Congress investigating Gates Foundation exec

WASHINGTON — The director of the Gates Foundation's multibillion-dollar global health program, Dr. Richard D. Klausner, is at the center of a congressional investigation into practices within a government agency he once directed.

Congress is looking into possible conflicts of interest inside the National Institutes of Health. Klausner ran one NIH division, the National Cancer Institute (NCI), between 1995 and 2001.

After a two-year investigation of its own, a congressional committee has asked the Government Accountability Office (GAO) to look at conflict-of-interest guidelines and Klausner's role in a lucrative NCI contract awarded to Harvard University.

Harvard was competing for the $40 million contract at a time Klausner was being considered for two jobs at the university, including its presidency.

He did not get those jobs. But soon after leaving the NCI in the fall of 2001, he joined the board of a for-profit Boston company, Infinity Pharmaceuticals, which was co-founded by a Harvard researcher who won the NCI contract. Klausner remains on the board.

He declined to comment through a Bill & Melinda Gates Foundation spokesman.

The request for a GAO investigation came in a 17-page letter dated Aug. 8 from the House Commerce and Energy Committee.

The letter said Klausner had formally recused himself twice from NCI matters related to Harvard. And he had agreed to a one-year "cooling off" period before he could resume participating in NCI grant work related to Harvard.

However, the House letter questioned Klausner's compliance with recusal guidelines.

It said "documents and witness statements provide reasonable grounds to believe that NCI director participated personally and substantially as a government employee in matters affecting Harvard" in 1999.

A story about the House's GAO request appears in today's issue of The Cancer Letter, a subscription newsletter based in Washington, D.C. The newsletter, which broke the first stories on Martha Stewart and the ImClone biotech company, has covered the ongoing congressional investigation into the NIH.

In November 2003, when the House committee's interest in the Harvard contract was first known, Klausner told The Cancer Letter: "This was a very standard, competitive, open contract review around which I had zero interaction at any point during the review and decision process. To this day, I have no idea who was on the [review] committee."

But the House letter to the GAO said Klausner "claimed in an e-mail that he personally recruited three of the ten members of the panel, according to records and interviews."

After the first round of employment negotiations with Harvard ended in November 1999, the letter says, "reasonable grounds exist to believe the NCI Director personally and substantially participated" by conceiving, launching and authorizing financial support for an initiative to create a molecular targeting lab.

The contract for that lab was officially awarded in March 2002, but according to the House letter, Harvard had in effect won it months earlier.

Klausner has become a mini-celebrity in health research. In March, he was featured at a gala cancer fund-raiser in Beverly Hills, Calif., headlined by Tom Hanks and Lance Armstrong.

Klausner joined the Gates Foundation in May 2002 with a starting salary of $435,887, the foundation's highest at the time. The foundation would not disclose his current salary.

He and his wife, Cecile Bassen, bought a $2.3 million home in Broadview that year. This July, the couple filed for divorce.

Congress began looking at Klausner in June 2003.

House leaders complained about thousands of dollars in lecture fees Klausner had received from research organizations that had applied for federal grants. They cited Klausner's awards as one reason that NIH needed stronger rules regarding outside fees and conflicts of interest.

In May 2004, he again came under fire during a House hearing in which concerns were raised by witnesses from the ethics office at the Department of Health and Human Services.

They said that in 1997, the HHS general counsel had encouraged them to approve a $40,000 medical prize to Klausner from the University of Pittsburgh, another major NCI grant recipient. Researcher Gene Balk contributed to this story.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com