The release of a forensics audit of the Kansas Bioscience Authority coupled with two days of joint committee hearings revealed an independent government agency out of control, an audit that draws conclusions described as sanitized of important details, and an agency and legislative supporters who believe that now, all is well at the KBA.
Defenders and supporters of KBA rely on two facts: First, the source of many problems — former CEO Tom Thornton — is no longer at KBA. He has been criticized for overspending and his managerial style, and the audit found that he deliberately deleted and scrubbed data from his personal laptop computer. Data is also missing from a protected section of a KBA server.
Second, the audit finds no major problems with KBA’s board of directors or its business policies, procedures, and controls.
Regarding Thornton, Kansas Secretary of Agriculture Dale A. Rodman, who oversaw the audit process on behalf of the Brownback Administration, was strongly critical of the KBA board’s oversight of Thornton. He told a joint committee that the KBA board had not done its job, and that a “golden opportunity” for Kansas has been lost.
As to policies and practices, it is apparent that the KBA board violated a Kansas statute governing the KBA that covers conflicts of interest and board members receiving financial benefits on behalf of companies they have ownership interests in. The audit, many times, says that board members may resolve a conflict of interest by disclosure and not voting.
But the case of KBA board member Bill Sanford is an example to the contrary. Rodman said that a company he partly owns received KBA grants totaling $674,996. There appear to be many similar examples involving other KBA personnel and companies.
These facts stand in contrast to conclusions drawn in the audit, which was conducted by BKD, LLP Forensics and Valuation Services on behalf of the KBA, although the Brownback administration, through Rodman, had some oversight. Senate Commerce Committee Chair Susan Wagle, a Wichita Republican who has been at the forefront of the KBA issue, has repeatedly described the audit’s conclusions as “sanitized.” I agree.
Rodman, in his testimony, revealed a troubling attitude towards ethics that we often see in Kansas. He told the committee that former Governor John Carlin told him that KBA could not do business in Kansas with strict ethic rules because everyone in Kansas knows each other. And last year Carlin, as chairman of the board of KBA, appeared before a Senate committee to give a strong defense of CEO Thornton.
Now we know differently. But Carlin — defender of Thornton, who is now widely recognized as a “bad apple” — still serves on the KBA board. The fact that there has been little turnover in the composition of the KBA board reveals that the board, along with KBA’s supporters, believe that little is left to be fixed, now that Thornton has left the building.
Kansans deserve something better, however. If KBA is to continue, all board members should resign, and immediately.
The audit and committee testimony also uncovered troubling facts about the performance of KBA in creating jobs. If we take away KBA’s largest success story, which accounts for half or more of the jobs KBA claims to be responsible for creating and which cost a small amount of KBA funds, we are left with the realization that the other jobs KBA created cost over $700,000 each.
KBA defends itself by noting that it focuses on long-term nurturing of the bioscience industry in Kansas, and less on creating jobs in the near term. Long-term goals, however, are not the forte of government, and that may be why KBA was created as an independent agency with its own revenue stream not subject to annual legislative or executive branch appropriations.
But that leads to another problem: Arrogance and indomitability. That is much in evidence at KBA. Furthermore, we can’t really say that KBA “invests,” as it is not subject to the same constraints that govern when businesses or individuals invest. These private actors can’t conscript their capital from the people of Kansas, as does KBA. Neither does KBA have to accept responsibility for losses.
It would not be surprising to see legislation emerge to provide legislative or executive branch oversight and control over KBA. While that may improve KBA, we will still be left with the issue of the incompatible roles of government and private sector.