Secrecy and California's $100 Million in Stem Cell Grants

More than two years ago, a legal expert on California's "sunshine" laws said the state's $3 billion stem cell agency should open its doors wider and fulfill its then fledgling promise to meet the highest standards of openness and transparency.

Terry Francke, general counsel for Californians Aware, zeroed in on the manner in which CIRM decides which scientists are selected to receive millions of dollars in public funds. Francke said the task should be performed mostly in public, which would provide "vital insurance" that public needs are met and no mischief is afoot.

CIRM's Oversight Committee rejected that position, and today we are beginning to see the impact. It comes in the form of a lack of vital information about how the agency has handed out more than $100 million in research grants. It involves the failure of the agency to keep minutes or transcripts of key sessions of its grant review committee, compliance with the state's constitutional guarantee of the "people's right to access" governmental information and the role of the chair of the agency during one closed-door grant review.

The case in point is a $2.6 million grant to CHA RMI, a 15-month-old nonprofit subsidiary of CHA Health Systems of Korea. Like 28 other applications, the Los Angeles-based RMI went through review and approval earlier this year. But the grant has now risen to higher visibility because of what one watchdog group called "troubling questions" about plagiarism allegations concerning Kwang-Yul Cha, president of CHA RMI's parent company, and alleged ethical breaches involving the medical director of RMI's allied fertility clinic.

How did the CHA RMI application come to be in the top tier of grants approved for funding, setting it up for no-questions-asked approval by CIRM's 29-member Oversight Committee? What can the public learn about the process that does not involve the closely protected scientific details of the grants or proprietary information? For example, can the public learn what the key vote was on the CHA RMI application during the initial review? Can the public learn if other votes were taken that would have affected CHA RMI's possible approval? Can the public determine whether the organization's reputation was discussed by grant reviewers, much less what was said?

Using CHA RMI as an example, here is a look at the grant review process, what the public is allowed to know and what is kept secret by the California stem cell agency.

In January during a closed-door session, the CIRM grant review committee (14 out-of-state scientists and seven patient advocate members of the CIRM's Oversight Committee, including its chair) placed the CHA RMI grant in the top tier of those to be funded. The names of all applicants, however, were secret at the time. On Feb. 18, the Los Angeles Times carried its story about the plagiarism allegations and other issues involving Cha, the top executive of the parent company of CHA RMI. On Feb. 23, the Los Angeles Times carried another story about the CHA fertility clinic. Neither story specifically mentioned CHA RMI. On March 15, CIRM's Oversight Committee, approved the CHA RMI grant with little discussion as part of a block of other top-ranked grants. Under CIRM rules, Oversight Committee members (with the exception those who served on the grant review panel) did not know the name of any of the recipient organizations before they voted. So it was impossible for most Oversight Committee members to connect the CHA RMI application with either of the Times' stories. After the vote, the names of the winners were released by CIRM. The names of the other applicants remain secret. Public linkage of the Times reports and the CHA RMI grant came only on March 17 on the Bodyhack blog on Wired.com and on March 21 in the California Stem Cell Report. Other media followed the March 21 report.

What the public knew about all the grants prior to its approval can be seen on the CIRM web site, which carried, in advance of the Oversight Committee meeting, a summary of each application and reviewers' assessment of its strengths and weaknesses – minus names of the applicant. That summary and assessment surpasses the information disclosed about grant applications by the National Institutes of Health, the federal agency for making most scientific research grants, and other grant-making organizations with the exception of Connecticut's stem cell research effort, according to CIRM.

What is not known publicly is also significant. Here are questions that remain unanswered.

-- Did California stem cell Chairman Robert Klein, who met Cha in October 2005 in Korea on trip financed by a Korean trade organization, take part in the discussion of the CHA RMI application during its review by the grant committee?

-- What was the vote by the grant review committee on the CHA RMI application, a vote that is required by the grant review committee's bylaws?

-- Were other votes taken that would affect the placement of CHA RMI grant in the top tier? Such as a vote on the cutoff score for placing applications in the top tier? The CHA RMI application received a scientific score of 77, nine points above cutoff line and 18 below the top score.

-- Did any grant reviewers raise questions about CHA RMI's reputation or that of its allied organizations?

CIRM would not disclose the vote on the CHA RMI application. The agency declined to disclose whether the CHA RMI grant was considered separately or together with other grants. CIRM declined to disclose whether there was a vote on the cutoff score for tier one grants. No transcripts, minutes or audio tapes exist from the meeting, although notes were taken by CIRM staff to prepare the public summaries of the grants.

