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08/05/91

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Stanford provides internal audit report on SLAC; no fraud found

STANFORD -- Stanford University on Monday, Aug. 5, delivered to federal officials an internal audit report that, after four and one-half months of investigation, does not support allegations of falsely obtained earthquake funds at the Stanford Linear Accelerator Center.

Stanford officials said that they would continue to investigate whether any university employee acted improperly.

Tim Axe, a former employee of the center, has alleged that some of his supervisors encouraged him and fellow employee Noel McMahon to inflate estimates of repairs necessitated by the 1989 Loma Prieta earthquake, allowing the center to improperly obtain additional operational funds from the Department of Energy.

The report concluded that there was no fraud or misappropriation related to the accusation. It said that "the estimates Messrs. Axe and McMahon prepared were not used to obtain funding or justify the obtaining of funds from DOE, had a very tenuous relationship with any budgeting of funds, and had no effect on the use of funds." And, the report said, since the Department of Energy made "no specific appropriation of funds for earthquake repair, there are no grounds for considering a misappropriation of funds, unless the funds were used for other than the general purpose of maintaining and operating SLAC. The allegation does not claim that this occurred, and our investigation confirms this."

Because internal audits are meant to answer financial questions, it was not designed to reach conclusions about allegations of individual conduct, university officials said. The university will continue to investigate on that issue.

"We take this matter very seriously," said Peter Van Etten, Stanford's new chief financial officer. "When the allegations were made, SLAC management immediately requested an internal audit by the university. Today, we delivered the report to the Department of Energy and a congressional subcommittee and, though it is not normal practice to do so, are making it public.

"In addition, we are asking the new team from the outside auditing firm of Coopers and Lybrand to review the audit and advise us on examination of other issues, including whether any Stanford employee acted improperly."

Burton Richter, Nobel laureate and director of SLAC, said that while Axe was no longer employed at the center, it was for reasons unrelated to the allegations.

"I am pleased that the audit found no misappropriation of funds and am confident that any further reviews will come to the same conclusion," Richter said.

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