As a result, the 29 directors were not
aware of the gift when Klein, former chairman of the agency, appeared
before them two months later and successfully asked them to
override a grant reviewer decision rejecting a $20 million award to
StemCells, Inc., of Newark, Ca. It was the first time in the eight
year history of the agency that its board had approved an application rejected twice
by its scientific reviewers. The proposal had been given a score of
61 out of 100. The board rejected higher scoring applications in that
particular round.
According to a person familiar with the
agency, members of its executive committee, some of whom are lawyers,
were aware of the Klein donation in May. Other lawyers not on the
executive committee knew as well. Previously, it was not known that the donation was known so widely among CIRM executives and lawyers. It also was not clear that they knew
that Klein intended to appear before the board in July. At the time
of his donation, reviewers had already rejected the StemCells, Inc.,
application but it was not supposed to be publicly known.
Most of the CIRM executives and lawyers aware of the gift
were also present at a public meeting of the CIRM board in May as
well as July but did not alert the board to board to the donation.
Last week, an agency spokesman said the failure to report the Klein gift was “due to the lack of
additional donations, a transition in CIRM’s finance office and an
oversight."
The board will be formally told of
the gift at next week's board meeting, more than a year after it
was made.
The donation by Klein, a Palo Alto,
Ca., real estate investment banker, financed a trip by six CIRM
science officers to Japan for an international stem cell conference.
CIRM President Alan Trounson subsequently directed the officers to
give special access to Klein, among other favors Trounson granted
Klein. Two of the officers were heavily involved in the grant round
that included the StemCells, Inc., application. The science officers
participate in the application of the closed-door review process but
do not vote on proposals. Trounson excused himself from participation in public discussion of the StemCells, Inc., application because of his relationship with the company's founder, researcher Irv Weissman of Stanford University.
The board vote approving the
application was a narrow 7-5. It is not clear whether the vote would
have changed if the board had been informed publicly about Klein's
gift. But it would have heightened concerns that Klein was using his
six-year service as chairman of the agency plus the donation to sway
the board, which rarely overturns the decisions of its scientific
reviewers. CIRM directors go along with reviewer decisions on 98
percent of applications, according to agency calculations.
One of the votes in favor of Klein's
position came from Art Torres, one of two vice chairman of the
agency. Torres' state-required economic disclosure statements show
that he received at least $31,000 from firms controlled by Klein during 2012 and 2011. Torres works four days a week for the agency,
earning an annual salary of $225,000. Torres told the California Stem
Cell Report that his vote had no connection to the consulting work
he did for Klein's real estate firms.
Klein has denied any impropriety in
connection with his donation. He has not responded to questions
involving Torres.
