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Collins retains role in New Zealand firm Cites responsibility to local investors

During his election campaign, Chris Collins said he would resign from all his business positions and pour his energies into the job of Erie County executive.

But when he wrote those resignation letters, he did not send one to Virionyx, a biopharmaceutical company that is testing a new anti-AIDS drug in India and is currently seeking more money from its U.S. investors.

Collins remains one of four unpaid directors of Virionyx, which operates from Auckland, New Zealand, and is about to test an HIV vaccine in India, making this a pivotal moment in the company's history.

While the county executive earlier this month had his mind on county budgets and Six Sigma, he also was intent on buttressing Virionyx.

As the lead U.S. investor, Collins recently gathered about 20 other investors for a brunch at the Brookfield Country Club. He joined the Virionyx chief executive, who had flown in from New Zealand, in an appeal for additional capital.

"We are asking all current investors to pony up again, which happens in start-up companies," Collins told The Buffalo News during a recent interview.

Collins said he remained on the board of directors because he felt a responsibility to the local doctors, scientists, friends and neighbors -- including Sabres coach Lindy Ruff -- who put their money into Virionyx at his suggestion.

"They invested because of my confidence in the science," Collins said this week. "Lindy Ruff, and other friends of mine who are in this would say, 'I feel comfortable that Chris Collins is on the board of directors. He will never let this company disadvantage me as a U.S. investor.' "

Collins had deflected campaign criticisms that he would be a part-time county executive by promising to resign his business posts if elected. Before seeking public office in 2007, Collins had bought into troubled companies and helped turn them around.

At the time of his election, he had stakes in 10 companies and either held such titles as vice president or treasurer, or sat on their boards. Their management teams ran the daily affairs, and Collins had no operational duties.

He said at the time he would continue with the companies only as a shareholder -- as he does with General Electric and AT&T.

"Anybody who knows me knows I give 100 percent of my attention to whatever I pursue," he said in October 2007, as he promised to be a full-time Erie County executive.

But he later decided he could continue with Virionyx without affecting his duties as county executive.

No one familiar with Collins' work ethic would say he doesn't give the taxpayers an honest week. He easily spends more than 40 hours on the job, either in the office or appearing at after-hours community events. He donates all but $1 a month of his $104,000 annual salary to charities and will continue to do so while the state-appointed control board is in its hard phase -- another of his campaign promises.

Because Virionyx is in New Zealand, he doesn't stop in for status reports, as he did with his local companies. He patches into meetings by telephone, usually around 6 p.m. because of the time difference. But the fact that Virionyx is seeking additional capital makes Collins an unusual county executive in that he's helping a business raise money.

"I'm certain there is no legal prohibition on it, unless someone can show a direct conflict of interest," said Peter Reese, a Buffalo lawyer who served on the Erie County Charter Revision Commission that revamped the government's rules but did not restrict the outside activities of a county executive.

The charter says a county executive "shall devote his or her whole time to the duties of his or her office," but the authors seemed concerned that the executive would be distracted by other public offices.

Still, Reese said Collins' involvement in Virionyx raises questions.

Would Collins keep current or future investors at arm's length if they ever did business with the county, sought a job for a friend, or tried to influence him?

"It's very noble that he feels loyalty to the people who invested on account of him," Reese said. "But how about the people of Erie County? We invested in him, too. The local nature of the endeavor, or his investors, makes it more bothersome. Because he is the chief official of a large local government, if anyone can hand out government largess, it is him."

New York City's ethics code restricts the fundraising activities of city officials, said the executive director of its ethics board, Mark Davies, by e-mail. But he was unaware of any state law that would restrict such activities by a public official outside New York City.

Collins said Virionyx investors have no interest in a county government contract.

"If you are a qualified investor -- and there are strict requirements on what you have to have in liquid assets -- there isn't a one of them looking to do business with the county. These are all people who came in three years ago, when there wasn't a thought in my mind about running for county executive," Collins said.

Virionyx was incorporated in 2000. In 2005 it began a joint venture with Zeptometrix, then a Collins company on Buffalo's Main Street, to seek biodefense opportunities.

Their venture is called Buckler Biodefense Inc.

In financial statements for the year ended March 31, Virionyx says its research and development activities involve inherent risks that depend on the ability to retain key personnel and to protect its intellectual property from use by competitors.

"The company's business is based on novel and unproven technology," Virionyx says about itself.

Collins agrees there are risks, but he's more upbeat. He said Virionyx's new HIV drug is "the most promising AIDS-related treatment in development anywhere in the world, and the only one shown to kill the virus, which is the Holy Grail of what you want to do."


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