Nam­ing of donors wasn’t man­dated

In­ves­ti­ga­tion

Austin American-Statesman - - THE SECOND FRONT - Con­tin­ued from A Ad­di­tional ma­te­rial from staff writer Ralph K.M. Haurwitz. Con­tact Lay­lan Copelin at 445-3617.

the state agency as well as some of the same board mem­bers.

Its pur­pose is to raise money to sup­port agency op­er­a­tions not paid by tax­payer dol­lars, such as sup­ple­ment­ing the $700,000 salary for the agency’s chief sci­ence of­fi­cer and the $300,000 salary of the chief ex­ec­u­tive.

The Leg­is­la­ture au­tho­rized the foun­da­tion’s cre­ation, capped the salary sup­ple­ments, re­quired that a fi­nan­cial sum­mary be filed with the state and pro­hib­ited foun­da­tion donors from re­ceiv­ing grants from the can­cer agency.

Law­mak­ers did not, how­ever, man­date the dis­clo­sure of donors or re­quire any­one out­side the agency to con­firm in a timely fash­ion whether donors to the foun­da­tion re­ceived grants.

The foun­da­tion says there’s been no le­gal lapses and that the state au­di­tor re­views for con­flicts.

But the state au­di­tor’s report, due in Jan­uary, will be the first au­dit of an em­bat­tled, 3-year-old agency that has awarded al­most $805 mil­lion of the $3 bil­lion Texas vot­ers ap­proved to find cures for can­cer.

The foun­da­tion re­fused to re­lease the names of donors to the Austin Amer­i­can-States­man.

It also pro­duced a let­ter from the IRS say­ing it doesn’t need to file 990 forms re­quired of many non­profit groups be­cause it was cre­ated as an “af­fil­i­ate of a government unit.” The forms pro­vide the pub­lic with de­tails about how a tax-ex­empt or­ga­ni­za­tion raises and spends money.

“We chose from the be­gin­ning to adopt a donor bill of rights to pro­tect their pri­vacy,” said Jen­nifer Lustina Stevens, who serves as the foun­da­tion’s ex­ec­u­tive di­rec­tor and whose mar­ket­ing com­pany also man­ages Tex­as­One, the non­profit or­ga­ni­za­tion that raises money to pay for Gov. Rick Perry’s eco­nomic devel­op­ment trips.

The Leg­is­la­ture bars “an in­di­vid­ual, an or­ga­ni­za­tion, or an em­ployee, of­fi­cer or di­rec­tor of an or­ga­ni­za­tion that makes a do­na­tion” from re­ceiv­ing a grant from the state can­cer agency.

State Rep. John Otto, RDay­ton, said he in­cluded that lan­guage in the state ap­pro­pri­a­tions bill as a pre­ven­tive mea­sure.

“CPRIT grants were to be awarded based on the best sci­ence and af­ter an in­de­pen­dent re­view of each submission,” Otto said. “The rider was a way to en­hance the in­de­pen­dence of that process.”

Dr. Joseph S. Bailes, who re­cently be­came the foun­da­tion chair­man and serves on the agency’s over­sight com­mit­tee, said that the wall the Leg­is­la­ture erected be­tween donors and grant re­cip­i­ents is re­spected.

“The CPRIT Foun­da­tion strictly abides by that re­stric­tion,” Bailes wrote in an email. “No foun­da­tion donor has re­ceived a grant.”

Bailes wrote that the foun­da­tion donors in­clude phar­ma­ceu­ti­cal com­pa­nies, in­di­vid­u­als and a cou­ple of pri­vate foun­da­tions.

The pub­lic is pro­tected from con­flicts, Bailes said, be­cause “the state au­di­tor re­views the Foun­da­tion ac­tiv­i­ties” in con­junc­tion with the agency. Otto also said, “I would ex­pect the State Au­di­tor’s Of­fice to have ac­cess to this in­for­ma­tion in or­der to en­sure a proper level of in­de­pen­dence is main­tained.”

But the state au­di­tor, ac­cord­ing to its web­site, has never be­fore au­dited the agency or foun­da­tion.

The au­di­tor’s find­ings in Jan­uary might hinge on his def­i­ni­tion of “or­ga­ni­za­tion” be­cause the can­cer agency’s in­ter­pre­ta­tion, ac­cord­ing to agency spokes­woman Ellen Read, has been that some­one could re­ceive a grant even if an af­fil­i­ated foun­da­tion gave money to the can­cer foun­da­tion.

She said that would be OK as long as the grant re­cip­i­ent and foun­da­tion donor are con­sid­ered sep­a­rate le­gal en­ti­ties.

Although the can­cer foun­da­tion re­fuses to dis­close its donors, some of the donors, par­tic­u­larly those sup­port­ing univer- sities, dis­close their do­na­tions through their own IRS fil­ings.

For ex­am­ple, the South­west­ern Med­i­cal Foun­da­tion, whose main mis­sion is to sup­port the Univer­sity of Texas South­west­ern Med­i­cal Cen­ter in Dal­las, do­nated $22,500 over two years to the can­cer foun­da­tion, ac­cord­ing to the med­i­cal foun­da­tion’s IRS fil­ings.

