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Derek Lowe The 2002 Model

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Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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August 6, 2013

Academic Kickbacks in China?

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Posted by Derek

Here's a provocative post over at Chemjobber's blog, taking off from a letter to C&E News. James Collmann (emeritus at Stanford) wrote in about a recent article on Chinese scientists returning to that country to take academic positions. He mentions, as a "widely known but seldom discussed" problem, that large research grants in China require an illegal kickback, in cash, to someone at the granting agency.

Having never applied for a grant in China, I have no testimony to offer here. Some readers may, though, be able to shed some light on this from their own experiences. I will say, however, that I do not find this unbelievable at all.

And for anyone who wants to pop up in the comments section and accuse me of blind anti-Chinese bias, the reason I find this plausible is because of the way politics worked back where I grew up in Arkansas. We had a number of officials in my part of the state whose career trajectories ended up with an encounter with federal prosecutors because of this same attitude. No substantial sum of money could change hands, these folks seemed to think, without some of it sticking to theirs along the way. Road and construction projects were particularly favored for this kind of thing, but it certainly didn't, and doesn't, stop there.

And lest someone pop up in the comments to accuse me of blind anti-Arkansas bias (which hasn't happened yet, although you never know), I adduce a long list of politicians and officials from other US states, with ex-governor Rod Blagojevich of Illinois coming to mind immediately. But one could just as easily reel off names from Rhode Island, Louisiana, Connecticut, Ohio, New York, Arizona, Massachusetts and many another state beside. The only differences between them, and between them and China (or between China and dozens and dozens of other countries) is how common this behavior might be, on what scale it is practiced, and how likely it is to be uncovered or punished. Differences in degree, in other words, not in kind.

And Chemjobber's commenters waste no time in mentioning the "overhead" system built into academic grants in the US. Universities have a standard rake that they take off the top of every grant that comes in, as most of you will know. Lest you think that it's the smaller and hungrier schools that do this the most, the overhead percentage is famously highest at some of the most prestigious places. This goes for administration (a roomy category), paying the salaries of faculty who have tenure but bring in no grants themselves, paying that salaries of entire departments who bring in precious little grant money themselves (because there's precious little to be given in their subjects), and so on. Not all of these are illegitimate uses, by any means, but I think a lot of people outside of academia might still be struck by how much money changes hands, and by what percentage of each hundred thousand that Professor X pulls in for research actually ends up going to Professor X's research. In their defense, though, I will say that these overhead arrangements in the US are made explicit, although they're not exactly advertised, and are used by the universities themselves, rather than quietly lining the pockets of someone at a granting agency.

At any rate, if anyone knows more about these accusations concerning China, please let us know in the comments. And if anyone finds them unbelievable prima facie, let us know about that, too. That would be nearly as interesting.

Update: it's been pointed out to me that there are very specific regulations in the US about using overhead funds for salaries (and many other restrictions, besides). I take the point; I've never had to wade through that paperwork. But I wonder - if this money is going into some other (approved) pile at the University, does that not somehow, some way, follow on through the various budgetary piles to free up money for those other uses?

Comments (42) + TrackBacks (0) | Category: The Dark Side


1. anon on August 6, 2013 8:12 AM writes...

Similar situation in the UK universities, but I would not describe the situation as explicit or transparent.

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2. luysii on August 6, 2013 8:26 AM writes...

Let's not leave your adopted state out of the running

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3. Tony on August 6, 2013 8:39 AM writes...

In a lot of places in the world, this is just how business is. In fact many places pay their government officials low salaries because they know the position comes with 'benefits'.

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4. Anonymous on August 6, 2013 8:43 AM writes...

Transparency International tracks gov corruption, in a way: "The 2012 corruption perceptions index measures the perceived levels of public sector corruption in 176 countries and territories around the world - See more at: cpi. transparency. org

They explain their methods and results on their site. 2012 best = Denmark, Finland, N Zealand; 2012 worst = Somalia, N Korea, Afghanistan.

I wonder if they are planning a sister website to track SCIENTIFIC fraud and corruption by country?

