Thursday, April 26, 2012

Text of CIRM Response on the Weakening of Financial Disclosure Requirements

On April 24, the California Stem Cell Report asked the state stem cell agency about its proposed changes in its requirements for financial disclosures from its officials. Here are the key elements from that query with the stem cell agency's response following.

The agency was invited to respond to the following: "The new code appears to give discretion to the employee to determine what enterprise is 'the type to receive grants or other monies' from CIRM. Additionally, it would not appear to require disclosure of an investment with or income from, for example, Kleiner Perkins, which is a major investor in iPierian, which holds $7 million in CIRM grants and could well be a future applicant...(T)he weakening of the code comes at a time when the agency is moving to cozy up to industry and looking to raise funds to continue its existence, all of which raises even greater conflict of interest issues than earlier in CIRM's existence."

Here is the text of the response April 25 from Kevin McCormack, CIRM's new senior director for public communications and patient advocate outreach.
"In answer to your question, we are proposing changes to the Conflict of Interest Code based upon recommendations from the California Fair Political Practices Commission (FPPC). The Political Reform Act requires state agencies like CIRM to review their Conflict of Interest Codes every two years.  The FPPC, which is charged with enforcing the Political Reform Act, is responsible for reviewing and approving CIRM's Conflict of Interest Code.  In preparation for this review, CIRM's counsel met with the FPPC staff who suggested the proposed amendments which are the subject of the upcoming Governance Subcommittee meeting.  The proposed amendments to CIRM's Conflict of Interest Code are consistent with the FPPC's position that agencies should tailor their disclosure categories to type of work performed by the agency.  For example, CalPERS's conflict of interest code requires CalPERS officials to disclose investments in, and income from, entities that are of the type with which CalPERS contracts and entities in which funds administered by CalPERS could be invested.  Likewise, the State Board of Education requires its members to disclose investments, business positions, and income from a publisher, manufacturer, or vendor of instructional materials, or services offered to educational institutions in the State of California and investments, positions of management and income from any private school in the State of California.  Similar to these codes, the FPPC proposed that CIRM's Code be tailored to the nature of CIRM's work.  Thus, the FPPC proposed that CIRM require its board members and high-level employees to disclose investments in, and income from, entities that are of the type with which CIRM would contract or from which CIRM could procure goods or services as well as investments in, and income from, biotech and pharmaceutical companies.  Because these are the types of entities that are likely to create potential conflicts of interest, we believe the disclosure categories are appropriate.  It is important to remember, however, that this is a preliminary proposal.  CIRM will seek input from the Governance Subcommittee, the Board, and members of the public before seeking approval of the amendments."
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