The Canadian Citizenship Question – Day Four, an Answer!

The requirement that the chairman of the California stem cell agency be a citizen of California is unconstitutional according to a 1978 opinion by the state attorney general.

That's what James Harrison, outside counsel for CIRM, told the California Stem Cell Report early today. He was responding to an email query yesterday concerning the reason that Alan Bernstein, a Canadian, was scrubbed as CIRM Chairman Robert Klein's favorite candidate to succeed him in the position. Official opinions of the attorney general are widely regarded to have the force of law. The way the attorney general's Web site puts it is,

“The formal legal opinions of the Attorney General have been accorded 'great respect' and 'great weight' by the courts."

Here is what Harrison had to say,

“We discovered the citizenship issue when Bernstein's name was mentioned as a candidate. Given the litigation CIRM has faced over the years, there was a need to be cautious and there was not sufficient time to obtain closure on this issue before the deadline for nominations. You should know that there is an AG opinion from 1978 declaring that the citizenship requirement is unconstitutional.”

As far as we can tell the first public mention of Bernstein's name as a candidate came on Nov. 29 on the California Stem Cell Report. However, his name was being bandied about privately well before that. Late on Dec. 2, Klein released a statement that Bernstein was no longer being considered because of “a technical legal requirement regarding citizenship.”

Klein's statement followed stories in the media (see here, here and here) involving closed-door meetings and concerns about conflicts of interest in connection with his attempts to engineer selection of his successor. The ostensible citizenship condition also led to a well-read story in the Toronto Globe and Mail in which scientists in Canada deplored the requirement.

Harrison's response today about the matter came four days after we asked CIRM's official spokesman to provide the exact legal language concerning what Klein said was a citizenship problem.

We still have questions about whether the citizenship question applies to CIRM President Alan Trounson, an Australian, as well as the actual date when CIRM officials became aware there might be an issue with Bernstein.

Our assessment of the situation? Klein's statement was specious, at best. At worst, it might be called something else. It appears to be a dubious effort to paper over what is serious leadership issue involving Klein and raises significant questions about his credibility.

The Canadian Citizenship Question: Day Three

What exactly in California law bars non-citizens from becoming the chair of the $3 billion stem cell agency? Especially since its president is an Australian.

We asked Don Gibbons, CIRM's chief communications officer, about the issue last Friday morning. So far we have not heard back from him despite two additional queries. This morning we tried James Harrison, outside counsel to the board.

Our question to him was more specific and related to a provision that we found in state law (government code section 1020) that says,

“A person is incapable of holding a civil office if at the time of his election or appointment he is not 18 years of age and a citizen of the state.”

So we asked Harrison about that in addition to an opinion by the state attorney general's office concerning application of the section in the case of an appointment of a person to fill an unexpired district attorney's term. That instance involved an elective office. So far we have not found an opinion concerning application of the code to a non-elective position, such as president of the stem cell agency.

Of course, the key is how “civil office” is defined. The government code contained no definition. We searched other sections of California law as well but turned up no definition. However, opinions by the attorney general that related to “civil office” that we uncovered dealt with popularly elected officials.

Another little twist is whether the chair is “elected.” The directors vote on the position, but he is not elected by a vote of citizens.

So what does this all mean? When did CIRM Chairman Robert Klein and Harrison know there was a difficulty? Why was it not disclosed until after the ruckus erupted about Klein's attempt to install a Canadian as his successor?

Perhaps all will be revealed on Day Four of the “Canadian Citizenship Question.”

Read This Item to See What CIRM Has Expunged From Its Web Site

With one day left before Wednesday's meeting of the directors of the California stem cell agency, the public can find much to mull over by reviewing the agenda for the session.

But no one will find anything on three matters that have been expunged from CIRM's Web site. They deal with the less than artful attempt by CIRM Chairman Robert Klein to engineer the selection of his successor.

The items were removed after Alan Bernstein was scrubbed as a candidate following reports of conflicts of interest, inappropriate closed-door meetings and a late-coming disclosure that his Canadian citizenship reportedly disqualified him.

Here are the items that were stripped from CIRM's official agendas for both last Wednesday's meeting of the Governance Subcommittee and the full board session this Wednesday.

“Consideration of budget allocations and structural priorities.

“Consideration of future assignments to and volunteer support by Chair Emeritus.

“Consideration of authorization to compensate Patient Advocate Vice-Chairs of Grants Working Group in excess of cap if service as GWG Vice-Chair and Vice-Chair of any other Working Group requires commitment of more than 26 days per year.”

On the Governnance Subcommittee agenda today you will find only one word – “CANCELED” – in the place of these proposals. No mention is also made on the agenda for Wednesday's full board meeting that the document has been significantly altered and matters removed with no explanation.

Last week, we reported that CIRM had left the public and industry in the dark when it failed to provide any additional information beyond the cryptic listings of the three items, which appeared to involve fairly significant matters.

The board's outside counsel, James Harrison of Remcho Johansen and Purcell of San Leandro, Ca., Harrison, responded at the time, defending its information practices and also indirectly shedding some light on Klein's scheme to select his own successor. Harrison said in an email on Wednesday,

“In the case of the Governance Subcommittee, there are no written materials for two of the items because they are placeholders which will not be addressed at the meeting (because Bagley-Keene requires CIRM to post the agenda ten days in advance of a meeting, we sometimes include items before we know whether consideration of the items will be required in order to preserve the opportunity to consider them).  As to the one item which will be considered (the role of the former chair), the discussion is intended to be conceptual.  If the Subcommittee decides to move forward on this item, written materials will be prepared and distributed well in advance of the Board meeting at which it is considered.”