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5. rhodium on August 6, 2013 8:58 AM writes...

You obviously have Rhode Island bias. Rhode Island should be in a class by itself.

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6. Hap on August 6, 2013 9:16 AM writes...

New Jersey, represent! (not much verification, however)

I won't get into our mayors.

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7. Anonymous on August 6, 2013 9:20 AM writes...

Re: US Academic "kickbacks" and overhead. I believe that teaching faculty or other faculty not on the grant must be paid out of tuition or other funds, and not "overhead". Overhead is supposed to be justifiably relevant to the cost of doing research: heat and electricity bills, maintenance, library costs, approx 35-40% on salaries to pay for benefits, 401k, unemployment insurance (important in chemistry!). Many university costs are explicitly EXCLUDED from being included in overhead, such as the President's Yacht at Stanford, as that is irrelevant to the research.

Of course, anything that provides relief in one area (winter snow shoveling, to get to the labs) allows them to use more of their NON-restricted funds to fatten some other Administration cow ... or provide bridge funds to a Prof stuck between grants.

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8. Big Fish on August 6, 2013 9:39 AM writes...

Back in the 90's when I was doing my postdoc in a major research institute in CA, VWR guy took us to lunch every a couple of weeks. Whenever we wanted to try a new restaurant, our lab manager would call the VWR guy. But for some reason, Fisher Sci guy never did. Guess where we bought most of our lab supplies.
Is that a kickback???

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9. A Nonny Mouse on August 6, 2013 9:42 AM writes...

On a recent visit to a UK university to set up a collaborative piece of work, the situation was explained thus:

60K total, 2/3 supplied by the government/EU. Of that, 27K for the person (though this included a 24.5% contribution to a pension- the academic staff only had 17% going into their pot)

2k for consumables
2k for training (conferences etc)
2.25k for travel

7.5k for the supervisor time

The rest was for "associate support"- 1/3 library, 1/3 HR department, 1/3 for the centre that sets up the collaborations.

As you can see, it's not so different here!

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10. Basho on August 6, 2013 9:49 AM writes...

@8: yes

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11. Alex W. on August 6, 2013 10:04 AM writes...

Imagining Patrick Stewart filling out grant proposals is going to add a whole new subtext to the X-Men movies for me.

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12. James C on August 6, 2013 10:16 AM writes...

I, for one, support the transfer of more funds to Prof. X to support the training and growth of his mutant students.

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13. Esteban on August 6, 2013 11:10 AM writes...

@8,10: It's a matter of degree, as Derek says. Every year US companies take their best clients to the Masters and the Super Bowl. Do these gestures come with an implicit quid pro quo? Probably. Degrees matter however and I personally would not equate this to a civil servant holding his/her hand out for cash, although the thought of schmoozing for dollars makes my stomach turn. Oh wait, that happens at academic conferences too.

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14. Cellbio on August 6, 2013 11:20 AM writes...


The U where I got my PhD uses 100% of tuition to cover bond payments. The bonds pay for capital projects to build more research labs that bring in more grant money and more overhead. The bond rating is exceptional, because the U can raise student fees at any time, assuring the bond obligation will be met.

Seeing how this 'sausage" is made contributes to my belief, alluded to in my comment to Derek's post about NIH's concern about data quality, that our major U's have a new mission that is not about education, but rather about getting as much public money as possible to feed the beast. Press touting major scientific advances with the potentially huge potential to cure disease fits right into this mission, and the problem with data quality in high profile publications.

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15. Anonymous on August 6, 2013 11:26 AM writes...

From here (not well referenced):

China suffers from widespread corruption. For 2012, China was ranked 80th out of 176 countries in Transparency International's Corruption Perceptions Index, on par with Serbia and Trinidad and Tobago, [less] corrupted [than the] countries of Burkina Faso, El Salvador, Jamaica, Panama, and Peru, [and] more corrupted than Sri Lanka and most developed countries. Means of corruption include graft, bribery, embezzlement, backdoor deals, nepotism, patronage, and statistical falsification.
([] = corrected phrasing unclear in original, with omission of contradictory wording)

So the idea that China might actually have a significant amount of corruption (even more than us) doesn't entirely seem unfounded (on the same scale, the US ranked 19th, ahead of France and Spain but behind Canada, Australia, NZ, Britain, Germany, Japan, and all of Scandinavia). From the map, after the pileup near us, things fall off pretty fast into the world of baksheesh-addicted government.

