Thursday, May 19, 2016

um.., shouldn't there be some LOTS OF orange jump suits for fraud on this epic scale?

Fortune |  Theranos’ board of directors was assembled for its government connections, not for its understanding of the company or its technology.

“With three former cabinet secretaries, two former senators, and retired military brass, it’s a board like no other.”

So begins Fortune Editor-at-Large Roger Parloff’s 2014 piece on the board of directors at Theranos, the blood-testing company that was the subject of a deeply reported story in The Wall Street Journal this morning questioning the reliability of its drug tests. Theranos disputes the story, calling it “factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents.”

Without taking a position one way or the other, I think it’s worth noting that this “board like no other” was assembled for its regulatory and governmental connections, not for its understanding of the company or its technology. That raises significant governance issues at a moment like this one, issues that may bedevil the company in the days and months to come.

Let’s take a look at Theranos’ 12-person board (which is an 11-man team if you don’t include CEO and Chairwoman Elizabeth Holmes—interesting given her stated commitment to women in STEM). We have former Secretary of State Henry Kissinger, former Secretary of Defense Bill Perry, former Secretary of State George Shultz, former Senators Sam Nunn and Bill Frist (who, it should be noted, is a surgeon), former Navy Admiral Gary Roughead, former Marine Corps General James Mattis, and former CEOs Dick Kovacevich of Wells Fargo and Riley Bechtel of Bechtel. There is also one former epidemiologist—William Foege, and, in addition to Holmes, one current executive, Sunny Balwani, who is Theranos’ president and CEO.

It’s quite an impressive group, isn’t it? But here’s what it’s not: an appropriate board of directors for a company that is valued at $9 billion. There are no sitting chief executives at other companies—a basic tenet of board best practices.

discoveriesinhealthpolicy | "Biotech Theranos Offers a Cautionary Tale for Silicon Valley."
NPR.  All Tech Considered.  By Laura Sydell.  Here.
"Here's What Warren Buffett Thinks of Theranos and its Star Studded Board."   By Daniel Roberts.  Here.

May 4, 2016
"Everything You Need to Know About the Theranos Saga So Far."
Wired.  By Nicholas Stockton.  Here.

"FDA Looks to Clamp Down on Laboratory-Developed Tests and Put an End to ‘Wild West of Medicine’: Might CLIA Problems at Theranos Support FDA’s Position?"
Dark Daily. By Andrea Downing Peck. Here.
[Answer to the title question: Yes.]

May 5, 2016
"The Fall of Theranos and the Future of Silicon Valley."
TIME.  By Lev Grossman.  Here.

May 9, 2016
"Bleeding Out: Theranos Oozes with Corporate Governance Lessons."
Compliance Week.  By Jaclyn Jaeger.  Here.

May 11, 2016
"Theranos Executive Sunny Balwani to Depart Amid Regulatory Probes."
WSJ.  By John Carreyou.  Here.

Wikipedia. Company,  Here.  Elizabeth Holmes, Here.


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