Our response? From the very first, CIRM should have said on the agenda that the items were placeholders involving selection of a new chairman or involved a conceptual discussion and why. To do otherwise is to withhold from the public important information that the State Constitution says it has a right to see. The upshot is that interested parties are left to ferret out or speculate on reasons behind the proposals, which, quite frankly, is not in CIRM's best interests.

CIRM also compounded the error by expunging the items entirely. It is not the first time that material on CIRM's Web site has been altered without providing any indication to readers that it has been changed. The information that CIRM presents on its Web site constitutes an official government document. When changes are made, there should be a trail that shows the changes. In this case, the items should have been left on both both agendas with a note that the meeting was cancelled or the matters would not be taken up. In essence, stakeholders and interested parties now have to save all versions of CIRM Web documents in order to detect whether changes are being made, significant or otherwise.

As for the items currently listed by CIRM to be considered by its directors on Wednesday, they include the report of the external review panel(see here and here), changes in IP policy, current budget figures and changes in its biotech loan programs.

The Irvine meeting will be audiocast on the Internet. Directions for tuning in can be found on the agenda.

Canadians No, Australians Yes?

You could call it “The Canadian Citizenship Question.”

Robert Klein, the chairman of the $3 billion California stem cell agency, brought up the subject last week when he used it to explain why his hand-picked successor, a man from Canada, could not be voted on by CIRM directors. Canadians cannot chair the agency, Klein said last Thursday, because of “a technical legal requirement regarding citizenship.”

However, non-citizens can serve as president of the agency – the case in point being Alan Trounson, an Australian.

We wanted to know more about this situation. So we asked Don Gibbons, CIRM's communications chief, early Friday about the exact wording of the law. We renewed our query late that afternoon and again this morning. So far the agency has not responded.

During the weekend, however, we dug into the State Constitution and the law dealing with state personnel. Our quick look turned up nothing that would bar a Canadian from the chairmanship, but we could have easily missed something.

We will bring you exactly what CIRM has to say about all this when we receive a response.

Is Klein a Shoo-In for Chair of California Stem Cell? Maybe, Maybe Not

Is the re-election of Robert Klein as chairman of the California stem cell agency a foregone conclusion? A significant number of our readers think so.

The only other candidate to be nominated for that post is Art Torres, now co-vice chair of the $3 billion enterprise. Nature magazine has reported that he probably is not going to push his candidacy.

However, if the CIRM governing board re-elects Klein, it will be indicating to the public and the international stem cell community that it tolerates, if not approves of Klein's maladroit attempts to engineer the selection of his successor. As was pointed out in a Toronto newspaper on Saturday, Klein's machinations compromised the reputation of California's stem cell effort.

The belief that Klein is bound to be re-elected seems to be based on several assumptions. One is that if Torres is elected, CIRM President Alan Trounson will resign. Nature magazine reported last week that Torres and Trounson “cannot stand each other.”

That would leave the agency with a new chair and with no president and no vice president of research and development, a new position that replaces the post of chief scientific officer. Trounson has not filled the VP slot despite a hiring effort that began nearly 18 months ago. That leadership situation may seem daunting to some board members.

However, the CIRM board may choose other avenues. One possibility would see the board deferring all action until the dust settles. That would mean Klein would continue in his post, unless he walks directly out the door, which he may do if he is not re-elected on his own terms. If Klein does that, as co-vice chairs, Torres and Duane Roth, could split the job's responsibilities until the board decides to vote.

In another scenario, the board could name an acting chair and schedule a later election for chair. If the directors are concerned that naming an acting chair might violate the technical terms of Prop. 71, they could officially designate the position as “interim presiding officer” or something similar. The board already created a “non-statutory” vice chair in giving the posts to Torres and Roth. To avoid giving the appearance of favoritism to Torres, the board could look to somebody like Gerald Levey, a former member of the board and former dean of the UCLA medical school, for the interim job. Other possibilities include board members Ed Penhoet, co-founder of Chiron, and Sherry Lansing, former Hollywood studio chief, both currently members of the board and well-regarded.

Given a little more time, the board could put together a group of board members to deal with selection of a new chair, which could make fresh recommendations for nominations to the four statewide officials entitled to make them. The CIRM board could even ask the public, researchers and industry via its Internet site to make suggestions for candidates, as did state Controller John Chiang, one of the nominating officials.

One matter for the board to consider is Klein's lame duck status -- even if he were re-elected for a 12-month term as he has suggested. He will increasingly lose effectiveness. Outside of CIRM, researchers and the biotech industry will be looking ahead to his replacement – something that is likely occur as well within the agency.

Klein, a real estate investment banker, says it is necessary to find a nationally respected scientist to replace him and has promised to do so. However, the board has made no public statement that it wants a scientist as chairman. Plus Klein's past searches for a president for CIRM have been rocky and prolonged. It took a year to bring Trounson on board, including a delay of three months after his hiring was approved. No reason exists to expect anything different should Klein embark on his own search for his successor.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., and longtime observer of CIRM, said the board should simply vote in Torres.