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16. Bernard Munos on August 6, 2013 12:48 PM writes...

I remember a similar scandal at Stanford back in the early 1990s that eventually led to the resignation of Stanford's President, Don Kennedy. At issue were expenses that had been abusively charged to overhead on government grants. They included most famously a yacht, but also wine and flowers, silk sheets, fine silverware, and expenses related to Don Kennedy's wedding at his Stanford mansion. All in all, the government claimed ~$200 million had been improperly charged for this and other things, although the settlement included a refund of only $1.2 million. The scandal triggered audits and investigations at other institutions such as "Johns Hopkins, Harvard, the Massachusetts Institute of Technology, Duke, Michigan and Wisconsin, [and] all wound up repaying the government for disputed charges".

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17. Hap on August 6, 2013 1:11 PM writes...

Was that the same Don Kennedy who ran Science for a while?

I'm so glad to see he landed on his feet after that.

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18. John Spevacek on August 6, 2013 1:36 PM writes...

I loved the headline in The Onion about the former Illinois Governor: "Most Honest Governor in Illinois History Gets Longest Prison Sentence"

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19. db on August 6, 2013 2:04 PM writes...

@14, Cellbio:

Walk that back a step or two further and see that the increased tuition and student fees get paid out of (in large part) subsidized student loans, and then wonder no more why the cost of university education keeps rising.

Meanwhile students go into more and more debt to fund educations that earn them less and less money. It's the makings of a new economic bubble, which has been being blown for a long time and may be on the verge of popping.

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20. Hap on August 6, 2013 2:31 PM writes...

Subsidizing education, though, was supposed to have benefits to the nation - having an educated populace would in theory make decisions more informed, and would hopefully help people to be able to use their knowledge in lots of different jobs and places.

The shift to a degree becoming solely an accreditation of skills rather than evidence for learning and flexibility has sort of done that in. The decreases in funding for state universities have probably amplified that - if students are going to pay more for school, they'd better make money on the degrees they get, while if schools are businesses, well, then they're going to do what they can to make sure they get paid. Add the requirement of a degree for many jobs (and the limited accessibility of many of the others to most people - trades are generally difficult to break into, I think) and a bubble is born. Cutting subsidized loans might help, but it might also just serve to limit access of the not-rich to college - if there aren't cheap accessible state schools (and they are becoming fewer and less cheap), then money = access to education.

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21. Cellbio on August 6, 2013 2:48 PM writes...

Agree with you db,a bubble. It also includes rolling out PhDs at a clip the job market can't support, because they are the producers of the currency (publications) for this bubble economy.

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22. Morten G on August 6, 2013 4:28 PM writes...

I can't find this in English so you'll have to trust my summary:

In the beginning of the 19th century Denmark was screwed financially and the king was afraid of rebellion. Penalty for embezzlement was set to life in prison and it was actually enforced (the state needed the money and the king needed people to see that he wasn't wasting their taxes). And snitching was apparently also common. After 30 years of very strict sentences bookkeeping was standardized and it was outlined very clearly what a public employee could and could not do. In addition salaries for government employees was set to follow inflation and they were given pensions. 1849 it became a constitutional monarchy and sentencing became proportional to the crime.

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23. Anonymous BMS Researcher on August 6, 2013 5:53 PM writes...

The Appalachian Coal Wars of the early 20th century ought to get much more attention from our school textbooks. Look up Battle of Blair Mountain in Wikipedia, it's quite a story.

It seems like almost *every* country has to relearn the same lessons at certain stages of economic development. Nobody learns much from history.

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24. anon on August 6, 2013 7:12 PM writes...

chumps (DL included),

Corruption is universal. only exception is that it is "legalized" in the US.

also - where do you think all the billions of US government aid ends up ? check the swiss bank accounts of people like Zardari (Pakistan) or Karzai (Afghanistan) or Mubarak (Egypt).

