UCLA Names Professor in Auditor’s Case

SACRAMENTO —  The unnamed UCLA professor accused in a state legislative audit of misusing more than $500,000 in public funds was identified by university officials Wednesday as a renowned authority on tissue transplants who was part of the delegation sent to treat victims of the 1986 Soviet nuclear accident at Chernobyl.

According to university spokesman Harlan Lebo, Prof. Paul I. Terasaki of the UCLA Medical School is the individual whom auditors contend has “violated university policies, procedures and conflict-of-interest regulations by using state resources in support of his private commercial activities.”

While identifying Terasaki as the subject of the investigation, the university said in a statement that “UCLA, for its part, is proud of Dr. Terasaki’s scientific achievements” and that it believes he took part in no intentional wrongdoing. The statement also said that the financial arrangements criticized by the auditors had the full approval of the university.

UCLA officials initially refused to identify Terasaki, saying in a statement that they considered “the investigation completed and the issue resolved.”

After The Times published the allegations against the then-unnamed professor Tuesday, administrators reversed themselves and released copies of UCLA’s contract with Terasaki and the names of faculty members appointed to supervise his research and guard against possible conflicts of interests.

In his semiannual report of investigations to the Legislature, Auditor General Thomas W. Hayes stated that an inquiry prompted by an anonymous telephone tip had led to the “recovery” of more than $500,000 from commercial ventures controlled by the professor. State law prohibits Hayes from identifying employees examined by his office’s investigative audit division.

Employees found by Hayes to have misused state resources in other cases this year received reprimands, demotions, salary reductions and, in one case, dismissal. Terasaki, however, will retain his tenured professorship and remain director of a medical school laboratory; there will be no disciplinary penalty.

Terasaki could not be reached for comment, but Albert A. Barber, UCLA’s vice chancellor for research programs, said, “Paul Terasaki did not run away with $500,000 in university resources.”

Barber characterized the $500,000 payment from Terasaki’s private enterprises as “a negotiated agreement for the transfer of technology.” The university surrendered its rights to profits from the procedure in exchange for the payment.

The agreement with Terasaki, Barber said, was a special arrangement designed to keep a distinguished scientist from going elsewhere.

“We did not want to lose him,” Barber said. “That was a possibility. He is one of the most innovative, brightest people around. That (decision to transfer the rights) is what you do when you have someone (of his stature) who has been affiliated with the institution for 39 years” as a student and faculty member.

The Terasaki case is the only time the university has negotiated an explicit agreement to transfer rights to technology developed with university resources to a company formed by the researcher responsible for the invention, Barber said.

The technology in question is a method Terasaki developed in 1964 to match the tissue types of organ donors with those of patients awaiting transplants. Through the use of human lymphocytic antigen (HLA) trays invented by Terasaki, surgeons are able to make “quick, efficient and inexpensive” matches between donors and prospective recipients, the UCLA statement said.

The trays hold vials containing more than 50 varieties of human antigens, or proteins manufactured by white blood cells. Small samples--as little as one one-thousandth of a milliliter--of donor tissue can be tested with the HLA tray, allowing surgeons to check if the antigens of the donor tissue are compatible with those of a prospective organ recipient.

Because of their usefulness in transplant surgery, the trays are in great demand and their manufacture is highly profitable.

Until 1982, the federal Food and Drug Administration regulated the manufacture of HLA trays, granting licenses only to Terasaki at UCLA and to the National Institutes of Health. When that procedure was deregulated five years ago, making commercial production possible, UCLA administrators transfered the production and marketing of the HLA trays to One Lambda Inc., a firm established and controlled by Terasaki.

It was at this point, according to the auditor general’s report, that the irregularities began. Investigators found that One Lambda and other companies in which Terasaki had a primary interest used university furnishings and facilities rent-free and had their equipment repaired by UCLA workers free of charge and that 10 employees remained on the university payroll after they were officially transferred to Terasaki’s companies.

The UCLA statement acknowledged that this last activity was “inappropriate” and said Terasaki’s companies paid the university $13,178 for the employees’ salaries.

The auditor general also concluded that “university officials were aware of the professor’s plans and failed to take appropriate steps to ensure that the professor’s actions conformed with university regulations designed to prohibit conflicts of interest,” a charge UCLA officials did not deny.

In addition to collecting payments totaling $513,178 from Terasaki’s companies, the university has established a committee of three professors to oversee Terasaki’s research, university officials said.

UCLA acknowledged that HLA tray production is profitable for Terasaki’s private companies, but it said Hayes’ description of the “$500,000 payment as a ‘recovery’ (was) inaccurate,” as it “was not related to any misuse of UCLA facilities or staff by Dr. Terasaki.”

Hayes stood by his report, however, saying, “The state was entitled to some reimbursement for the use of the facilities.” The $500,000 payment, Hayes said, “was a reasonable recovery. The state got reimbursed for its time, equipment and procedure.

“The investigation prompted the negotiations that led to the payment of the $500,000,” Hayes said.

Barber acknowledged that although the university turned over manufacture of the HLA trays to Terasaki’s companies in 1984, it was not until March of this year, after Hayes’ investigation of 45 allegations against Terasaki, that UCLA entered into a formal contract governing its relationship with the professor.

Hayes’ “observation is correct,” Barber said. The auditor general’s investigation “forced us to focus in on the individual elements (and) . . . stimulated the rate at which we developed a final agreement.”

Terasaki, who holds a Ph. D. rather than a medical degree and is a professor of surgery at the medical school, has spent virtually his entire academic career at UCLA. He earned his bachelor’s and doctoral degrees there and joined the university’s faculty in 1961.

Barber said Terasaki’s research “has made organ transplants in this country possible.”

Last year, Terasaki, along with UCLA professors Robert P. Gale and Richard Champlin and Israeli physician Yair Reisner, traveled to the Soviet Union to help treat victims of the Chernobyl nuclear reactor accident in the Ukraine.

Terasaki’s prominence in the field of tissue transplants dates from the early 1960s. In addition to his development of the HLA trays, Terasaki engineered antibodies that, according to a biography issued by UCLA, “paved the way for bone marrow transplants.”

In 1968, Terasaki released a study concluding that the race of organ donors had no effect on their organs’ prospects for acceptance by transplant patients.

At the time, Terasaki told The Times, “a white man and his brother might differ more in tissue type than two persons of different races,” challenging some popular beliefs that the organs of blacks and whites were somehow different in composition.

Times staff writers Harry Nelson and Elaine Woo in Los Angeles contributed to this article.