He made the suggestion when queried by the California Stem Cell Report. Simpson declared,

"Nobody disputes Bob Klein's substantial contributions to CIRM. The agency would not even exist if it were not for him. Nonetheless, there is a time for every leader to move on.

"That time is past due for Klein, a point that was hammered home by his sleazy and inappropriate backroom tactics to manipulate the selection of his successor."

"Suggestions to elect an interim chairman are intriguing, but unnecessary. Art Torres has been nominated for the post and has all the qualifications necessary to lead CIRM to the next level."

In whatever case, Prop. 71 makes it clear that the choice of chairman is a matter for the entire 29-member board. Klein is only one member of that board.

Klein's Maneuvers, CIRM's Reputation and Bernstein's

A Canadian scientist yesterday pretty much identified a bottom line on the attempt by CIRM Chairman Robert Klein to hand pick his successor at the $3 billion public research agency.

In an interview with the Toronto Globe and Mail, Alan Bernstein said the publicity about the machinations “compromises his international reputation and the reputation of the [California] agency.”

Bernstein knows because he was the man Klein tried to name as his successor. Bernstein, head of HIV Global Vaccine Enterprise of New York, referred to publicity in news articles here and elsewhere that reported a ruckus about closed-door meetings and possible conflicts of interest involving Klein's maneuvers.

Reporter Carolyn Abraham began her article by declaring the tale was a “strange story.” She added,

“In the small and highly specialized world of stem cell research, it is even stranger still.”

It was interesting enough to draw 278 comments from readers. (On Monday morning, the Globe listed the article as the most widely read science story on its site.)

The conflict allegations were first reported in the Los Angeles Times and referred to Bernstein's role as chairman of a blue-ribbon panel that reviewed CIRM's operations and found them “extraordinary.” The panel's report is scheduled to be discussed at Wednesday's CIRM board meeting.

In his first comments about the conflict matter, Bernstein told Abraham,

“There was no conflict of interest, the review was done before I was approached about this job.”

Abraham continued,

“He (Bernstein) said Mr. Klein contacted him only recently to ask if he would be interested.
“'I didn’t go after this job, I’m very happy where I am,' he said, 'pumped about the research in HIV prevention. …But what do they say – you can’t say no to The Terminator?'”

Terminator is a reference to California Gov. Arnold Schwarzenneger, one of four state officials who can nominate a person for CIRM chair. The full CIRM board elects a chair from those who are nominated, although the board could reject them all.

Abraham wrote,

“In an interview Friday, Dr. Bernstein said he had received a personal letter from Gov. Schwarzenegger last week saying he was pleased to nominate him for the top job. But this week, he said, the governor wrote again with regrets that he would have to withdraw his nomination because of his citizenship.”

The governor's nomination of Bernstein was never released by the governor's office or CIRM. However, the lieutenant governor did, in fact, nominate Bernstein in a letter dated Nov. 30, but withdrew it later.

Late Thursday following the media flap, Klein for the first time said that Bernstein could not serve because of his Canadian citizenship. In a news release, Klein said “a technical legal requirement” barred Bernstein as a nominee. (We should note that an Australian, Alan Trounson, is president of the stem cell agency.)

Early Friday morning, we asked Don Gibbons, communications chief for CIRM, to point us to the law that Klein mentioned. We asked again late Friday afternoon. Gibbons has not replied.

The Canadian issue rankled some top scientists in Canada. Abraham wrote,

“'CIRM should be picking the best candidate for the job, not basing it on citizenship,' said Mick Bhatia, scientific director of McMaster University’s Stem Cell and Cancer Research Institute. The number of stem cell researchers is relatively small, he said, and the number with international managerial experience even smaller. 

“'Then to have to fractionate that by the number of U.S. citizens – you’ve got to be down to a few zip codes,' said Dr. Bhatia, who turned down an offer to join the California institute a few years ago. 'For an initiative that has been so global in their outreach … actively recruiting scientists internationally … I’m sure this rule is hurting CIRM.' 

“David Colman, the American who has headed the famed Montreal Neurological Institute at McGill University for the past eight years, called the California law 'archaic and anachronistic.' 

“'In this day and age, it’s ridiculous,' he said. 'Today, you want to have international searches for everything. Alan is a smart, good scientist and a tested leader. He would have been great.'”

CIRM Director Prieto Comments on Transparency

A Web site devoted to “Californians' rights to find out what's going on” last week quoted a big chunk of a piece from the California Stem Cell Report.

The item on CalAware Today by Anne Lowe was headlined, “Transparency Lacking in State's Stem Cell Agency.” It cited the our item “Public and Industry Left in the Dark by California Stem Cell Agency.”

We also received a comment on the situation via email from Francisco Prieto, a CIRM board member and Sacramento physician.

Prieto said,

“I don't think the failure to produce documentation and information well in advance of meetings is in any way malicious or deceptive, but rather reflects the fact that we put what may be excessive demands on some of our limited staff at CIRM. This has been a concern of many board members as well - that we receive supporting materials with too little time to review them in depth before a meeting. Both our internal and external communications could be improved, but it isn't due to unwillingness to communicate or ill will. I'm hoping the liberalization of our staff limits under the Alquist bill will help, but we know that our communication with the public is an area we have to take a serious look at.”

Klein's Re-nomination Almost Unnoted in Major Media

The hooha about CIRM Chairman Robert Klein and his maladroit attempts to manipulate the election of his successor generated little attention today in the mainstream media, but left an Internet legacy that may haunt the agency for some time.

