Archive for Tuesday, February 7, 2012

Auditors release 2nd report on KBA probe

February 7, 2012


— Forensic auditors said Tuesday that they stand by their investigation of the Kansas Bioscience Authority and that any further work would be a waste of time and public funds.

The supplemental report released by BKD Forensic and Valuation Services was in response to legislative questions about the scope of the firm's investigation of the KBA since April 2011.

BKD and a team from Meare Welch Browne were paid $960,000 to look at the KBA at the request of the agency and insistence of Gov. Sam Brownback's administration.

"In our professional judgment, continuation of the investigation is not likely to lead to any information which will change the findings and conclusions in any material way, if at all," the auditors wrote. "We believe the investment of additional time, effort and expense is not a wise or efficient use of resources."

The audit found that the KBA made sound investments in emerging bioscience companies since its inception in 2004. However, questions were raised about the KBA's former CEO Tom Thornton, a number of vendor contracts that violated KBA policy and missing files from the CEO's computer.

Legislators have questioned how thorough the review was, especially in light of documents that Thornton deleted from his state-issued laptop after his resignation was submitted. The Johnson County District Attorney's office is conducting its own investigation in to the KBA. Auditors have given copies of their findings to the prosecutor.

KBA Board of Directors Chairman Dan Watkins said the agency has complied with auditors during their investigation and had taken action on recommendations to change some of its governance practices.

"I do not plan to request or authorize further work by BKD on forensic audit matters but stand ready to discuss BKD's findings and conclusions with the board, KBA appointing authorities and other members of the Legislature," Watkins said.

Sen. Susan Wagle, a Wichita Republican whose questions in 2011 led to the audit, said overall the report provided valuable information about how the KBA's board has operated.

"I believe it is a case of crony capitalism," she said. "I know enough for my concerns to be validated about how the agency was managed. We have here an agency that has no oversight. It's an agency that failed to police its executive director and itself."

She said questions still remained to be answered about the ties between the KBA, Thornton and Cleveland organizations. Thornton resigned in to take a position as general manager at the Cleveland Clinic Innovations.

The audit found that Thornton misled the KBA board about a trip he took to Cleveland to interview for the job, a trip he eventually reimbursed the agency for the cost of the plane ticket.

Watkins said BKD spent more than 3,150 hours working on the audit. He said Brownback's office has requested detailed billings by BKD by each professional, which the KBA has provided.

Auditors were asked to probe how the authority was making its investments, potential conflicts of interest, personnel decisions and how job creation figures were determined. The KBA's purpose is to distribute millions in state tax dollars to emerging bioscience companies.

The audit concluded that the KBA had policies in place to safeguard its investments, but did suggest that there may have been the appearance of conflict of interest over two financial commitments by the board to organizations involving two members.

Other findings found fault with Thornton's management style, his destruction of documents on his state-owned laptop and misuse of some $4,700 in KBA funds, which he later repaid. Agriculture Secretary Dale Rodman, who led the administration's oversight of the audit, said the report suggests that "intellectual property" of the KBA was taken by Thornton to his new job in Cleveland.

Legislators continue to raise questions about the KBA's investment practices and the appearance of conflict of interest between the board and companies receiving funds. A bill has been introduced in the Senate to expand state law to prohibit KBA board members from personally benefiting from the authority's investment in emerging companies.


hyperinflate 6 years, 2 months ago

if "crony capitalism" is the new Fox buzzword for R-politicians to repeat ad nauseum about Democratic administrations, I think they will regret drawing attention to the concept.

Kirk Larson 6 years, 2 months ago

That $960,000 would have been better spent on the Arts Commission or just about anything else.

cowboy 6 years, 2 months ago

The question is who authorized a million dollar audit ? This is the person who should be fired !

cowboy 6 years, 2 months ago

Ding ding Ding we have a winner !

