Complete 2012 forensic audit documents - Kansas Bioscience ...

In summary, it appears that Lindsay Holwick Thornton was hired by Mr. Thornton prior to the
commencement of their personal relationship and her reporting structure was realigned under
KBA’s CFO/COO in spring 2010, prior to the marriage. Tom Thornton and Lindsay Holwick
Thornton married in January 2011. Mrs. Thornton continued her employment with KBA
through March 25, 2011 when she resigned.
In hindsight, management’s handling of this matter should likely have been in a more open and
forthright manner. While many KBA employees indicated that they were not aware of the
relationship until the engagement announcement, many other KBA employees were in a position
to notice the significance of the developing relationship between the Thorntons at a much earlier
date. Additionally, as previously mentioned, there are allegations that inappropriate intimate
behavior occurred between Mr. Thornton and Lindsay Holwick Thornton in KBA’s offices.
Furthermore, when Lindsay Holwick Thornton’s line of reporting was changed to Jan
Katterhenry, there was a perception that Lindsay Holwick Thornton was not being held to the
same level of responsibilities and requirements as those placed upon Katterhenry’s other direct
reports. Jan Katterhenry indicated that there was no preferential treatment of Lindsay Holwick
Thornton. However, as is the case with the perception of a conflict of interest, even the
perception of preferential treatment can be harmful. The perception of preferential treatment
afforded Lindsay Holwick Thornton was harmful to the office culture and morale.
KBA’s Response:
KBA management agrees that Tom Thornton’s relationship with a KBA staff member should
have been handled in a more open and forthright manner. While management believes that
Lindsay Holwick Thornton received no preferential treatment, the relationship created the
potential for and perception of preferential treatment. Management will recommend that KBA’s
Board update the policies governing the handling of any similar situations to ensure transparency
in the future.
In addition, in 2010 management contracted with an independent reporting service through
which employees can anonymously report any concerns about unethical, illegal or irresponsible
activity. These reports are automatically forwarded to the chair of the Board’s Nominating and
Governance Committee and to KBA’s general counsel, who serves as the corporate compliance
officer.
Allegations Related to the Hiring of Lindsay Holwick Thornton
Allegations have been made that Tom Thornton was acquainted with Lindsay Holwick Thornton
prior to her hiring and created a position for her that did not exist and was not needed, due to his
personal interest in her. Further, it has been alleged that she was unqualified for the
responsibilities she was to fulfill. In reviewing these allegations, BKD interviewed KBA
management and staff members and BOD, interviewed Mrs. and Mr. Thornton separately and
performed computer forensics on Lindsay Holwick Thornton’s KBA computer.
In her August 24, 2011 interview, Lindsay Holwick Thornton indicated that she was first
mentioned to Mr. Thornton as a potential employee by a mutual acquaintance at KSU in 2006 or
2007. However, at that time, she was not interested in leaving her then employer and did not
pursue an interview. However, in mid-2008, Lindsay Holwick Thornton decided to follow-up on
any potential employment opportunities with KBA and contacted Tom Thornton to inquire. It
appears that Lindsay Holwick Thornton imported her Outlook calendar from her previous
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