Only three newspapers carried a story as far as we can tell: the San Francisco Business Times, the Los Angeles Times and The Sacramento Bee. The most complete story, however, appeared on Nature magazine's web site, which has a much narrower but important reach

In the Nature piece, Elie Dolgin wrote that Klein said he would not insist on the full $529,000 salary the chair is entitled to, but continue with the $150,000 he is currently receiving for the 12 months that he said he will serve.

Klein, who is a real estate investment banker, also indicated that he will insist on a top level scientist or clinician-scientist as a replacement to succeed him. Klein did not note that such a scientist would also by law be required to have “direct knowledge and experience in bond financing,” probably an extremely rare quality among scientists with national reputations.

Klein has had repeated difficulties in the past in hiring a president for the agency. CIRM also has not been able to hire a vice president for research and development despite a search that began nearly 18 months ago.

Any candidates for chair may find the agency's track record on hiring and management less than attractive, especially given Klein's latest unsuccessful attempt to engineer selection of a successor. Some cynics might wonder, however, whether Klein knew all along that Bernstein's Canadian citizenship would ultimately disqualify him and force the board into a position that would make Klein's re-nomination an apparent necessity. Few people know the law concerning the stem cell agency as well as Klein, who has more than once said he wrote Prop. 71, the measure that created CIRM.

Dolgin also reported that Art Torres, who has also been nominated for CIRM Chair, “probably” will not challenge Klein but is interested in staying on in his current co-vice chair slot.

Today's four stories are only part of what will pop up in the future as potential hires and journalists examine CIRM's performance. The coverage earlier in the week of the closed-door meetings and allegations of conflicts of interests will surface as well. CIRM would do well to keep in mind the admonition -- "If it can't stand the light of day, don't do it."

Questions Raised About Klein Campaign to Pick His Own Successor

The closed-door machinations involving the election of a new chair of the California stem cell agency raise important policy questions about the conduct of the agency, its openness and whether the structure of the board and chairman is in the best public interest.

Last year, the Little Hoover Commission, the state's good government agency, documented many of those problems in its 88-page report on the $3 billion enterprise. Among other things, the commission recommended much earlier action to smooth out the election process and to create a seamless leadership transition.

Additional insight into some of the issues can be found in an exchange of emails today involving CIRM board members.

The following messages went to all members of the CIRM board as a result of an item yesterday on the California Stem Cell Report, in which we asked whether Klein's Portola Valley meeting Sunday was legal under the state's open meetings law.

The first message is from James Harrison, outside counsel to the board. The second is from Jeff Sheehy, a member of the board, who responded to Harrison's memo. Sheehy raises points that go beyond the legality of the meeting, addressing the integrity of the entire election process for chairman of the $3 billion agency. Here is Harrison's email.

"Dear Board Members,

"Bob asked me to provide you with information regarding a dinner he arranged for last Sunday evening in response to a blog post by David Jensen.

"Bob wanted to create a forum for potential nominees for Chair and Vice-Chair [Art Torres, Jeff Sheehy and Alan Bernstein] to meet and exchange views prior to the Board meeting. Because of the Bagley-Keene limitations, however, he limited the dinner to a small number of board members, including himself, Ted Love, who served as interim CSO, and Robert Birgeneau, who was a colleague of Dr. Bernstein at the University of Toronto. Melissa King and I also attended.

"The participants engaged in an open and constructive discussion, and the meeting was in compliance with Bagley-Keene.

"If you have any questions, please contact me.

"James"

Here is Sheehy's response:

"Hi James,

"From what I can gather, this was just one of several informal meetings or phone calls involving several board members through which the determination of the next chair was meant to occur.  There were further conversations with the constitutional officers who have the duty to nominate individuals for chair and vice-chair with the intent to have them agree to collectively nominate a single individual for chair.

"What process was used to screen potential candidates for chair?  Were Californians, women, and/or people of color considered?  Under what board process, committee or sub-committee was this activity undertaken?  What board members were involved and what were their roles?  Why were other board members excluded?  Why did this not take place in public under established board practices including recently adopted procedures for selecting the next chair and vice-chair?

"Why was the chair’s role and salary reconfigured for Bernstein in direct contradiction of adopted board resolutions stating that the chair is not the chief executive of the agency, the chair is a part-time position, and the salary is $150,000?   Items were placed and then removed from yesterday’s aborted Governance sub-committee meeting that would have restructured the adopted budget for the agency to accommodate the larger salary for Bernstein?  How was this decided?

"I look forward to your response.
"Thank you,
"Jeff Sheehy"

Klein Removes Ambiguity and Says He Will Seek 12-month Term

CIRM Chairman Robert Klein tonight issued an unequivocal statement that he would seek re-election to his post, declaring that he was needed to provide “continuity” to the $3 billion enterprise for the next 12 months.

Klein said he accepted the nomination and would “work with the (CIRM) board and the constitutional officers to identify candidates...to succeed me” within the next year.

Klein's statement also mentioned the withdrawal of Alan Bernstein, who Klein had touted in closed-door meetings as his preferred successor. Klein's statement said,

“Dr. Bernstein would have been an outstanding nominee for Chair of CIRM’s governing board, but due to a technical legal requirement regarding citizenship, he is not eligible to serve as a nominee.”