Sam Brownback

“I continue to have very serious concerns regarding leadership at the Kansas Bioscience Authority. It is essential we get to the bottom of the recently raised issues that prompted a criminal investigation. The next step should be a truly independently overseen forensic audit of KBA. We have asked for this for more than a month. The KBA also needs a new President and CEO who has no ties to the current regime. There is too much at stake for KBA to continue to refuse this legitimate scrutiny of how the authority spends hundreds of millions of taxpayer dollars.”

Sam , your wasting our tax dollars faster than we can earn them ! A million fo to your a snipe hunt , then 75 grand to your trickle down buddy , nightly kumbayahs at the mansion.

Joe Blackford II 6 years, 2 months ago

$1 Million for a Forensic audit on an "authoriity" authorized to spend ~ $581 Million Is Not a bad investment to look behind the opacity of Brownback's "curtain of transparency" on the NBAF site selection process.

Kansans should insist our legislature pull back the Brownback ""curtain of transparency" on the site selection process for the National Bio- & Agro- terrorism Defense Facility (NBAF). Such an investigation will find:

Kansas has had a Ringer sitting in from the very beginning of an opaque curtain designed to label the Plum Island Animal Disease Center as "aging," physically not enough room . and not have BSL-4 capabilities to meet the expanding mission's research needs, or to be prepared for future needs.

"The DHS Science & Technology Advisory Committee has been established to serve as a source of independent, scientific and technical planning advice to the Under Secretary for Science and Technology as mandated by the Homeland Security Act of 2002. The Committee will hold its first meeting February 26-27, 2004."

This committee is no doubt the "secret panel" which advised Under Secretary Cohen to select KSU for the N B A F

Dr. David R. Franz sat on the DHS Science & Technology Advisory Committee at the same time he was:

Director of KSU's National Agricultural Biosecurity Center

Chair, KSU Biosecurity Advisory Committee

Director of the Executive Committee; Vice-Chair, of the Investment Committee, Kansas Bioscience Authority. Gov. Kathleen Sebelius appointed Franz as an inaugural nine member of the KBA on August 02, 2004.

Franz is Vice President and Chief Biological Scientist at Midwest Research Institute.

MRI was awarded a $200K KBA contract for "N B A F _ G O C O Strategy," an MRI treatise based upon MRI's success as the contractor for their Government Owned, Contractor Operated lab in Fredrick, MD, for the US Army Medical Research Institute for Infections Diseases, of which, Col/Dr Franz was formerly Commander.

Joe Blackford II 6 years, 2 months ago

Here's a link to MRI's Center for Biological Safety and Security, which has:

"Assisted in the design of many of the most notable BSL-3 and BSL-4 containment laboratories worldwide..

"Conducted more than 50 international site assessments and risk/threat analyses of biological facilities and containment laboratories as well as the development of appropriate administrative controls and sustainment programs."

"Developed and implemented extensive biological safety and security training for laboratory staff, laboratory construction firms, government, academic research facilities and pharmaceutical companies worldwide."

And investigation would uncover Kansas $ spent with mri, kc. mo, to prop up the KSU Biosecurity Research Institute, aka Pat Roberts Hall; assemble the house of cards known as the ksu nabc; spend KBA $ on contacts to which Dr. Franz is tied; and, in fact, wasted all this money to secure the NBAF when it was rigged to come to KSU from the day of its inception.

just_another_bozo_on_this_bus 6 years, 2 months ago

"In our professional judgment, continuation of the investigation is not likely to lead to any information which will change the findings and conclusions in any material way, if at all," the auditors wrote. "We believe the investment of additional time, effort and expense is not a wise or efficient use of resources."

Translation-- we already have our million bucks, and because of the public outrage, we know we won't get any more, so we'll quit while we're ahead-- way ahead.

Kirk Larson 6 years, 2 months ago

Brownbackside does not want Kansas relying on Bioscience industries because you can't have Biology without Evolution! Just like his recent statement that the NBAF is in jeopardy; I think he actually wants to sabotage it so that we don't have an influx of science-y people to influence the folk in Manhattan with all their science-y talk.

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