House agrees to tighten rules for Olathe-based Kansas Bioscience Authority

The House of Representatives has overwhelmingly supported a measure to try to prevent conflicts of interest by board members and staffers of the Olathe-based Kansas Bioscience Authority.

The bill, advanced on a unanimous voice vote Thursday, seeks to stop KBA officials from benefiting from the agency’s business-development grants. A final vote is expected Friday.

The state-supported Kansas Bioscience Authority was created by legislation in 2004. Its mission is to attract more bioscience companies to Kansas and nurture the industry.

The House’s legislation would prohibit the KBA’s board members, employees, agents or advisers from directly benefiting from authority contracts or transactions.

A person with a conflict would have to resign from the authority or divest of the financial interest creating the conflict.

Now, the authority only requires its board members to recuse themselves from participating in issues in which they have a conflict.

The new bill does allow board members and employees to keep their positions in cases of indirect benefits from agency decisions, as long as they disclose the indirect conflict in writing and recuse themselves from participating on the issue.

Authority board Chairman Dan Watkins did not take a position on the bill but said in a statement that the agency continues to be “committed to meeting a high standard of integrity in its operations and investments.”

“This bill provides added measures to address conflicts that may be presented and, as with our prior statutory and policy provisions, the KBA plans to adhere to them,” his statement said.

The bill is part of the fallout from a year of investigation and a lengthy audit of the agency, prompted by Sen. Susan Wagle, a Wichita Republican, and Gov. Sam Brownback’s administration.

Among the audit’s findings were two cases of potential conflict, both involving board members associated with entities that received money from the Kansas Bioscience Authority.

•  A company called NanoScale Inc. received four Bioscience Authority grants totaling $675,000. Bill Sanford, an authority board member who is now vice chairman, owns 14 percent of NanoScale and is chairman of the company’s board, according to the audit. Board minutes and interviews indicated that Sanford recused himself from the discussions and votes on the grants benefiting NanoScale.

•  Former authority board member Angela Kreps voted for contracts between the agency and KansasBio, a private bioscience trade association, according to the audit. Kreps is president of KansasBio. From 2006 to 2010, the authority contracted with KansasBio for $100,000 each year to stage a trade conference. The audit found Kreps voted on spending plans including the KansasBio contracts in 2008 and 2009.

The Senate Commerce Committee, led by Wagle, has held several hearings on allegations of misspending and other issues involving the authority and had tried to pass a similar bill.

However, the Senate bill is stalled in another committee. Senate leaders have been reluctant to move forward, concerned that controversy around the agency could compromise its mission of creating jobs.

The Senate bill would prohibit authority board members and officers from benefiting from the agency’s decisions, but did not specify that they would have to resign or divest their interest in case of a conflict.

“Their bill’s better than ours,” Wagle said.