CIRM Election Wrap-up

Reporter Ron Leuty of the San Francisco Business Times has wrapped up the CIRM election events of the day in a piece that can be found here.

Klein's Careful Statement on Re-nomination

In a statement made in connection with his re-nomination as chairman of the California stem cell agency, Robert Klein said today he wanted “to continue to build” on the state's stem cell research record.

But did he say he would accept re-nomination?

CIRM's chief communications officer, Don Gibbons, pointed us to the statement when we asked whether Klein planned to accept re-nomination.

The press release from the governor's office said,

“I am honored to be nominated chair of CIRM’s governing board by Governor Schwarzenegger,” said Klein.  “California was the first state to support and fund stem cell research, and I want to continue to build on California’s global leadership including growing our national and international partnerships and forging new ones that will help carry on this important research.”

By our reading, the quotation from Klein does not say that he accepts the nomination or that he is looking forward to running the agency – only continuing to build in the area of stem cell research. That could mean a variety of things, including bird-dogging CIRM's proposed new multibillion bond issue on a volunteer basis. We may be parsing the statement too closely, but Klein, who is a lawyer, can be exquisitely careful with words.

Klein has been adamant as recently as October about not planning to head the agency for another term. Plus, he may not have votes on the board to win re-election following the Bernstein/Portola Valley plan ruckus.

Klein Re-Nominated for Chair of California Stem Cell Agency

Republican California Gov. Arnold Schwarzenegger today nominated Robert Klein for a second term as chairman of the California stem cell agency after Klein's attempt to hand pick his successor collapsed amid questions about the integrity of the process.

Reporter Ron Leuty of the San Francisco Business Times was the first to report Klein's re-nomination.

Also nominating Klein for another term was Republican Lt. Gov. Abel Maldonado, who acted after his first nomination, Alan Bernstein, withdrew. Bernstein was Klein's choice as successor. However, Klein's campaign on behalf of Bernstein failed following disclosure in the media of closed-door meetings and allegations of conflicts of interest.

Also nominated for the chairmanship is Art Torres, currently co-vice chair of the board. State Controller John Chiang proposed the election of Torres.

State Treasure Bill Lockyer today announced he would not make any nomination for chair of the $3 billion agency. But he re-nominated Torres for vice chair. Jeff Sheehy, a member of the board, has been nominated also for vice chair by Chiang.

Klein has been steadfast when questioned about his desire to give up the job at the end of his term this month. One might also question whether, after the ruckus about the Bernstein candidacy, there are sufficient votes on the board to re-elect him. We have queried CIRM about whether Klein will accept the re-nomination.

Bernstein Drops Out of Race for CIRM Chair

Efforts by CIRM Chairman Robert Klein to engineer the election of Alan Bernstein as his successor at the $3 billion California stem cell agency collapsed today when Bernstein withdrew from the race, the California Stem Cell Report has been told.

The move followed yesterday's disclosure (see here and here) of a closed-door meeting Sunday at a Portola Valley restaurant attended by only five of the 29 directors of the California Institute for Regenerative Medicine. Klein presented a plan at the meeting that would have made Bernstein an “executive chairman” of CIRM. Klein was also reportedly lobbying major state officials such as the governor to win backing for Bernstein. One of the board members attending the session, Jeff Sheehy, complained publicly about the meeting, describing it as a “horrible" way to pick a new chair.

Queried via email, Bernstein, head of HIV Global Vaccine Enterprise of New York, said,

"I am very busy at an HIV vaccine meeting and unable to offer a comment at this time."

Bernstein recently chaired the blue-ribbon panel that  recently conducted a sweeping review of CIRM's operations.

CIRM directors must pick their chair from candidates nominated by four of California's constitutional officers: the governor, lieutenant governor, treasurer and controller. Bernstein was nominated Tuesday by the lieutenant governor. Art Torres, co-vice chair of the CIRM governing board, was nominated yesterday by the controller. The state treasurer yesterday said he would not make a nomination because of the ruckus over Bernstein. The governor is yet to be heard from.

We will have more on this shortly.

Stem Cell Chairmanship Flap Draws Major Media Coverage

The ruckus over selection of a new chairman for the California stem cell agency this morning drew the rare attention of the Los Angeles Times, the state's largest circulation newspaper.

And it wasn't the kind of attention that CIRM is looking for.

Reporter Jack Dolan mentioned a “possible conflict of interest” involving Alan Bernstein, a candidate backed by outgoing chairman Robert Klein, and said Bernstein could become “one of the highest paid employees in state government.” The position of CIRM chairman carries a salary with a top range of $529,000.

Dolan reported that state Treasurer Bill Lockyer, a longtime colleague and friend of another candidate for chair, Art Torres, has decided not to nominate anyone because of misgivings about Bernstein.

Dolan quoted Tom Dresslar, Lockyer's spokesman, as saying,

"He just doesn't have enough information to alleviate his concern about Mr. Bernstein's role in crafting the (recent external review) report.”

Dolan's article raised the conflict question in connection with completion of the report, which Dolan described as “glowing.” Bernstein chaired the panel, which included seven other persons. Presumably the conflict would arise if some sort of quid pro quo existed for generating a favorable report.

Dolan quoted Klein, a strong supporter of Bernstein, as saying,

"It would be quite a compliment to the agency if someone who has done such a thorough review of the agency, and has talked to everyone involved, would accept the nomination to be chair."

Dolan did not include in his story Klein's Portola Valley plan to install Bernstein as an executive chair.

