Hard cell

Approaching the front door of the California Institute for Regenerative Medicine (CIRM) can invoke a measure of cognitive dissonance. The institute’s origins—it was brought to life by the November passage of Proposition 71, the California Stem Cell Research and Cures Act—conjure up expectations of cutting-edge technology, an image furthered by the headquarters’ location on the fourth floor of a stylish brick-and-glass office complex across the street from the Emeryville BART station. But the entryway itself is more reminiscent of the security entrance to a Rodeo Drive jewelry store or an inner-city pawnshop: “This door is locked. Please ring the doorbell,” reads a sign taped to the inside of a wire-crosshatch-reinforced window. A residential-style white, plastic doorbell is attached to the adjoining wall, and pressing the button brings CIRM receptionist Karen Lemus to the window. After identifying a visitor, Lemus opens the industrial-strength door, allowing entry into a sparse reception area. A stack of Wall Street Journal newspapers addressed to “State of California CIRM” is the only visible indication that this may well be the most controversial state agency ever funded by the taxpayers of California.

“Proposition 71 involves the technology of human embryonic cloning, cannot be justified from an ethical perspective, promises what may not happen, and is a financial boondoggle.” So began a statement last September from the Catholic Bishops of California, whose subsequent remarks were no less judgmental. Despite the bishops’ admonition, 59 percent of the electorate voted in favor of the measure, which allocates $295 million per year over a 10-year period for stem-cell research. But less than four months later, the bishops’ statement is beginning to sound prophetic.

CIRM and its 29-member Independent Citizen’s Oversight Committee (ICOC) were set up to award grants and loans for stem-cell research and research facilities. But before the first check has been written, both entities already are engulfed in a firestorm of controversy, including allegations of financial impropriety. Pending legislation and court actions may significantly modify, or even invalidate, the act and its promises of medical miracles.

The new controversy arose in February when it was revealed that five of the first 11 employees hired by the institute had worked on the Proposition 71 campaign and would be paid salaries ranging from $95,000 to $125,000 per year. It also was disclosed that at least nine of the 29 members of the oversight committee served on boards or had financial holdings in biotech or pharmaceutical companies that potentially could benefit from the publicly financed work of the institute. Critics charge that some institute members could make recommendations that would result in financial gain for themselves or their associates in the private sector.

The act itself has provisions that exempt some members of the oversight committee from conflict-of-interest laws. In February, Californians for Public Accountability and Ethical Science filed a court petition alleging that those provisions are illegal under California law. Another controversy erupted when open-government advocates pointed out that three “working groups” set up to advise the ICOC on grant awards and medical and ethical standards for research would be operating in total secrecy.

One of the first private-sector watchdogs to challenge the secrecy aspect of the working groups was Terry Francke, executive director of Californians Aware, a nonprofit open-government advocacy organization. Francke is intimately familiar with public-records law in California, having also served as legal counsel to the California Newspaper Publishers Association, taught media law at Stanford University and drafted the 1994 revisions to the Brown Act—California’s original open-meeting and public-records-disclosure law. Francke has pointed out that, because the institute and the ICOC are funded by the public, they, and the working groups, must comply with state open-meeting laws. Among other things, those laws require that meeting agendas and supporting documentation for each agenda item be provided to the public at least 10 days before a meeting is held.

The first organizational meeting of the ICOC did not comply with these requirements, and Francke attempted to bring the problem to the attention of the officers and members of the ICOC by sending them a letter outlining the law and why they were in violation of it. “What is at risk is something notoriously difficult to recapture once lost—public confidence,” Francke wrote in the January 3 correspondence. More than three months later, he has not received a response. Francke explained that the institute apparently is attempting to justify the clandestine operation of the working groups on the grounds that they are advisory in nature and only make recommendations, not final decisions. But no other government-funded advisory groups in the state are allowed to operate in secret, he said. “There is no other advisory group in California which is outside the open-meetings ambit,” he explained.

This transparency problem has now led to new legislation from state Senators Deborah Ortiz, D-Sacramento, and George Runner, R-Lancaster. The bipartisan team has proposed a Senate constitutional amendment that will require the institute and its working groups to comply with open-meeting laws and heightened conflict-of-interest requirements. Unlike Ortiz, Runner initially was opposed to Proposition 71 on moral and ethical grounds. “I struggle with the issue of the whole concept of the embryonic portion of stem-cell research on a moral and ethical level,” he said. Runner also objects to using taxpayer dollars to fund the research and says that the proposed constitutional amendment will result in more transparency. “Proposition 71 had a series of problems that we’re seeking to cure, such as the open-meeting aspects and some kind of sunshine to how it operates, those kinds of issues,” he said.

