Topeka A key member of Gov. Sam Brownback’s administration said Thursday that the Kansas Bioscience Authority’s board of directors shared some of the blame for problems identified in a forensic audit of the agency, including questions about the spending decisions of its former CEO.
Agriculture Secretary Dale Rodman, a leading figure in the administration on audits, told legislators that issues about spending and perceived conflicts of interest resulted from a lax board.
“If the board had done its job we wouldn’t be here today,” said Rodman, a Brownback appointee who spent 37 years working in management for Cargill Inc.
The audit by BKD Forensic and Valuation Services released Monday found issues with the KBA’s operation, including the activities of its former president and CEO Tom Thornton. Rodman said the KBA’s spending on overhead and what he called inflated figures on job creation were troubling.
He said figures in the audit show that the KBA invested $200,000 per job created before Thornton became CEO, but jumped to $700,000 per job during his tenure. There also questions raised about the $18 million investment in an office building in Olathe to house the KBA, which is also used by tenant companies in what is frequently called an incubator facility as the companies grow.
The chairman of the authority’s board, Dan Watkins, who hasn’t been asked yet by legislators to speak on the record about the audit, took exception with Rodman’s comments.
“He’s impugning the integrity and ethics of a good group of people, and it’s apparent that he and I read different audit reports,” Watkins said. “I think it’s obvious that the governor’s pursuing a scorched, you know, take-no-prisoners approach until he has control of the operations and the investments of the KBA.”
Watkins is a Lawrence Democrat who was appointed to the board by Senate Minority Leader Anthony Hensley, a Topeka Democrat. His term expires in March 2015.
Sherriene Jones-Sontag, the governor’s spokeswoman, responded to Watkins’ statement, suggesting the issue with the board was financial, not political.
“It’s troubling to see that the KBA spent more than $700,000 per job it ‘created’ while Tom Thornton was its CEO,” she said. “Clearly the audit shows that those who said they had no concerns about Tom Thornton were wrong. It is in every Kansan’s interest in seeing that taxpayer money is well-spent and Kansas laws are upheld.”
Brownback has two political associates on the board already, Commerce Secretary Pat George and Kenny Wilk, a member of the Board of Regents and member of the governor’s transition team.
Wilk, a non-voting member of the KBA board, is a former Republican state House member who helped write the Kansas Economic Growth Act with Nick Jordan, a former Republican state senator and Brownback’s secretary of revenue.
The governor will have two more appointments this spring with the expirations of terms by former Gov. John Carlin and Sandra Lawrence.
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. Rodman said the audit suggests that “intellectual property” of the KBA was taken by Thornton to his new job with the Cleveland Clinic
Legislators from three committees spent three days reviewing the audit and asking questions. Senate Commerce Committee Chairwoman Susan Wagle, whose committee’s hearings in 2011 led to the audit, said more hearings would be held in the coming weeks.
“This is to be continued,” said the Wichita Republican.
Legislators also have been critical of expenses related to the KBA’s involvement with the state’s winning bid for the National Bio and Agro-Defense Facility. The Department of Homeland Security awarded the state the project to be built in Manhattan to conduct research on deadly plant and animal pathogens.