CIRM Rejects Grant Applications in Wake of Director Conflicts

The California stem cell agency, already under fire because of one conflict-of-interest flap, today dumped 10 applications for grants of up to $3 million annually as the result of additional violations of its conflict of interest policy by members of its board of directors.

The announcement followed a report in the San Francisco Chronicle (see below) this morning that disclosed the problems with grant applications from UC San Francisco, UC San Diego, UCLA and the University of Southern California.

The newspaper said that applications from those institutions included letters of support from the deans of those schools who also sit on the board of directors for the $3 billion program. Members of the board of directors are barred from attempting to influence a decision regarding a grant.

CIRM's announcement did not mention conflicts of interests. Nor did it mention the names of the schools, which may submit more than one application on behalf of their researchers. It also did not indicate whether more institutions than the four were involved.

The problems are connected to an $85 million faculty award program aimed at supporting top-flight, young researchers for several years. CIRM said that with the rejection of the 10 applications, the size of the program could shrink by about $15 million. Awards are scheduled to be approved by directors next week in Los Angeles.

Interim CIRM President Richard Murphy said that "checks and balances" at CIRM detected the problem. According to the Chronicle, CIRM staffers identified the conflicts. Murphy said the problem was the result of an "innocent misunderstanding."

CIRM Chairman Robert Klein said steps will be taken to prevent a recurrence of similar problems. They include more review of applications prior to issuance, special guidance to board directors and "specific guidance on access to counsel" concerning applications.

Klein, an attorney, was involved in the earlier conflict problem involving the Burnham Institute. He advised John Reed, a CIRM director and president of the Burnham, to write a letter in August lobbying CIRM staff to overturn a negative decision on a grant to Burnham. The case has attracted international attention online in scientific journals and has generated a call for an investigation by the California Fair Political Practices Commission.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, said CIRM made the right decision in rejecting the 10 applications. But he said in a news release:

"The only way to fix this is complete transparency. People have a right to know which board members still don’t understand conflict of interest rules."

Simpson continued:

"It’s simple: stem cell board members cannot take part in any way in grants to their institutions. 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."

Both Simpson and California's top fiscal officer, state Controller John Chiang, have called for the FPPC investigation in the Burnham case.

The Chronicle said that applications for the faculty award grants required a letter of support signed by the dean of the medical school or the departmental chair.

In addition to the four schools identified by the Chronicle, other institutions have top academic officials, including deans, represented on CIRM's board. They include Stanford, UC Davis and UC Irvine. CIRM refuses to disclose the names of institutions that apply for grants on the grounds that those rejected might be embarrassed.

However, it is reasonable to assume that at least one of those three schools applied for the faculty award program and did not submit a letter that would be a conflict of interest.

In response to a question from the California Stem Cell Report, Simpson said,

"They need to make clear what institutions and board members are involved. And they need use the words "conflict of interest violation. Even if they don't do that, the (CIRM news) release was gobbledygook."

Murphy, also in response to questions, said that all 10 applications were eliminated for the same reason. He said,

"ICOC members and CIRM staff are, like all government officials, aware of and sensitive to conflict of interest concerns. This is precisely why CIRM has acted so cautiously in this case. The concerns about the submissions in response to the new faculty (awards)arose out of an innocent misunderstanding of what was allowable in terms of the sign off of institutional support letters by ICOC members."

Jesse Reynolds of the Center for Genetics and Society, writing on the organization's blog Biopolitical Times, said, the Burnham conflict case and today's suggest "a board culture that does not take conflicts of interest seriously. The picture seems even sharper in light of CIRM board members' personal financial interests in companies that are invested in stem cell research, documented in a CGS report in April 2005."

Reynolds continued,

"This meddling is symptomatic of the deep flaws of Proposition 71, which created CIRM. It mandates that the CIRM board be dominated by high-ranking representatives of the institutions vying to maximize their slice of the public funding pie. These developments should stimulate the California legislature to alter the law to reform the board structure, and more."