Dale Carlson, chief communications officer for CIRM, said at one point said via email, "We think the public summaries of the discussion speak for themselves." He later added, "From the ranked list of Comprehensive Grant applications...anyone can see that it's clear the CHA application made it into Tier I on the strength of its scientific score."

Responding to a general question about the review process, Stuart Orkin, Harvard medical professor and chair of the grant review committee, said, "I think it is a very fair and transparent process for selection of the best and most promising grants for the CIRM."

Regarding the lack of transcript and minutes, Carlson said, "We keep very careful records on the (grant reviewers) who vote and have conflicts. They are retained and available for review by auditors."

CIRM declined to disclose whether Klein took part in the discussion of the CHA RMI application, but noted that he sits ex officio on the committee and does not have a vote.

Klein was in Korea in October 2005. Carlson said that he met with Cha at that time but offered no further details. In economic disclosure statements filed with the state, Klein, a multimillionaire who takes no salary for his post with CIRM, listed a gift from CHA Health Systems on Oct. 16, 2005, valued at $100. It was described as a "stone stamp/seal." Klein also received a decorative box valued at $175 from the Korean International Trade Association during the trip, which was paid for by the same association. The flight was valued at $4,170 and his one-night hotel stay at $509, according to Klein's filings. He reported that he spoke at a symposium and three research hospitals. Klein received no honorarium or other fee for his speeches, according to state filings. His trip was made to join in the announcement of an international stem cell consortium being organized by then stem-cell superstar Woo Suk Hwang, according to published reports. The consortium later collapsed when Hwang confessed to stem cell research fraud and was indicted on embezzlement and bioethics law violations.

Carlson said,

"Klein's probably met hundreds of scientists in California and elsewhere in the past couple of years, including many with applications considered by the ICOC. That's probably true for most, if not all, members of the
ICOC. They are, after all, a pretty high-profile group with a lot of public interaction. What's your point? Meeting someone does not constitute a conflict of interest."

We asked Carlson whether CIRM, prior to the working group review of grants, gathered any information on grant applicants and their institutions? His response:

"In the interest of effectively managing our scarce resources, the rigorous due diligence conducted on each applicant investigator and/or institution is undertaken after the ICOC votes to approve grants for funding. The administrative review is an intensive process, as I'm sure you can imagine. With 300 applications for SEED and Comp grants, for example, and an expectation that the ICOC would approve just 55, it wouldn't be prudent to examine all 300 to see if they met the requirements of the RFAs. Better to focus our limited time on those that actually have a chance of a grant award."

We also asked Carlson whether, during the grant review process, there was any discussion of CHA's reputation or that of its parent or allied organizations? Or of the reputations of the CHA scientists or management or scientists and other personnel associated with CHA's allied organizations? He replied,

"The public summary indicates that there was discussion of the capabilities of the principal investigator and his collaborators. The focus is on scientific merit. Exclusively, scientific merit.

"I think it's worth noting that none of the stories referenced by (watchdog groups and others) had surfaced at the time the application was submitted or reviewed."

As for the agency's position on withholding information on votes and other non-scientific information involved in the grant reviews, Prop. 71 states: "All records of the working groups SUBMITTED (our capitalization) as part of the working groups’ recommendations to the ICOC for approval shall be subject to the Public Records Act." That phrasing apparently serves as the legal foundation for the institute's position that it may withhold any information that is not submitted as part of the grant review's formal recommendations. The language is part of state law as opposed to the State Constitution.

During the same election in which Prop. 71 was passed, California voters also adopted Prop. 59, amending the state Constitution to guarantee the public's right to government records. The constitutional amendment states: "A statute, court rule, or other authority, including those in effect on the effective date of this subdivision, shall be broadly construed if it furthers the people's right of access, and narrowly construed if it limits the right of access." The measure was approved by 89 percent of voters, far exceeding the 59 percent for Prop. 71. That is significant because courts have used approval rates in some cases to determine precedence in case of conflicting measures.

Does the voter-approved Constitutional provision mean that CIRM must open its processes? That question is not likely to be completely answered short of litigation that would probably proceed to the State Supreme Court. Other possibilities include a legislative change in Prop. 71, which requires an overwhelming 70 percent vote in both houses, or an attorney general opinion. Those can be requested by legislators or state agencies and carry considerable legal weight. CIRM can also change its policies on its own volition.