The board is expected to take up the chairmanship election later this month, although it doesn't have to vote on any of the candidates. It has a variety of options: One would be to pass on all the candidates, choose an interim chairman, let the dust settle and make a final choice in a month or two.

The Los Angeles Times has rarely reported about activities of the California stem cell agency over the last six years. Dolan recently wrote an overview assessment of the agency that has attracted national attention. His article has ricocheted around the Internet as fodder for critics of hESC research and persons concerned about what they perceive to be unnecessary government spending.

Closed-Door Portola Valley Plan to Install Bernstein as New Chair of CIRM

Engineered by outgoing Chairman Robert Klein, a closed-door plan is reportedly afoot to restructure the management of the $3 billion California stem cell agency to have it run directly by a new executive chairman, Alan Bernstein, now head of HIV Global Vaccine Enterprise of New York.

It is unclear how the current agency president, Alan Trounson, would fit into the proposed new arrangement. But one CIRM board member, Jeff Sheehy, said,

“The president obviously loses out.”

The plan was first reported today by Ron Leuty of the San Francisco Business Times. Leuty described the effort as “backroom politics.” He also characterized Bernstein as “unqualified” in an apparent reference to the legal requirement that the CIRM chairman be a “patient advocate.”

Leuty quoted Sheehy, a candidate for vice chair of the agency, as describing the dealings as a “horrible process” that was far from open.

Based on what Leuty wrote and what Sheehy and others told the California Stem Cell Report here is what has occurred.

On Sunday, a dinner meeting was held at a Portola Valley restaurant attended by Klein, Sheehy and CIRM board members Ted Love and Robert Birgeneau, the chancellor of UC Berkeley and who has rarely attended a CIRM board meeting. Birgeneau, however, is a former colleague and friend of Bernstein. Also in attendance were Art Torres, co-vice chairman of the board, and Bernstein, both of whom have been nominated for chairman, along with the board's outside counsel, James Harrison of Remcho, Johansen & Purcell
of San Leandro.

Sheehy said that a scenario was proposed at the meeting that would make Bernstein an “executive chairman” and effectively CEO of CIRM. To qualify Bernstein legally as a patient advocate, Klein would appoint Bernstein to the board of Klein's private stem cell lobbying group, Americans for Cures, which shares quarters in the building that houses the offices of Klein's Palo Alto real estate investment banking firm.

Sheehy told the California Stem Cell Report,

“Given that (CIRM board)members can't even put an item on the agenda without the chair's consent, and we can't remove the chair (no provisions for removal in Prop. 71), and that many members are from institutions that receive funds from CIRM, and that the legislature and constitutional officers have very little control over CIRM, Bernstein will become California's stem cell czar, effectively controlling $2 billion in state funds.”

Sheehy said the proposal also jeopardizes the integrity of the patient advocate positions on the 29-member board. He said,

“By making the patient advocate qualification--which is taken from the language for qualifications that all 10 ICOC patient advocates are appointed under--infinitely malleable, this move makes all patient advocates vulnerable to replacement by a scientist.”

We asked Harrison about the legality of the Sunday meeting, given the state's open meeting laws. He replied, “Because the meeting involved far fewer than a majority of the board, it was not subject to” the state's meeting laws.

We then asked Harrison about the possibility the session could turn into an illegal serial meeting if the participants talked with other board members. Harrison replied,

"We've advised the board members to refrain from discussing the nominations with other board members."

Information about the meeting has been communicated to at least one other board member, who warned us that we did not have all the information about the Portola Valley deal. But the person was unwilling to share anything further.

An agency spokesman told the San Francisco Business Times that he would have no comment.

Bernstein was nominated for chairman by Republican Lt. Gov. Abel Maldonado in a letter dated Nov. 30. We were told this afternoon that CIRM asked that the letter, which is a public record, be withheld until tomorrow. State Treasurer Bill Lockyer, a Democrat, is expected to announce his nominations tomorrow along with Gov. Arnold Schwarzenegger.

The board is expected to take up the nominations Dec. 15 at Stanford.

Here is Maldonado's nominating letter.
Lt. Gov.'s CIRM Chair Nomination Letter

CIRM Defends Its Information Practices

Earlier today, we told the California stem cell agency we would be glad to carry verbatim a response to our item – Public and Industry Left in Dark by California Stem Cell Agency. The agency and its directors have a standing invitation from the California Stem Cell Report to comment on this Web site and have their entire remarks carried without editing.

Here is what was filed by James Harrison, outside counsel to the CIRM board.

“CIRM takes its obligation to fully inform the public very seriously.  In fact, in most cases, there are multiple opportunities for the public to participate in the development of CIRM's policies.  Through the use of subcommittees, draft policies are normally made public well in advance of the full Board's consideration of those policies, and the public has an opportunity to comment on the policies at subcommittee meetings and at Board meetings before they are adopted. 
 
“When you criticize the agency for not posting materials ten days before a subcommittee meeting (which, as you know, is not required by law), you ignore the fact that the Board's subcommittees do not typically make final decisions; rather, they consider draft policies and make recommendations to the Board, which provides the public a second opportunity to comment.  The Finance Subcommittee Meeting is a good example.  The question of warrant coverage and a payback alternative have been raised at a prior public meeting and the Finance Subcommittee will not make any final decisions this week; rather, its recommendations will go to the full Board for consideration, providing another opportunity for public input. 
 
