Brownback staff had significant role in KBA audit

? Gov. Sam Brownback’s administration insisted on expanding the scope of a forensic audit into the Kansas Bioscience Authority’s activities and specified what areas should be examined, an exchange of documents between the auditor and the governor’s administration show.

The documents, including letters from Agriculture Secretary Dale Rodman to auditors and KBA board chairman Dan Watkins, show that investigators 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.

In the audit released Monday, the most serious allegations questioned the management and spending of former president and CEO Tom Thornton, who resigned last April. The audit cost the authority $960,000 and resulted in the return of about $4,700 in authority funds that Thornton received for an airline ticket to Ohio, purchase of an oil painting and overpayment for a car allowance.

The audit also raised questions about the appropriateness of payments on small contracts to vendors, many stemming from the organization of the authority starting in 2004.

But auditors from BKD Forensics and Valuation Services largely found that the KBA’s investment practices were sound and that there were not clear violations of conflict of interest policies. Legislators were getting their chance to ask questions about the audit, as Watkins and the auditors were testifying Wednesday before a joint hearing of Senate and House commerce committees, followed by Rodman on Thursday.

Sherriene Jones-Sontag, the governor’s spokeswoman, said the administration was adamant from the beginning that a “thorough forensic audit” be performed.

“It was very narrow in scope and we worked with them to broaden it,” she said. “It’s not untypical for an audit to start with a focus on this and then to be broadened as information becomes known and different things need to be added to the scope.”

The audit was announced April 11 and Thornton resigned two days later. The initial scope covered KBA expenditures dating to 2004, including personnel and contracts, potential conflicts of interest by its staff and its board of directors related to awarding funding and alleged funding of projects outside the state that violate statutes establishing the authority.

It also mandated that Brownback’s “representative” would approve the conclusions of the audit before it was made public.

Rodman asked auditors in October answer additional questions about Thornton’s business relationships, how he was hired by the KBA, claims that the organization created 1,195 jobs and any conflicts of interest by its board members or employees.

In December, Rodman wrote to Watkins in response to the KBA’s release of its investment outcomes, saying it “appears overly inflated by errors and inconsistencies that paint a picture that does not seem borne out by the facts.” He also raised questions about the authority’s expenses, including $18 million spent on offices in Olathe.

“The administration is very concerned about these issues and would encourage the management and board of directors of the KBA to address these issues even before the forensic audit is released,” Rodman wrote.

Auditors found instances of document destruction, misuse of funds and questionable management by Thornton, who is now employed by the Cleveland Clinic in Ohio. Thornton has not returned repeated messages since Monday seeking comment.