a "letter signed certifying that the owner does not have and will not have in the future any ownership interest in any firms or agencies competing for grants to be awarded by the Institute."

We raised questions on Feb. 28 about the definition of “ownership interest.”

If the employee standard is applied to landlords, it will mean investments of more than $10,000. One might wonder whether the landlord ownership ban would also apply to the principals of a firm that the landlord hired to do janitorial work at the permanent headquarters.

Under the best circumstances, it is impossible to write a conflict of interest code that covers all possibilities. It is particularly difficult with CIRM because some of the Oversight Committee members have longstanding and deep ties with parties that could stand to benefit from actions by CIRM. All that is legal but some critics have raised questions whether it is right.

Given that situation, it would behoove the agency to act with an abundance of discretion in matters involving perception and appearance, whether in the case of Oversight Committee members and employees or consultants and landlords.

We welcome and will publish comments on the conduct of CIRM and the failings of this blog. Please send them to

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