UT South­west­ern is a ma­jor re­cip­i­ent of can­cer in­sti­tute grants for sci­en­tific re­search. UT-Austin, the M.D. An­der­son Can­cer Cen­ter in Hous­ton and other UT Sys­tem cam­puses also have re­ceived can­cer in­sti­tute grants.

The Univer­sity of Texas Foun­da­tion, which sup­ports the UT Sys­tem and its 15 aca­demic and med­i­cal cam­puses, do­nated $33,810 to the can­cer foun­da­tion over three years, said Jenny LaCosteCa­puto, a sys­tem spokes­woman. It also cov­ered the $6,190 bill for two din­ners for the can­cer foun­da­tion at the Bauer House, the chan­cel­lor’s res­i­dence in Austin.

Randa Safady, ex­ec­u­tive vice chan­cel­lor for ex­ter­nal re­la­tions, said the UT Sys­tem is aware of the re­stric­tion in the ap­pro­pri­a­tions bill and abides by it.

“The univer­sity-af­fil­i­ated foun­da­tions are sep­a­rate non­profit or­ga­ni­za­tions,” Safady said. “They’re not gov­erned by our Board of Re­gents. They’re stand-alone or­ga­ni­za­tions.”

The same could be said for com­pa­nies or in­di­vid­u­als with foun­da­tions.

For the past sev­eral months, the state can­cer agency has been rid­dled with con­tro­versy de­spite at­tempts to min­i­mize po­lit­i­cal in­ter­fer­ence with an elab­o­rate sys­tem for re­view­ing grant ap­pli­ca­tions.

The idea was that outof-state sci­en­tists, who are in­el­i­gi­ble to ap­ply for grants, would re­view the sci­en­tific worth of an ap­pli­ca­tion. Their rec­om­men­da­tions would be pre­sented ev­ery three months as a slate of rec­om­men­da­tions to the agency’s 11-mem­ber over­sight com­mit­tee, which could only ac­cept or re­ject the whole slate by a two-thirds vote.

But strains be­gan to ap­pear sev­eral months ago among the agency’s top ex­ec­u­tives in charge of the re­views.

Dr. Al­fred Gil­man, the agency’s chief sci­ence of­fi­cer, and 33 outof-state sci­en­tists who re­view grant ap­pli­ca­tions re­signed be­cause an $18 mil­lion grant for a Hous­ton busi­ness in­cu­ba­tor was re­viewed by busi­ness ex­perts but not a sci­en­tific panel.

There also were com- plaints about in­ter­fer­ence in the re­view process.

Jerry Cobb, the agency’s com­mer­cial­iza­tion of­fi­cer quit af­ter it was dis­cov­ered that Dal­las biotech firm Pelo­ton Ther­a­peu­tics was awarded an $11 mil­lion grant with­out any re­view be­cause of an agency mix-up.

Emails be­tween Gil­man and Cobb dis­cussing the Pelo­ton grant — if they ex­isted — can’t be found, ac­cord­ing to the agency’s com­pli­ance of­fi­cer.

This week, the ex­o­dus was com­pleted when Bill Gim­son, the agency’s ex­ec­u­tive di­rec­tor, of­fered his res­ig­na­tion as the out­side in­ves­ti­ga­tions be­gan.

The foun­da­tion’s role is now coming into view.

Be­sides Bailes, two other mem­bers of the agency over­sight com­mit­tee also serve on the foun­da­tion’s board: Bar­bara Canales of Cor­pus Christi and Austin busi­ness­man Jimmy Man­sour.

Man­sour, who was the foun­da­tion’s orig­i­nal chair­man when it was cre­ated, chairs the agency’s over­sight com­mit­tee.

He re­ferred all ques­tions to Bailes.

Bailes said the agency’s process of re­view­ing grant ap­pli­ca­tions is kept sep­a­rate from the foun­da­tion’s ac­tiv­i­ties.

He said the out-of-state sci­en­tists who ini­tially re­view grant ap­pli­ca­tions don’t know who do­nates to the foun­da­tion. They are paid from $4,000 to $75,000 a year, de­pend­ing on how much time they spend on the re­views, ac­cord­ing to the agency. Some of the foun­da­tion’s do­na­tions helped pay that cost.

On the other hand, Bailes said would-be donors to the foun­da­tion are warned that they can’t re­ceive state grants.

Only Man­sour, Canales and Bailes, who serve on both boards, would the­o­ret­i­cally know both foun­da­tion donors and grant ap­pli­cants when it comes to a vote on award­ing grants.

The other eight mem­bers of the agency over­sight com­mit­tee might not know.

In the fu­ture, Dal­las lawyer Tom Luce, the new­est mem­ber of the over­sight com­mit­tee, said he would want the agency’s com­pli­ance of­fi­cer and the three foun­da­tion board mem­bers to af­firm that there is no im­proper con­nec­tion be­tween donors and ap­pli­cants.

“Be­fore I vote on an­other grant, I would want to be as­sured of that,” Luce said.

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