Sin and Phin

"Fraud" in academia?

Harvard Assistant Professor Phin Cohen, an M.D. and biochemist, was studying human blood chemistry under a $200,000 research grant from the National Institutes of Health in 1972, when an aide to his department chairman asked him to sign a form. Innocuously titled "Report of Expenditures," it was designed to explain how Cohen's federal research money had been spent. Trouble was, the copy shown Cohen was blank. He asked for a list of expenditures. No, he was told, other researchers customarily signed blank forms. Administrators filled in the items later. Cohen persisted, and was warned by the School of Public Health, he says, that his protestations might hurt his career. He countered with a threat of his own: no list of expenditures, no signature on the report that was required by Government regulations.

He got the list and learned that money from his project was being used to pay people who had not worked on it. Some he had never heard of, others were scientists assigned to other projects. In 1975 Cohen called on top financial officers at Harvard to audit all grants in his department, but says he got an "inadequate" response. Afterward, he was told he would not receive his hoped-for reappointment to the faculty (Harvard denies that Cohen's inquisitiveness was the reason).

At the headquarters of NIH, Cohen got a more sympathetic response. After an NIH audit, the agency hit Harvard for a refund of $132,000. "Most of Cohen's allegations had substance," says NIH Division Manager James Shriver. "When we completed our investigation of his activities, Harvard made restitution almost immediately." But NIH was sufficiently aroused to ask for a broader investigation by the Department of Health, Education and Welfare. HEW's preliminary findings, released earlier this year, hit Cambridge like a ton of red tape: HEW auditors questioned the way Harvard accounted for 40% of $37 million in federal grants and contracts to the School of Public Health. It sought an outright refund of an additional 7%, totaling $2.35 million. Most of the problems involved inadequate documentation of "salaries and wages." The refund demands, however, were based on HEW findings that grant money went to consultants' fees, overhead costs and fringe benefits, not provided for in Government regulations.

Harvard is disputing many of the claims, and a resolution still awaits months of negotiation. But this fall tighter new HEW rules take effect. They require, among other things, that universities produce a record for 100% of the time worked by research-project staff members, even if only a portion of their work load can actually be charged to a given project.

In the years since he left Harvard, Phin Cohen has been working part time in student health services and industrial medicine. Outside of work he has trans formed himself into an avenging angel of bookkeeping; invoking the Freedom of Information Act to gain access to HEW audit files, he has made a nationwide study of the accounting practices of 100 colleges. Among his findings: overbilling of federal research grants for medical insurance; hiding cost overruns with "journal transfers"--the practice of billing one project for work done on another.

No theft is involved. Reports of criminal misuse of funds are almost nonexistent. What is at stake is the robbing of Peter to pay Paul, all within an academic context. Colleges are valuable, expensive and above all nonprofit institutions. Federal grants given for research have often been regarded as a general fund that can justifiably be used for allied but unauthorized expenses. University administrators, in fact, say that what is needed now, given the economic pinch, is more accounting flexibility rather than less.

Government research grants now total $4.5 billion a year, in the case of some universities, up to 40% of the total operating budget. The audit crackdown is likely to put a serious crimp in the already strained relationship between academia and the federal bureaucracy.

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