Regents report recommends president’s executive team disclose conflicts of interest

File+photo+-+President+John+Bardo

Manny De Los Santos

File photo - President John Bardo

A routine audit of Wichita State’s management presented to the Kansas Board of Regents this month found that members of the president’s executive team did not provide conflict-of-interest disclosures to the auditors.

At a Wichita State Innovation Alliance, or WSIA, board meeting Thursday, board members called an executive session to discuss the audit for reasons of “attorney-client privilege.” WSIA is the non-profit company that manages innovation campus. Executive sessions are closed to the public, so The Sunflower had to leave. The six other attendees of the board meeting who are not members of the board were invited to stay for the executive session.

The audit was not provided to The Sunflower by Wichita State following the board meeting but was obtained through an open records request to the board of regents.

In its report, the auditors said Innovation Campus “is being accomplished in a unique and cutting-edge manner.”

“However, the uniqueness of the Innovation Campus, and its ongoing development, have raised some questions and concerns,” the report said.

“We recommend WSIA’s board amend the Conflict of Interest Policy to more closely align with Kansas Board of Regent’s disclosure levels for significant financial or managerial interests,” the report said.

Wichita State policy requires its faculty and unclassified staff to file annual declaration and disclosure forms “to disclose whether they or their immediate family, personal household or associated entities have consulting arrangements, significant financial or managerial interests or employment in an outside entity.”

John Tomblin, president of the board, declined to comment after the executive session on the specifics of the audit or how the university will implement the recommendations of the auditor.

“They are recommendations and not requirements,” Tomblin said.

Several members of the president’s executive team did not provide those forms to the auditors for examination.

“We requested all of the conflict of interest disclosures made by Presidents Donald Beggs and John Bardo or members of the President’s Executive Team,” the audit said. “We were provided disclosures for the affiliated entities, but not for the University for the following individuals.”

—John Bardo (FY 2012, FY 2013, FY 2014, FY 2015, FY 2016)

—Donald Beggs (FY 2012)

—Tony Vizzini (FY 2012, FY 2013, FY 2014, FY 2015, FY 2016)

—Mary Herrin (FY 2012, FY 2014, FY 2015, FY 2016)

—John Tomblin (FY 2012, FY 2013, FY 2014, FY 2015, FY 2016)

—Lou Heldman (FY 2012, FY 2013, FY 2015, FY 2016)

—Andy Schlapp (FY 2012, FY 2013, FY 2014, FY 2015, FY 2016)

—David Moses (FY 2016)

—Ted Ayres (FY 2012, FY 2013, FY 2014, FY 2015)

—Darron Boatright (FY 2016)

—Eric Sexton (FY 2012, FY 2013, FY 2014, FY 2015)

—Wade Robinson (FY 2012, FY 2013, FY 2015)

The auditor, BKD LLP, recommended members of the president’s executive team follow university policy and provide yearly conflict-of-interest disclosures. BKD LLP is one of the largest accounting and advising firms in the United States, with such past clients as The Clinton Foundation.

President John Bardo did not respond to The Sunflower’s questions Thursday about the audit and whether his executive team plans to follow the recommendations of the report. Bardo is the chair of the innovation alliance board.

David Moses, Wichita State’s attorney, did not respond to The Sunflower’s questions Thursday about the audit. Moses is also an ex facto member of the innovation alliance board.

The Kansas Board of Regents selected the auditor “to ensure there is no conflict of interest or improper management or use of funds” by state universities, said Breeze Richardson, spokesperson for the board of regents. Wichita State paid for the audit.

Based on its assessment, the auditor found that “identified potential conflicts of interests are currently being properly managed and monitored.” For the most part, the president’s executive team’s potential conflicts of interest were not provided to be included in the assessment.

“During our interviews, some individuals expressed a variety of concerns regarding a perceived lack of transparency and possible conflicts of interest regarding the development of the Innovation Campus,” the report said. BKD interviewed members of the president’s executive team for the report.

According to the report, one common topic was the potential conflict of interest created by use of the developer MWCB, LLC on innovation campus. The development company is owned, in part, by Regent David Murfin. BKD said Murfin’s role as a developer on innovation campus “appears to have been appropriately identified and managed.”

“However,” the audit continued, “based on our interviews with members of the President’s Executive Team, other concerns remain.”

President Bardo did not respond to questions about the nature of those “other concerns” or what steps, if any, would be taken to address them.

Lou Heldman, vice president of strategic communications, provided a statement on the audit.

“State conflicts of interest forms have been filed electronically each year by members of the executive team and are available online for public inspection,” Heldman said.

Heldman also provided links to the Kansas Secretary of State website to Statement of Substantial Interests filed by university employees.

A Statement of Substantial Interests is different from conflict of interest disclosures. According to the Wichita State website, both are required by certain employees for the university to continue receiving federal funding.

The audit also recommended WSIA change its conflict of interest policy to better align with board of regents policy.

“Currently the (WSIA) policy requires a conflict to be disclosed if there is one person with a greater than 35% ownership in an organization, two people with a 10% ownership in the same business or investment equity, or business transaction involving value in excess of $10,000. We recommend these benchmarks be reduced to significant financial or managerial interests defined as holdings greater than $5,000 or 5%,” the audit said.

Some members of the WSIA board did not disclose their position on the board on their statements of substantial interests to the Secretary of State; others’ statements are not available because they serve an affiliate of the university, such as the foundation.

Heldman said in response to the audit Wichita State would update its conflict of interest policy to better reflect regents policy.

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Read the full audit: Wichita State University External Management Review