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Controller calls for audit of state's stem cell agency

By Ari Burack

November 27, 2007

A financial audit of California's multi-billion dollar stem cell research agency ordered today by the State Controller has nothing to do with recent conflict-of-interest allegations on the part of agency board members, a spokeswoman with the controller's office said today.

"It's completely separate," said controller's office spokeswoman Hallye Jordan.

State Controller John Chiang made the announcement at a meeting this morning of the San Francisco-based California Institute of Regenerative Medicine's financial oversight committee.

After voters approved Proposition 71 in 2004, CIRM was tasked with providing $3 billion of public money for grants and loans for stem cell research at universities and research institutions in California.

According to Jordan, a recent court decision approving the constitutionality of Proposition 71 has allowed CIRM to begin disbursing a significant amount of grant and loan money, and the Controller feels a thorough audit by his office, in addition to the group's own yearly audit, is in order. Jordan added that the audit was not a signal of any financial impropriety.

"Considering the Institute has already made grants to 23 research agencies and the Treasurer has sold $250 million in bonds for additional research, it is imperative that the research financing move forward in an ethical and transparent manner," Chiang said in a statement released after the meeting.

"Immediate action is necessary to guarantee the Institute is effectively overseeing grants, and that grant recipients are using State funds appropriately an in a manner consistent with the stem cell initiative," Chiang added.

The audit will examine how grant money is allocated, and whether there is adequate oversight after grants are awarded.

Chiang also sent a letter today to the state's Fair Political Practices Commission, asking for an investigation into recent allegations that Dr. John Reed, a member of CIRM's 29-person governing board, tried last summer to reverse a decision by the agency rejecting a grant proposal from a scientist who works for him at the Burnham Institute of Medical Research in La Jolla.

"Whether they are perceived or real blemishes, we must resolve any conflict of interest questions quickly so we can protect the important and powerful work that is taking place in stem cell research," said Chiang.

John Simpson of the Santa Monica-based watchdog group the Foundation for Taxpayer and Consumer Rights said today that his group filed a formal complaint against Reed with the FPPC last week.

"He should resign," said Simpson, who manages the Foundation's Stem Cell Oversight and Accountability Project.

With an additional allegation that CIRM governing board chairman Robert Klein had given advice to Reed to contest the grant rejection, Simpson added, "It would clear the air if he (resigned) as well."

According to Simpson, who said he does not oppose CIRM but merely wants to help ensure the results of stem cell research end up "affordable and accessible" to consumers, the way Proposition 71 was written may inevitably create conflicts of interest.

"Most of the people on the board are the very representatives of the institutions that are going to be receiving the money," said Simpson.

"CIRM needs to understand that they're a state agency...public officials who are guardians of the public's money," Simpson said.


Copyright © 2007 by Bay City News, Inc. -- Republication, Rebroadcast or any other Reuse without the express written consent of Bay City News, Inc. is prohibited.




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