As a seven-month University audit investigating the financial mismanagement of the Biomedical Engineering Institute unfolds, the University’s relationship with the National Institutes of Health is being brought under greater scrutiny.
University officials responded to allegations that Dennis L. Polla, head of the biomedical institute, mismanaged funds from his department, the University and federal agencies.
Polla allegedly transferred money between and within University accounts and federal grants, in violation of University policy.
“Cross-transferring is a red flag,” said Edward Wink, director of the University’s Office of Research and Technology Transfer Administration. “There are questions raised when that occurs. That’s bothersome when we have a lot of cross-transferring.”
Corporations and institutions like the NIH that provide funds to University projects could demand a repayment of funds misused in the project, Wink said. The University would be liable for the costs because it receives the grants, but depending on the audit, the costs could ultimately filter down.
“If the audit is very specific, (liability) probably could get down to the department,” Wink said. “If it was some systemic problem that you couldn’t narrow down to one department, the institution would have to repay it.”
Biomedical institute employees refused to comment on the allegations. Other University officials also declined to comment directly on the ongoing audit.
But Warren Larson, chair of the Board of Regents’ audit committee, said he knew of the investigation but denied allegations that some University officials delayed the investigation into biomedical institute mismanagement.
“The absolute wrong approach would be to delay or hide,” he said.
Larson said the University is taking the right course of action by investigating the department.

The University and the National Institutes of Health
The University has a vested interest in re-establishing a good relationship with the NIH. In 1998 alone, University researchers procured more than $128 million in grants from the institutes.
In recent years, however, the University’s relationship with the NIH has been difficult. Many of the problems resulted from the University’s mismanagement of the anti-rejection transplant drug, ALG.
A federal criminal trial followed after investigators found evidence of financial mismanagement and illegal profits from selling hemoglobin, a byproduct of ALG — in addition to the illegal sale of ALG, which was not approved by the Food and Drug Administration.
Richard Condie, director of the ALG program, was fired Sept. 22, 1992 after an internal audit showed that he profited from the sale.
Dr. John Najarian, a renowned liver transplant surgeon, resigned as head of the Department of Surgery on Feb. 11, 1993, as a result of the investigation, but continued as a faculty member. Najarian was acquitted of all federal criminal counts filed against him in 1996.
In 1995, the NIH classified the University as an “exceptional organization,” meaning additional restrictions were placed on University researchers.
The University ended up paying $32 million to the U.S. government in November 1998 to settle the lawsuit that sprung from the misuse of the ALG federal grants.
Another example of federal grants mismanagement was revealed in a University audit last spring, when officials determined that a University cocaine research misused NIH grants intended for pain research.
Dr. Keith Kajander died from a cocaine overdose April 28 at the age of 45.
Auditors did not determine how much cocaine Kajander used in his experiments, but University officials agreed to pay back $11,000 of Kajander’s grants to the NIH in June.

— This article was compiled from Daily staff reports.