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Wednesday, April 3, 2013 - 9:02am
AUSTIN — House lawmakers on Tuesday questioned the decision by the foundation affiliated with the beleaguered Cancer Prevention and Research Institute of Texas to cut ties with the agency and reconstitute itself as the Texas Cancer Coalition.
Legislators on both sides of the political aisle suggested that the attorney general's office should put the nonprofit into receivership to guarantee money donated to benefit CPRIT reaches the institute.
Without receiving state approval, and amid lingering conflict of interest concerns involving both CPRIT and the foundation, the foundation rebranded itself as the Texas Cancer Coalition and began to wind down its operations in March. The nonprofit had roughly $613,000 on hand, and was prepared to pay $328,000 to cover its existing bills and contract fees. But the attorney general's office has ordered the foundation to stop spending, amid concerns that donations made to CPRIT might not end up reaching the institute.
“We should be judicious of every cent that’s going out of the foundation, so if there is something to preserve for the institute, we can have that,” said state Rep. Trey Martinez Fischer, D-San Antonio. The attorney general “should take a more proactive role in managing the wind down of this foundation."
To help CPRIT attract top talent, legislators authorized the creation of the CPRIT Foundation in 2009 to supplement the salaries of the institute's executive director and chief scientific officer. Martinez Fischer pointed out that at the time, lawmakers also included a clause stipulating that if the nonprofit dissolved, the remaining assets would be transferred exclusively to the institute.
"The TCC's proceeding with its own formation and asserting ownership over CPRIT Foundation funds, in the absence of state authorization, necessarily raises substantial questions,” Assistant Deputy Attorney General David Whitley wrote in a letter to the nonprofit ordering the organization to cease spending pending further investigation.
Jennifer Stevens, the executive director of the foundation, told a House committee devoted to making agencies more transparent that the attorney general’s office and CPRIT officials were aware of the nonprofit’s plan to reconstitute itself as the Texas Cancer Coalition and turn over remaining assets to CPRIT. She said the board began discussing rebranding the organization in December. In March, the board voted to adopt the name "Texas Cancer Coalition," and to stop the practice of supplementing the salaries of CPRIT officials. The three individuals that served on both the CPRIT oversight committee and the CPRIT Foundation board — Jimmy Mansour, Joseph Bailes and Barbara Canales — have since left the nonprofit, but remain on the CPRIT oversight board.
“Over the course of the last few weeks, it has become apparent that the best course would be to wind down the foundation and give the remaining resources to the institute in support of their work,” Stevens said. The nonprofit plans to wind down and cease its operations within 60 days under the guidance of the attorney general's office. Stevens later added, “We’re trying to sort of untangle and at this point, we’re not 100 percent sure the best way to do that.”
Kristen Doyle, general counsel for the institute, told the committee that the nonprofit contacted CPRIT after filing paperwork to reconstitute itself as the Texas Cancer Coalition. “I was shocked that this was being told to us as an afterthought, several days after it happened,” said Doyle. She said the institute asked the attorney general’s office to intervene because the institute was concerned the nonprofit would spend or obligate money that should go to the institute.
State Rep. Charles Perry, R-Lubbock, said it was “disingenuous” for the nonprofit to take steps to rebrand itself as the Texas Cancer Coalition without state authorization.
“There seems to be a deliberate attempt almost to continue down the road of lack of transparency,” he said. "...The truth of the matter is the history of the foundation and the institute goes a lot deeper."
Martinez Fischer, Perry and other members of the committee expressed concern about Mansour, Bailes and Canales remaining on the CPRIT oversight committee. Mansour and Bailes were aware of the nonprofit's plans, but resigned from the nonprofit before the vote to reconstitute the nonprofit. Canales participated in the vote before resigning.
“I have less sympathy when these board members are taking affirmative acts to hurt the institute,” Martinez Fischer said. “Why we’re not having a come to Jesus with them right now at this junction, that’s thin ice in my view.”
Wayne Roberts, the interim executive director of CPRIT, responded that the institute’s newly hired compliance officer has taken steps to ensure oversight committee members do not have conflicts of interest that would affect the institute.
“We found out about this all after the fact, so we weren’t in a situation to give advice,” Roberts said. “Since finding out about this, my focus has been almost exclusively on making sure those assets are secure, as I believe they are state assets.”
Roberts said the institute, the nonprofit and the attorney general’s office are now working together to wind down the organization’s operations. He said the attorney general should segregate funds to pay the nonprofit’s existing obligations, including supplemental payments for the chief scientific officer’s salary.
In recent months, CPRIT has been embroiled in controversy, after a state audit revealed that three grants totaling $56 million were approved without proper peer review.
The foundation was not allowed to accept donations from CPRIT grantees, but its largest donor, Peter O'Donnell, was also an investor in one of the CPRIT grantees that received financing without proper peer review, leading to speculation about potential conflicts of interest between the nonprofit and the agency.
“I have seen no indication that anyone that donated to the foundation ever influenced the peer review process and I believe such evidence would have appeared by now,” Roberts said. He also argued that allegations that CPRIT is a “slush fund” are unfounded, and said he’s seen no evidence that elected officials have attempted to improperly influence how CPRIT grants are awarded.
“Although the mistakes made are regrettable, positive steps have begun to guarantee strict controls and procedures," he said.
The Travis County district attorney’s office is conducting an investigation to determine whether the actions of former CPRIT employees were criminal, but it has cleared members of the CPRIT oversight committee from allegations of wrongdoing.
State leaders called for a moratorium on CPRIT grants in December, which left on hold a combined $183 million in approved financing. In March, CPRIT received approval to move forward on contract negotiations for 25 grants worth $72 million that were approved before the moratorium took effect.
Senate Bill 149 — which the upper chamber is expected to review this week — would reform CPRIT by restructuring the agency’s leadership. It would prohibit members of the oversight committee from sitting on the board of a nonprofit that supplements the salaries of CPRIT officials, such as the former CPRIT Foundation, and require a nonprofit associated with the agency to disclose its donors. In the last month, members of the CPRIT oversight board who also served on the board of the former CPRIT Foundation resigned from the nonprofit.
"The funds raised by the foundation to support CPRIT should go to CPRIT,” Sen. Jane Nelson, R-Flower Mound and the bill's author, wrote in an email to the Tribune. “Whether that is the CPRIT Foundation or another entity or no entity, the provisions in SB 149 will ensure that any future foundation operates with complete transparency and accountability."
This article originally appeared in The Texas Tribune at http://www.texastribune.org/2013/04/02/house-panel-questions-cprit-nonprofits-move-rebran/.