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Kansas Bioscience Authority Audit Slams Former CEO Thornton

1/26/2012 8:28:07 AM

Kansas City Business Journal by David Twiddy, Reporter

An independent audit finds that former Kansas Bioscience Authority CEO Tom Thornton wiped files and other information from his agency-issued laptop after resigning.

The KBA released the results of the forensic audit on Monday. Accounting firm BKD LLP, based in Springfield, Mo., conducted the audit.

“Overall, the forensic audit affirms that the KBA’s investment process is diligent, and it makes no significant findings or exceptions related to KBA expenditures or conflicts of interest,” KBA Chairman Dan Watkins said in a release. “The audit reports should clear the air regarding questions and allegations raised in the past year.”

To read the KBA’s announcement and access a link to the audit at the bottom of the announcement, click here. Check back on Tuesday morning for additional coverage of the KBA audit.

The KBA, charged with using $581 million of taxpayer dollars for building up the state’s life sciences industry, was criticized last year by state lawmakers and Gov. Sam Brownback for high salaries and faced accusations of potential conflicts of interest and other questionable management practices.

Thornton stepped down in April to join Cleveland Clinic Innovations.

Auditors said that when they performed computer forensics on Thornton’s computer, they found large amounts of information removed.

In interviews, the auditors said Thornton told them he removed the information “because he was concerned that representatives of the State of Kansas would be involved in the review of the computer’s content and would possibly be politically motivated to inappropriately construe or use its contents.”

Thornton also told auditors that he used the computer for personal use and that it included financial and tax information, family photos and other info “which would be embarrassing if made public.”

The audit also found that Thornton used a KBA-issued credit card to fly to Cleveland for a job interview with his current employer. He told auditors the trip was intended to discuss the KBA’s business model with Cleveland Clinic Innovations. Auditors also found instances in which Thornton was overpaid for business expenses, used KBA funds for personal expenses and bought a piece of art with a KBA credit card that was placed in his home and later donated to a charity auction.

Thornton has agreed to repay $4,680 for those expenses.

BKD also detailed that Thornton started a romantic relationship with KBA employee Lindsay Holwick in October 2009. Although many employees knew about the relationship, it wasn’t communicated to the KBA board of directors until wedding invitations went out in late 2010. The pair married in January 2011.

Even though the report largely cleared the KBA of questions about how it invested in companies and handled conflicts of interest, Brownback was not pleased.

“The facts brought forth by the audit are deeply troubling,” he said in a release. “This is not how we do business in the state of Kansas.”

Brownback called for the KBA’s board to issue a moratorium on new spending and commitments until the Legislature can resolve the KBA’s future.

“The biosciences industry is an extremely important industry in Kansas, and I am committed to growing this key sector of our state’s economy,” Brownback said in the release.

Besides the BKD audit, the KBA hired the firm of Meara Welch Browne PC to look at the authority’s financial commitments to the Wichita-based Center of Innovation for Biomaterials and Orthopaedic Research. A Wichita senator and KBA critic last year argued that the agency shortchanged CIBOR.

The two reviews cost a combined $960,000.

BKD is scheduled to present the results of its audit to a joint meeting of the Kansas House and Senate Commerce Committees on Wednesday. Agriculture Secretary Dale Rodman, Brownback’s liaison to the KBA, will make a presentation to the committees on Thursday.

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