“In the case of the Governance Subcommittee, there are no written materials for two of the items because they are placeholders which will not be addressed at the meeting (because Bagley-Keene requires CIRM to post the agenda ten days in advance of a meeting, we sometimes include items before we know whether consideration of the items will be required in order to preserve the opportunity to consider them).  As to the one item which will be considered (the role of the former chair), the discussion is intended to be conceptual.  If the Subcommittee decides to move forward on this item, written materials will be prepared and distributed well in advance of the Board meeting at which it is considered.”

Torres, Sheehy Nominated for CIRM Chair and Vice Chair Respectively

State Controller John Chiang today nominated Art Torres, currently co-vice chair of the California stem cell agency, to a six-year term as the chairman of the $3 billion research effort. Chiang also nominated CIRM board member Jeff Sheehy for the vice chair position.

Torres, a former state legislator and head of the state Democratic party,  would replace Robert Klein, a real estate investment banker who is leaving this month at the end of his six-year term. In his nomination letter, Chiang said Torres has a unique skill set that has bridged "the gulf between the academic world, private sector and government."

Sheehy, a communications manager at UC San Francisco, has served on the 29-member board since its inception. He sits on the key grant review group, acting as the board's chief representative on that panel, which makes the de facto decisions on grant applications.

Chiang, a Democrat, said Sheehy has "distinguished himself with his leadership on increasing public accountability and transparency of CIRM's operations, both critical to retaining the public's faith in CIRM."

Chiang is also head of the Citizens Financial Accountability and Oversight Committee, a sister group to CIRM that was also created by Prop. 71. Chiang and that committee have been critical of CIRM's lack of transparency.

The CIRM board is expected to take up the election of a chairman at a meeting later this month. They hope to have nominations also from Republican Gov. Schwarzenegger, Republican Lt. Gov. Abel Maldonado and Demoratic State Treasurer Bill Lockyer. See below for Chiang's letter.

Controller's Nomination Letter for CIRM Chair

Trounson and Torres and the Battle for Chair of the California Stem Cell Agency

The president of the California stem cell agency, Alan Trounson, may resign if the new chairman of the $3 billion research effort is not a person who has worked with the biomedical industry, Nature magazine reported today.

Trounson's position was disclosed publicly for the first time by writer Elie Dolgin in a profile of outgoing CIRM Chairman Robert Klein in the Dec. 2 edition of the internationally respected journal.

Trounson's preference could have an impact on the election of the chairman, which the CIRM board is expected to take up later this month. Art Torres, a former state legislator with little connection to industry, is one of the leading candidates, along with Alan Bernstein, head of HIV Global Vaccine Enterprise of New York, who is being backed heavily by Klein. The Trounson disclosure could also shape how the CIRM board receives the report Dec. 8 of the blue-ribbon panel that was chaired by Bernstein.

Dolgin wrote,

“Klein’s departure might also trigger the president to leave, thereby causing a complete overhaul of CIRM’s leadership. Trounson says he told Schwarzenegger that he would like that next chairperson to be 'somebody who’s in the delivery end of the spectrum — that is, somebody who has worked with the biotech or pharmaceutical industry.'
.
“But as this issue was going to press, the leading internal candidate to replace Klein, many say, is vice-chair Art Torres, a former state senator and chairman of the California Democratic Party. Torres and Trounson reportedly cannot stand each other. Trounson notes that Torres is 'a politician, so he’s in that end of the spectrum.' Torres, for his part, declined to comment on his relationship with the president.”

Trounson's foray into board politics came in a multi-dimensional look at Klein and his role in Prop. 71 and as chairman of the agency. The piece included both praise for Klein along with some of his warts.

Here are some excerpts:

“He (Klein) leaves behind an agency with a long list of accomplishments, including more than US$1.15 billion in grants, six new facilities dotted across the state and close to 700 scientific papers.

“Yet many critics say that Klein and CIRM have failed to fully deliver. Despite promises that money borrowed from the state — at least $6 billion over ten years, when interest is factored in — would be returned through commercial spin-offs and savings to health care, the first marketable therapies have yet to materialize. Only two CIRM-funded projects have made it to early-stage clinical trials, and neither of these involves embryonic stem cells — the main impetus for launching the agency in the first place. The embryonic stem-cell clinical trials that have recently been approved in the United States are the product of privately funded research.

“Klein’s critics say his promotion of stem cells’ therapeutic promise was zealous and oversimplified. He 'left voters with the impression that people will be jumping out of their wheelchairs and not being diabetic within a year,' says John Simpson, a long-time observer and critic of the agency’s governance, who is at the consumer-advocacy group Consumer Watchdog based in Santa Monica, California. 'There’s been this constant compulsion for [Klein] to say, ‘See, we’re delivering, we’re delivering’, and that’s something that’s haunted him throughout the whole thing.'

“Throughout CIRM’s existence, Klein has pulled the strings, maintaining control over nearly every aspect of its structure and science, often to the chagrin of its other leaders. Still, many observers say that no one else could have weathered CIRM’s early storms. 'With Bob, there’s always this indefatigableness,' says Douglas Wick, a movie producer and diabetes advocate who worked with Klein to get CIRM funded. 'His personal energy and charisma are so strong, and he has this ability to get punched, stand up and go at it again.'”

