House OKs stronger ethics rules for Bioscience Authority

TOPEKA — The House of Representatives today overwhelmingly supported a measure to try to prevent conflict of interest by board members and staff of the Kansas Bioscience Authority.

House Substitute for Senate Bill 40, carried on the floor by Rep. Jo Ann Pottorff, R-Wichita, seeks to stop KBA officials from benefiting from the state-supported agency’s business-development grants.

The bill would prohibit board members, employees, agents or advisors of the authority from directly benefiting from authority contracts or transactions.

A person with a conflict would have to either resign from the authority or divest themselves of the financial interest creating the conflict.

At present, the authority only requires its board members to recuse themselves from participating in issues in which they have a conflict.

The new bill does allow board members and employees to keep their positions in cases of indirect benefits from agency decisions, as long as they disclose the indirect conflict in writing and recuse themselves from participating on the issue.

In a written response to an inquiry from The Eagle, authority board Chairman Dan Watkins did not take a position on the bill.

“The KBA has been, and remains, committed to meeting a high standard of integrity in its operations and investments,” the statement said. “This bill provides added measures to address conflicts that may be presented and, as with our prior statutory and policy provisions, the KBA plans to adhere to them.”

The bill is part of the fallout from a year of investigation and a lengthy audit of the agency, prompted by Sen. Susan Wagle, R-Wichita and Gov. Sam Brownback’s administration.

Among the audit’s findings were two cases of potential conflict:

  • A company called NanoScale Inc. received four Bioscience Authority grants totaling $675,000. Bill Sanford, an authority board member who now serves as vice chairman, owns 14 percent of NanoScale and is chairman of the board of the company, according to the audit. Board minutes and interviews indicated that Sanford recused himself from the discussions and votes on the grants benefiting NanoScale.

  • Former authority board member Angela Kreps voted for contracts between the agency and KansasBio, a private bioscience trade association, according to the audit. Kreps is president of KansasBio. From 2006 to 2010, the authority contracted with KansasBio for $100,000 each year to stage a trade conference. The audit found Kreps voted on spending plans including the KansasBio contracts in 2008 and 2009.

The Senate Commerce Committee, led by Wagle, has held several hearings on allegations of mis-spending and other issues involving the authority and had tried to pass a similar bill.

However, the Senate bill is stalled in the Ethics and Elections Committee and Senate leaders have been reluctant to move forward, concerned that controversy around the agency could compromise its mission of creating jobs by encouraging bioscience businesses to start in or move to Kansas.

Wagle said the House version of the conflict-of-interest bill is actually stronger than the one the senators had proposed.

The Senate bill would prohibit authority board members and officers from benefiting from the agency’s decisions, but did not specify that they would have to resign or divest their interest in case of a conflict.

“Their bill’s better than ours,” Wagle said.

The House bill was advanced on a unanimous voice vote with a final vote expected Friday.