Professor John Rasko on SBS Insight
Royal Prince Alfred Hospital #39;s Director of Cell and Molecular Therapies, Professor John Rasko, was invited as a guest on SBS Insight #39;s special on stem cell medicine.

By: SydneyLHD

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Professor John Rasko on SBS Insight - Video

There's no good time for a public agency to be embroiled in a conflict-of-interest scandal, but this is an especially delicate time for California's stem cell agency.

The California Institute for Regenerative Medicine, as the program is known formally, is on track to finish doling out its $3 billion in funding from the state's voters as soon as 2017. Its original sponsor, Northern California real estate developer Robert Klein II, has been quoted talking about another $5-billion infusion, perhaps via the 2016 ballot.

Any such effort will refocus attention on the program board's inherent conflicts of interest, which were baked in by the terms of Proposition 71, Klein's 2004 ballot initiative that created CIRM and funded it through a bond issue. The prestigious Institute of Medicine in a 2012 report found these conflicts to lead to questions about "the integrity and independence of some of CIRM's decisions."

And now here comes another case. This one involves CIRM former President Alan Trounson, an Australian biologist who left the agency on June 30 and joined the board of one of its highest-profile financial partners a mere seven days later. Trounson's new employer, Stem Cells Inc., is the recipient of a nearly $20-million loan for Alzheimer's research.

CIRM says Trounson's quick move to Stem Cells Inc., where he'll receive a stipend of at least $90,000 a year, is legally "permissible." But officials there acknowledge they were blindsided; the agency learned about Trounson's new position from the company's press release.

Afterward, CIRM rushed out a statement acknowledging that Trounson's appointment to the board of a CIRM loan recipient "creates a serious risk of a conflict of interest." The agency says it will place the relationship between CIRM and the company under "a full review." Administrators reminded Trounson, board members and agency staff that state law bars him from communicating with them on any administrative matter involving Stem Cells Inc. The company declined to comment.

The relationship already reeked of cronyism. As we reported in 2012, the Newark, Calif.-based firm's co-founder, Irving Weissman, director of Stanford University's Institute for Stem Cell Biology and Regenerative Medicine, had been one of the most prominent and outspoken supporters of Proposition 71.

He's also a leading recipient of CIRM funding, listed as the principal investigator on four Stanford grants totaling nearly $35 million. CIRM contributed $43.6 million toward the construction of his institute's $200-million research building at the Stanford campus. Weissman and his wife, Ann Tsukamoto, owned nearly 380,000 shares of the firm as of last April, according to a corporate disclosure. Tsukamoto is one of the company's top executives; Weissman is a board member.

Trounson's move comes as CIRM must begin looking to the future, but any discussions about extending the agency's life span will have to address the flaws created by Proposition 71. Among them is the program's very structure, and even its scientific goals.

Klein's ballot proposition exempts CIRM from virtually any oversight or accountability. Each of the 29 governing board members has to be associated with a California public or private research institution or company, or an advocacy group for patients of one disease or another. The qualifications for board chairman are so specific they initially yielded a single credible candidate: Bob Klein.

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Conflicts of interest pervasive on California stem cell board