Daily Archives: Jan. 23, 2012

Audit finds document destruction, misspending at Kansas Bioscience Authority

OLATHE – An in-depth audit of the Kansas Bioscience Authority found that former agency head Tom Thornton destroyed documents on his computer that had been subpoenaed by a prosecutor investigating the agency.

The audit, by the firm BKD LLP, also found that Thornton used public funds to fly to Cleveland for a job interview and that employees alleged that he engaged in inappropriate intimate relations in the KBA’s office, with an employee who later became his wife.

The audit concluded that the couple’s relationship hurt office morale but, citing a legal opinion of KBA’s contract council, it didn’t apparently violate state law because employees of the state-funded KBA are not technically state employees.

The audit also concluded that former KBA board member Angela Kreps may have improperly participated in deliberations and voted on a grant to a private bioscience association she headed.

It also questioned some of the agency’s contracting practices.

“Our analysis found 301 payments without a contract, including 102 payments that violated KBA’s Contract Policy,” the audit said. “The total contract cost involved totaled $1,219,271.81 in payments without a contract, including $571,828.20 in payments which violated Contract Policy.”

Those are some of the conclusions in a lengthy report of a “forensic audit” of the agency that was forced upon the agency by Gov. Sam Brownback, after questions were raised in a series of legislative hearings called by Sen. Susan Wagle, R-Wichita, chairwoman of the Senate Commerce Committtee.

In a statement, Brownback called on the board to place a moratorium on funding new projects until the Legislature determines how to proceed.

Wagle is planning to conduct two hearings later this week on the audit and its findings in her Senate committee.

The audit report was made public Monday afternoon following a three-hour closed session meeting of the board and the auditors at the KBA headquarters in Olathe.

The audit concluded that Thornton used public funds to pay for a trip to Cleveland to interview for a job with the Cleveland Clinic, a major health provider in Ohio.

Under fire at the KBA, Thornton resigned in April of last year after landing the new job with the Cleveland Clinic. His wife, whom he met while both worked for the KBA, left with him.

The audit says the state is seeking to recover more than $4,500 from Thornton.

However, the auditors said the full scope of misspending could not be determined because Thornton erased and electronically shredded document files kept only on his KBA-provided laptop computer.

Investigators were unable to recover the files despite the use of sophisticated computer forensic tools.

The timeline of the audit shows that some files were destroyed after Wagle and representatives of the governor’s office began pressing for the forensic audit, which is a deep look into the workings of an agency designed to uncover information that can, if necessary, be used as evidence in a criminal prosecution.

The Johnson County District Attorney’s office confirmed last year that it was conducting an investigation of the authority.

Thornton and board members, including former Gov. John Carlin, had told Wagle and her committee that the allegations against the authority were unfounded.

The Bioscience Authority was created by the Legislature in an effort to attract high-paying jobs to the state. The agency’s charge was to identify and help fund promising research at the state’s universities and in private-sector companies.

The Legislature committed $581 million to the agency and placed it under the direction of an independent board in an effort to insulate it from Capitol politics. The first sign that things were going wrong came last year when scientists at Center of Innovation for Biomaterials in Orthopaedic Research, claimed that they were being shortchanged on a five-year, $20 million grant that they say they were supposed to receive from the authority. CIBOR, a joint venture led by Via Christi health system and Wichita State University, is attempting to adapt the university’s innovative aviation materials for medical uses, such as hip and knee replacement joints, battlefield splints and lightweight stretchers. Thornton denied that the authority committed to any funding beyond an initial $4 million investment, but lawmakers said authority executives indicated the full funding would be granted in a series of meetings with legislators at the Capitol. After Wagle began looking into the situation, employees of the agency told her they believed that funds were being misspent and that Thornton was using a state employee to perform personal errands.

According to documents provided to Wagle’s committee, 12 of the authority’s 21 employees, including Thornton and his wife Lindsey, were making more than $100,000 a year. All employees received raises of 4-15 percent last year, when the state was instituting salary freezes and layoffs of other state employees to close a $500 million budget gap.

Thornton’s base salary was $265,000 and he was given a $100,000 bonus.

His wife, director of special projects for the authority, was making a salary of $107,500, plus a $5,000 bonus.

Both left the KBA after Thornton landed his job with the Cleveland Clinic.

The hearings also brought out that Thornton, while working for the authority, also held a $50,000-a-year position as a director of Advanced Life Sciences, a pharmaceutical company that had received government grants to test an experimental antibiotic.

The company foundered after the drug was rejected by the Food and Drug Administration.

Last year, Wagle was harshly criticized by legislative leadership on both sides of the aisle for investigating the bioscience authority. Republican and Democratic legislative leaders said her investigations into the KBA could threaten Kansas’ status as the site for the National Bio and Agro-Defense Facility. The federal government selected Manhattan as the site for the $650 million laboratory that will study ways to counter biological terrorism and threats to the nation’s food supply. The KBA was one of the lead agencies in convincing the federal government to site the facility in Kansas.