I don't understand why such educated folks like yourselves cant read beyond the surface (or am I giving too much credit here ).

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25. kling on August 6, 2013 10:53 PM writes...

Re kickbacks in China... I set up a see ar oh in Shanghai back in 2005, and at that time faculty were not well paid at all, I mean abt $15K or so a year. Although there were University policies that did not allow extra curricular income, moonlighting for cash was a common practice. If one needed some animal study   done, wasn't hard at all to find a professor who would give you a quote for the study, all done under the table. No hassle. No animal rights activists either.

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26. Steve on August 7, 2013 5:45 AM writes...

One of the comments at the iink refers to "overhead" expenses charged to research grants by universities not in China. I'm not a researcher, but would like more light shed on this practice. Who's mugging whom?

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27. Jonathan Hallam on August 7, 2013 5:55 AM writes...

Lets say only one-in-three proposals for research are successful, then the one successful proposal has to pay for the writing and prep of all three proposals.

This may seem wrong, but where else should the money to take time to prepare a proposal come from?

A parallel can be drawn to drug companies which have to do lots of prep and pursue false avenues to get a few drugs which are successful.

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28. ajsp on August 8, 2013 8:04 AM writes...

In the US corner/colony, see the current developments in federal funding fun over at the University of Puerto Rico (an excellent university, producing excellent chemists, btw).

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29. KOH on August 8, 2013 8:59 AM writes...

As a recent transplant from my native American academia into Chinese academia, and having just landed a big grant at that, I have a unique perspective on this subject. I did not have to do any bribing or sending in kickbacks. My boss, on the other hand, spent many days getting my name out there to the appropriate people and making sure that lots of alcohol was consumed by all parties concerned. This is Chinese business; the one who can drink the most and stay relatively level-headed will come out on top of most negotiations. Large cash bribes are much less common now (though not gone); what matters more (and really what has always mattered) is who you know and how well you know them.
The new government that just took over last year has been very public about their goal to reduce government corruption. Every week, I receive an official email cataloguing all of the University professors and administrators nationwide (including names and institutions) that have been caught using government grant funds to illegally support personal finances along with the punishments they received. The administrators and deans of my University were recently taken on a tour of the newly opened prison facility in my province as a not-so-subtle hint of where exactly they can expect to be if they are caught doing similar indiscretions. I do not know if this means corruption and kickbacks are on the decline, but I do know that the red tape and bureaucracy that my students and I have to go through just to buy something as trivial as vacuum grease is now significantly worse than the already Heller-esque Catch-22 scenarios experienced last year.
Overall, I do appreciate that the overhead costs from my grants here go directly to reasonable overhead for the proposed project (mainly payment for electricity, water, and other essential utilities). Payment for administrators and other professors come from completely separate government funds.

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30. MaryKaye on August 10, 2013 9:48 AM writes...

I served on US university admission committees for a while, and we rapidly discovered that Chinese applications had a high frequency of being untruthful about their language skills--the easiest thing for us to verify. You can lie about your GRE and hide it when you arrive, but if you do not actually speak English this becomes rapidly apparent. An amazing number of Chinese applicants got 5/5 on their TOEFL but did not turn out to speak English. The results were pretty unpleasant for everyone as the program had a substantial teaching requirement--I know someone who had to retake "English for TAs" twice, and took 10 years to get their PhD due in large part to language issues.

I received one letter which said, "I worry you will not believe my scores as everyone knows most scores are faked here, but I want you to know that those people come from Beijing. In my province we are too poor to afford fake scores." I wonder what the going price is. In at least one case we were pretty sure that the individual we interviewed by phone was not the same person as the student we admitted, so it's not just a matter of sending a fake score.

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31. NMH on August 13, 2013 10:56 AM writes...

I know of a female Chinese faculty member in a R1 research university who is unable to write in English, yet gets awarded RO1 grants. Guess who writes the grants? Her husband, who is fluent in English. The department where they are didnt seem to have a problem with granting her tenure, as long as the grant is funded. I suspect this is quite common in Chinese husband/wife teams in American academia. Many just dont seem to care if they get the money in a fair way, just as long as they get the money.