Dolgin continued,

“But not all the early organizers of Proposition 71 remain enthusiastic about the way Klein led the charge. 'It became Bob’s show almost entirely, and there was some friction about that,' recalls Peter Van Etten, former JDRF president and chief executive. (Home developer Tom) Coleman (an early key organizer for Prop. 71) has not spoken to Klein since the initiative passed, following disagreements over what Coleman viewed as Klein’s self-promotional approach. (Movie director Jerry) Zucker (another influential early organizer of the Prop. 71 campaign) remains on better terms with Klein, but still feels some lingering resentment.

“'If I had to do it over again I’d make the same call to Bob Klein because I don’t think the rest of us would have got it done without him,' Zucker says. But, he adds, 'What I was most unhappy about was the realization after a while that [Klein] wrote the initiative for him to be the chairman. That was something I was too naive to realize. It’s shameless almost.'”

Dolgin also spoke with Joel Adelson, a health policy researcher at UC San Francisco, who co-authored a study of the agency earlier this year. Dolgin wrote,

“'Klein has in effect acted like the chief operating officer beside Trounson and beside (former CIRM President Zach) Hall, and I can only say that this looks like it must have been very uncomfortable for these guys,' Adelson says. 'It’s an unusual situation,' says Trounson. 'And if you ask me what I prefer,I prefer the simple situation where the president is in charge of all management and reporting to a board on policies. But it’s bifurcated, and it was set up that way, so you don’t have a choice.” (Hall declined to comment for this story.)”

Dolgin also quoted a CIRM board member on Klein.

“'He’s an historic figure with real genius in terms of moving biomedicine forward,' says Jeff Sheehy, a CIRM board member and director for communications at the University of California, San Francisco’s AIDS Research Institute. 'He’s as good as they get if not better.'”

Dolgin also noted that some criticism of Klein focused on CIRM's emphasis on clinical applications. However, a significant number of folks in the biotech industry believe the agency is overbalanced towards basic research.

Public and Industry Left in Dark by California Stem Cell Agency

Does the California stem cell agency, which is costing taxpayers $6 billion, have an obligation to inform the public in a timely fashion about matters that come before its governing board and affect how the agency spends its money?

That's the question we posed to CIRM yesterday. It is a question that is not new. It was raised because CIRM's record of openness and transparency is mediocre at best when it comes to its finances and other important issues facing its board of directors.

This afternoon's meeting of the directors' Governance Subcommittee is a good example. It is scheduled to meet at 3:30 p.m. PST to consider matters that appear to be of considerable substance. However, not one word of explanation has yet been offered to the public: No justification, no discussion of the pros and cons, no delineation of the costs, no explanation how it might affect the nature of its grants. The public is left in the dark, unable to make an intelligent comment or suggest changes.

All that CIRM offers are cryptic phrases on the Governance agenda that raise more questions than answers. Here is the exact language:

“Consideration of budget allocations and structural priorities.
“Consideration of future assignments to and volunteer support by Chair Emeritus.
“Consideration of authorization to compensate Patient Advocate Vice-Chairs of Grants Working Group in excess of cap if service as GWG Vice-Chair and Vice-Chair of any other Working Group requires commitment of more than 26 days per year.”

These items have implications that seem to involve how CIRM might spend its remaining $2 billion or some of portion of that amount. The “chair emeritus” item could involve continued work and compensation for outgoing Chairman Robert Klein, a Palo Alto real estate investment banker, possibly involving CIRM's proposed, new multibillion dollar bond measure. The third item is harder to decypher. It certainly involves additional payment to some members of the board of directors. It also may be linked in some fashion to the election or non-election of a patient advocate as vice chair of the board. But no member of the public, which is paying CIRM's freight, is allowed to know.

CIRM has two other directors meeting coming up soon with important matters on the agenda. One is the Finance Subcommittee this Friday. It will consider complex changes in what Chairman Klein has described as a $500 million biotech loan program. CIRM posted an explanation of the changes only yesterday, three days before the meeting, hardly enough time for biotech companies or the public to evaluate the proposal and make plans to testify. Ironically, CIRM says it is trying to engage industry more completely, but holding back on release of proposed changes in the loan program has the opposite effect. Still a mystery is a second item before the Finance panel. The matter involves CIRM's only source of cash, the bond market. Directors are scheduled to discuss “future implications for CIRM” of the market's behavior – definitely not a lightweight topic.

In just five business days, the entire CIRM board will meet in what is likely to be one of its more important meetings. The Dec. 8 session will discuss the recently completed report by the blue-ribbon external panel. That report was publicly available one week ago, a timely posting, which is much to CIRM's credit. But there is no link to that report on the board agenda, leaving the public to ferret it out. Three routine items on the agenda have background information. The other six significant items have no links to any explanations or justifications, leaving the public or interested parties at a loss.

Last week, the California Stem Cell Report carried an item headlined,
“CIRM Management Stumbling at Routine Tasks.” The item said that it is not clear why CIRM cannot or will not provide the background information in a timely fashion, which should be a routine task. The item said,

“The inability of an enterprise to perform routine tasks in a routine fashion is also one sign of serious, embedded management problems that are likely to extend well beyond the routine matters.”

We can add that if routine tasks are not handled routinely, it makes it much more difficult to deal with the truly urgent and extraordinary.

As for the question we posed to CIRM early yesterday morning --- does CIRM believe it has an obligation to fully inform the public about matters before its directors – the agency has yet to respond in any fashion.