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Controller Chiang Will Refer Conflict Issue To FPPC
San Francisco, CA -- Stem cell chairman Robert Klein and oversight committee member John C. Reed must resign from the oversight board because of a conflict of interest rule violation, the Foundation for Taxpayer and Consumer Rights (FTCR) told a stem cell financial committee chaired by State Controller John Chiang today.

Chiang said he would refer the issue to the state's Fair Political Practices Committee (FPPC) for a review by a third party. He expressed a desire to learn from the situation.

Burnham Institute President Reed violated state conflict of interest policies when he intervened and attempted to overturn a decision by the stem cell agency's scientific staff rejecting a $638,000 grant to Burnham. His improper action came on the advice of Stem Cell Committee Chairman Klein. Details of the improprieties emerged last week after a Public Records Act request.

To ensure the agency's commitment to the highest ethical standards, both men should resign, FTCR said. The non-partisan, non-profit consumer advocacy group has filed a complaint with the state's Fair Political Practices Committee.

"The stem cell oversight committee was designed with built-in conflicts. They supposedly have policies that are intended to mitigate those conflicts," said John M. Simpson FTCR's Stem Cell Project Director. "That means when their rules are violated it is an extremely serious matter. The only way to clear the air and restore confidence in the integrity of the awards process is for both men to leave."

Despite Reed's efforts, the stem call agency staff stood firm. They offered Burnham an opportunity to withdraw the grant, but when the institute declined to do so, it was rejected. The action was announced at the October oversight board meeting.

"I'm glad the agency's staff enforced the rules. Apparently they understand their responsibilities to the public as a state agency even if the chairman and some oversight board members do not," said Simpson.

Simpson also called on the committee chaired by Controller Chiang to urge the stem cell oversight committee to end the secrecy surrounding applications for $227 million in grants to build stem cell research facilities. So far, the agency will only say that 17 institutions have applied.

"As already demonstrated by Reed and Klein's actions, the only way the public can have faith in the process that will dole out millions of taxpayer dollars is for there to be complete transparency," said Simpson. "Apparently the stem cell agency is afraid that a university or research institution might be embarrassed if their application does poorly. What the overseers need to understand is that they are not running a private club. They are supposed to be stewards of public money. They need to act that way. When they don't, there must be consequences."

Reed was appointed to the 29-member Independent Citizens Oversight Committee of the California Institute for Regenerative Medicine by then State Controller Steve Westly. Simpson told Controlled Chiang that if Reed does not resign, he should remove him from the stem cell oversight board.

FTCR's Stem Cell Oversight and Accountability Project is working to ensure that California's landmark stem cell research program offers accessible and affordable cures and treatments to the taxpayers who have funded it. The program will award $3 billion in grants over a decade. Bond financing charges mean the project, the largest source of stem cell research funding in the world, will cost California taxpayers $6 billion.

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The Foundation for Taxpayer and Consumer Rights is California's leading non-profit and non-partisan consumer watchdog group. For more information visit us on the web at: www.ConsumerWatchdog.org.