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32. eugene on August 14, 2013 5:11 AM writes...

"I know of a female Chinese faculty member in a R1 research university who is unable to write in English, yet gets awarded RO1 grants. Guess who writes the grants? Her husband, who is fluent in English."

I fail to see a big problem with this. Ideally you should expect faculty to write most of their grants, but we all know grad students and postdocs do a lot of writing on some of these. If she wrote it in Chinese and had the husband translate and improve, that would be a bit better, but I don't see a problem with outsourcing your grant writing to a family member. It's not illegal and the university is not supposed to pry into how the work gets done if that is the case.

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33. NMH on August 14, 2013 8:32 AM writes...

Eugene: I guess I see one person writing another persons grant (in this case, likely in its entireity) similar to someone taking an SAT test in someone else's name.

In either case, its unethical.

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34. eugene on August 14, 2013 3:08 PM writes...

Well, writing a grant is not a test, you just need to get the thing done. Like I'm failing right now with improving my PIs grant (that I wrote a good section of), by surfing the Internets and chemistry blogs instead...

I see the PI job as more about managing resources and people to do different jobs. This PI decided to manage resources by outsourcing grant writing. It's not so bad. I imagine you would want your PI to have some ideas on stuff, but maybe it's her ideas and the writer just fleshes them out. Even if they are not her ideas, it's not like she stole them, as they ultimately come from an underling: the husband. So she is in the end successful at her job at pulling in money flow from ideas that come from within the group unit, and managing the group.

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35. NMH on August 14, 2013 4:13 PM writes...

Ive written sections of grants and edited major parts, which I think is fine, as long as my boss (the PI) does most of the work. If so, he is paid what he is worth, as his value to the university is the idea he brings to allow fundable resaerch.

But this female PI is well known through the department to be not very bright, and so it seems likely these are her husbands ideas, not hers. She is paid for the services she renders to the department but they are not from her but from somebody else, which is dishonest and unethical.

Some have called this woman an idiot. Is it fair that she is a tenured professor who is merely a puppet for her husband?

Maybe in China.

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36. eugene on August 15, 2013 9:19 AM writes...

Well, we'll just have to disagree. I don't see much of a problem with the whole 'shadow cardinal' business. As long as the front is still smart enough to teach and advise students. Ultimately, this whole game doesn't benefit the shadow cardinal as they are forced to expend more energy playing behind the scenes instead of being able to have a fast turn-around time on decisions. Maybe the family could have divided their tasks in a smarter manner.

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37. Rokujolady on August 18, 2013 5:53 PM writes...

One you ever hear this kind of gossip in academia about male faculty members? It seem like all of the lazy stupid hack stories I hear are about women....

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38. Rokujolady on August 18, 2013 5:54 PM writes...

One you ever hear this kind of gossip in academia about male faculty members? It seems like all of the lazy stupid hack stories I hear are about women....

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39. eugene on August 19, 2013 5:26 AM writes...

True, there are plenty of male professors whose wives were also chemists and decided to forgo the career in order to focus on the kids. I'm sure for some of them, they probably wrote their husband's grants in their entirety. Probably the husband knows how to look confident and passes it off as all his own ideas, so nobody suspects anything. In fact, I guarantee you 100% that this has happened. The situation is just too common for this not to occur.

Well, by my line of reasoning there is nothing wrong with either the secret wife or secret husband staying home and writing grants scenario. I don't think it reflects on the intelligence of the part of the pair that is the actual professor and it could be part of a deal that the couple made early on in dividing up life tasks.

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40. Anthony on August 20, 2013 1:35 PM writes...

Is it any less ethical for the professor to have her husband write the grant applications than to have a grad student do it?

At least in theory, "overhead" is something that the granting agencies in the U.S. know about, know the amount, and have limits on the allowable use. That is qualitatively different from needing to pay a chunk of your grant to the personal account of the official who decides whether you get the grant.

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