Hallye Jordan, spokeswoman for Ortiz, confirmed that Ortiz was an ardent supporter of the initiative. “In fact, she’s the one that actually got it going,” said Jordan. “She had introduced stem-cell legislation back in 2002 and then, over the years, has also tried to get funding for it through some bonds. But that didn’t happen, so she was the one that really went and did some polling on whether this is something that Californians would support in an initiative form.”

Jordan said that Ortiz wasn’t involved, however, in the drafting of Proposition 71 and felt the initiative did have problems in the areas of open meetings, conflicts of interest and patient protections, which is what the Ortiz-Runner legislation is designed to address. “What they’re trying to do is maintain the public’s confidence in the research by opening up the implementation with the disclosure of financial records and the conflicts of interest, so that the public is confident that their $3 to $6 billion is being spent for this research in a neutral way and not to provide favors to someone you happen to have business dealings with or a company that you have a vested interest in,” she explained.

Dana Cody, on the other hand, would not be disappointed if the entire proposition was found to be in violation of state law and declared invalid—and she is trying to accomplish exactly that. Cody is the executive director of the Life Legal Defense Foundation, a legal-assistance organization that opposes abortion as well as assisted suicide and is involved in other right-to-life issues. In February, the foundation filed a petition challenging the constitutionality of the act in the California Supreme Court. The Supreme Court declined to hear the case, indicating that it should be filed in a lower court, according to the foundation, and the case since has been re-filed in Alameda County.

In essence, the suit says that because the public funds earmarked for stem-cell research are not controlled by the Legislature, Proposition 71 violates Article 16 of the state Constitution. In the action, Cody’s foundation is providing legal representation for two unrelated groups, People’s Advocate and the National Tax Limitation Foundation. Both of these groups oppose the measure as taxpayer watchdogs and not necessarily on moral or ethical grounds.

Cody explained the unique partnership: “We’re definitely a pro-life group, and obviously we have moral objections to embryonic stem-cell research, and that’s one of the reasons we took this case,” she said. “I’m sure that our clients may have a different opinion on whether or not embryonic stem-cell research is something with promise or something that they would like to see done from a moral or religious standpoint. I’m sure that they have different opinions.”

Cody also emphasized that her group doesn’t get public funding and said she believes that, in the case of Proposition 71, the government should not fund a project that private venture capitalists could bankroll instead. “If embryonic stem-cell research had any promise, they would have no problem getting private funding. They don’t get private funding because it’s not a proven technology,” she said.

People’s Advocate Chief Executive Officer Ted Costa confirmed that his group doesn’t object to the concept of stem-cell research but does take issue with the lack of oversight with Proposition 71 and the fact that if CIRM is allowed to conduct its work without government oversight, other groups will be able to do the same. “This body can spend money anyway they want, and [other groups] can duplicate it,” he said. “That’s kind of like throwing money down a rat hole.”

The man behind the development, marketing and successful passage of Proposition 71 is attorney and real-estate developer Robert Klein II. Klein is now chairman of the ICOC, and as the controversy surrounding his pet project has escalated, he has become noticeably less accessible. In mid-March, Ortiz’s Senate committee held a hearing on the stem-cell program and invited Klein and other program stakeholders to testify. Before the hearing convened, the California Research and Cures Coalition, a nonprofit stem-cell promotional organization founded by Klein, sent out an e-mail urging supporters to contact Ortiz and persuade her to postpone the hearing.

“The hearing will inevitably generate press which could be damaging to the efforts of the Institute,” said the e-mail, which reportedly infuriated a number of legislators. That frustration escalated when Klein himself, who was expected to attend the hearing, backed out just before the proceedings began. Klein sent a proxy in his place, Zach Hall, who had been hired as the institute’s interim president just a week earlier and was unprepared to effectively address the committee’s inquiries.

SN&R’s attempts to pin down Klein for an interview were equally unsuccessful. Unreturned messages were left for Klein at his Fresno law firm and the CIRM Emeryville office. Klein’s chief of staff, Amy Lewis, referred calls to Red Gate Communications, a public-relations firm, where messages also were not returned. Confronted at the CIRM office, Lewis and other staffers were unavailable for interviews. Lewis initially refused a request to take photos of the headquarters but relented, allowing a few shots of only the reception area.

Meanwhile, CIRM was continuing its search for a permanent president, the only position currently listed on the institute’s Web site. A five-page “Duty Statement” calls for, among numerous other qualifications, an “inspiring presence,” a “good rapport with regulators” and an ability “to not be perturbed by criticism or controversy.”