TOPEKA — Secretary of Agriculture Dale Rodman assailed the board of the Kansas Bioscience Authority today, saying it spent way too much on overhead and allowed one of its members to personally benefit in violation of state law.
Rodman also blasted the board for hiring and failing to adequately supervise Tom Thornton, the authority’s former chief executive officer who has been found in an audit to have misused public funds and electronically shredded documents on his way out of the agency.
Rodman, assigned by Gov. Sam Brownback to monitor the audit of the KBA, laid blame squarely at the feet of the board as he testified to a joint meeting of the House and Senate commerce committees.
“We would not be here today if the KBA board had done their job properly,” Rodman said.
After the hearing, KBA board President Dan Watkins acknowledged there were problems with Thornton’s management, but said he thinks Rodman’s criticism are part of an attempt by the governor to seize control of the KBA from the independent board that runs it now.
“I think it’s obvious the governor is pursuing a … take-no-prisoners approach until he has control of the operations and the investments of the KBA,” he said.
Watkins said the board has reformed its practices to prevent future executives from doing some of the things Thornton was found to have done, such as using the authority credit card for personal expenses and using an office assistant to run his personal errands.
The $960,000 audit, by the national firm BKD, reported that the authority’s investment policies were basically sound. But it found that Thornton had spent agency money on artwork for his home, plane tickets for a job interview and created an uncomfortable work environment by having an office romance with an employee he hired and ultimately married.
Rodman, however, said the authority spent way too much money on buildings, consultants, attorneys and other expenses.
“They spent nearly 40 cents of every dollar on invested on internal expenses,” he said. “This is unacceptable performance.”
In reply, Watkins referred to a KBA letter indicating that was about 20 percent.
Sen. Chris Steineger, D-Kansas City, distributed his own calculations from KBA balance sheets showing overhead ranging from 34 percent in 2008 to 14 percent in 2001.
Rodman also was especially critical of approximately $875,000 in KBA grants to two companies where KBA board member Bill Sanford served as chairman of the board.
The audit concluded there was no wrongdoing because Sanford recused himself from the decisions on grants that benefited the companies.
Rodman pointed out that state law authorizing the authority specifically states “no part of the funds of the authority shall inure to the benefit of, or be distributed to, its employees, officers or members of the board.”
The only exceptions written into the law are for expense reimbursement and payments for services rendered to the authority.
Investing in board members’ businesses “does not pass the smell test,” Rodman said. “If it smells bad, it is bad and you should not do it. If any of the members wanted money from the KBA, they should have quit and followed the normal request procedures.”
Watkins said he thinks the authority complied with the law by requiring members to recuse themselves from voting when they have a conflict.
He said in the relatively small bioscience community, it would be impractical to expect members to resign every time there is a potential conflict.
“If you want to find a board that is never going to have a potential conflict from which they have to recuse themselves, you’re going to have to look pretty damn far and wide to find anybody who knows anything about bioscience to get them involved,” Watkins said. “That’s why we have those (recusal) procedures and that’s why we follow them.”
The joint commerce meeting was the third public hearing on the audit since the 900-page report was released on Monday. And lawmakers have now begun solidifying their opinions about it.
Sen. Tom Holland, D-Baldwin City, pointed out that Jim Snyder, the BKD executive who oversaw the audit process, had testified Wednesday that the authority has adequate procedures in place to accomplish its mission and follows them.
He said the Brownback administration had taken a direct hand in crafting the audit and its scope and should accept its results.
“If the administration does not take ownership of this report and say this is a decent audit, what have we done this for?” he said.
“I accept the audit, I don’t accept all the (auditors’) statements,” Rodman replied.
Sen. Ray Merrick, R-Stilwell, said the authority’s position seems to be: “Tom Thornton was a bad apple, go ahead and throw him under the bus, and we’re going to be good stewards of your money.
“That doesn’t satisfy my feeling that this thing going forward is going to do what it’s supposed to do,” Merrick added.