Statement Regarding RADIL Audit

July 2, 2009

Story Contact:  Mary Jo Banken, (573) 882-6212, BankenM@missouri.edu

COLUMBIA, Mo. - University of Missouri Provost Brian Foster has confirmed structural changes for the Research Animal Diagnostic Laboratory (MU RADIL) to address issues raised by university auditors. As a result, Dr. Alex Bermudez has assumed the role of interim director with responsibility for all MU RADIL operations, which will continue to play a major role in MU research and economic development activities.

MU RADIL, currently composed of nine College of Veterinary Medicine faculty members, is a long-standing program that was developed about 40 years ago to provide material for the National Institutes of Health (NIH)-funded laboratory animal veterinarian training program. Currently, MU RADIL serves as a testing laboratory for research services across the country and internationally, and its faculty provide services to scientists that include health monitoring and cryopreservation. Each year it generates revenues of almost $10 million for the university and with resulting economic impact for the community.

Internal auditors recently found RADIL financials to be in good order but stated that internal controls should be improved. Specifically, in 2005, the eight faculty comprising MU RADIL formed a private venture company, now known as Impact Bio Labs, LLC. This potentially valuable development has generated conflict of interest problems. Because the LLC (Limited Liability Corporation) does business with MU RADIL, it was necessary to make a structural change in RADIL to address the conflict of interest issues as well as other management issues.

In general, conflict of interest occurs when an employee may have outside financial interests that somehow are inconsistent with effective performance of their university jobs, or that somehow may influence performance of their jobs in ways that could be personally advantageous. Under university rules a conflict of interest is described as follows:

"University employees shall faithfully discharge their duties and shall refrain from knowingly engaging in any outside matters of financial interest incompatible with the impartial, objective, and effective performance of their duties. They shall not realize personal gain in any form which would influence improperly the conduct of their university duties. They shall not knowingly use university property, funds, position or power for personal or political gain..."

Because Impact Bio Labs, LLC has done business with MU RADIL, and future business is planned, a structural change was needed to manage the conflict of interest and numerous management issues. Dr. Lela Riley no longer serves as director of MU RADIL, and Dr. Alex Bermudez, who is not a member of the LLC or a participant in the MU RADIL fee-for-services incentive plan, has assumed control of day-to-day operations. Among other duties, he will allocate work assignments, review effort verification reports, assure proper segregation of grant funds and fee-for-service income, and monitor the outside entrepreneurial efforts of the MU RADIL faculty. He also will continue to serve as director of the Veterinary Medical Diagnostic Laboratory.

"This structural change will strengthen an important MU program," Foster said. "These actions will protect both the interests of the university and the employees who have created a private entrepreneurial venture. That private effort will bring new business to the university and to the community. This audit made it clear to all of us that it simply was not possible for Dr. Riley to act in both her university capacity as director of RADIL and in her private capacity for the LLC.

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