WASHINGTON – Rep. Chris Collins won re-election Wednesday – to the board of directors of the struggling Australian biotech firm he invested in at a discount and touted to his colleagues, prompting a House Ethics Committee investigation.
That company, Innate Immunotherapeutics, held its annual shareholders meeting in Sydney, Australia, Wednesday morning. There, the company's CEO, Simon Wilkinson, said the company was likely to shut down after its only product, an experimental treatment for multiple sclerosis, failed in clinical trials.
But afterward, Innate announced in a press release that Collins had been re-elected to its board.
"Innate Immunotherapeutics Limited is pleased to confirm that each of the resolutions considered at its Annual General Meeting held earlier today were passed," according to the company's statement.
Congressional ethics experts were critical of Collins' decision to run for re-election to Innate's board, given the the probe into whether he engaged in insider trading on its stock.
"He should not be doing it – absolutely not," said Meredith McGehee, strategic adviser for the Campaign Legal Center and a longtime good-government advocate. "If he wants to do this, he shouldn't be in Congress. What master is he serving?"
McGehee said Collins should make a choice – that either he should serve as a member of Congress or on the board of directors of the Australian biotech firm.
Richard W. Painter, a law professor at the University of Minnesota and former chief ethics lawyer under President George W. Bush, agreed that Collins should not have opted to continue serving on Innate's board.
"There is at least an appearance of impropriety," Painter said. "And it is highly irresponsible to get into a position where there is an appearance of impropriety."
Asked on Tuesday why Collins decided to run for re-election to Innate's board, his spokeswoman, Sarah Minkel, declined to answer.
Instead, she issued a statement that said: "Congressman Collins has followed all applicable ethics laws and regulations concerning his personal finances. While The Buffalo News continues to play into the partisan witch hunt conducted by Congresswoman Louise Slaughter and her left-wing allies, Congressman Collins is in his district this week meeting constituents, going to events and doing the job he was elected to do.”
Collins did not attend the Innate shareholders meeting, where he was re-elected without debate or controversy – and where Innate's CEO said the company faces a bleak future.
Innate's stock price topped out at $1.53 in over-the-counter trading in the United States in January, amid controversy over the fact that Collins had touted the company to then-Rep. Tom Price, a Georgia Republican who now serves as President Trump's health secretary.
Collins had long said he had high hopes for the company's experimental treatment for secondary progressive multiple sclerosis. But in late June, the company announced that drug had failed in clinical trials.
That sent the stock plummeting to its current value of about 3 cents a share. And at Wednesday's meeting, Wilkinson, the company CEO, said the company would consider investing its remaining $2 million cash in another product, but that this was unlikely and the firm would probably be closed down.
“If we can’t find anything we’ll take the old nag out and put a bullet in its neck,” Wilkinson said.
An investor in the company for 15 years and a longtime member of its board, Collins last summer bought an additional 4 million shares at a discount in a private stock sale. Price did the same thing, and so did several prominent Buffalo business and community leaders who heard about the stock from Collins.
The stock's price quickly started rising. And once Trump nominated Price to be health secretary, that price rise prompted Public Citizen's Congress Watch and Rep. Louise M. Slaughter, a Democrat from Fairport, to complain to the Office of Congressional Ethics.
They said it appeared that Collins had violated the STOCK Act, a federal law that bars members of Congress from investing in stocks based on inside information. That especially appeared to be the case, they said, because Collins invested at the same time Congress was finishing work on a bill that includes a provision – written by Collins – that makes it easier for companies such as Innate to conduct clinical trials.
Several Collins constituents also filed ethics complaints about his actions, noting that by touting Innate's stock on House property, he could have violated a House rule that bars lawmakers from personally benefiting from their role in public office.
Those allegations took on a new seriousness on Monday, as the House Ethics Committee – which has the power to recommend punishment for lawmakers – said it was investigating the case against Collins after receiving the Office of Congressional Ethics report on his actions.
In Australia, though, Innate's leaders offered nothing but praise for the American congressman who has long been the company's largest investor.
At the company's shareholder meeting, Innate's independent chairman, Michael Quinn, said Collins had been a “straight up and down investor” and had never sold any of his shares in the company.
That fact is one of Collins' main defenses against the ethics accusations against him. Because he never sold any of his shares, he can argue that he didn't profit from any inside knowledge about Innate and the U.S. law that could theoretically boost the company's fortunes. Instead, he lost at least $5 million.
Asked about the allegations against Collins, Quinn said: "It's politically motivated, frankly."
Wilkinson, who met Collins in the office of then-Sen. Hillary Rodham Clinton in 2005 and encouraged his involvement in the company, also offered nothing but praise for Collins.
“Chris has been a fabulous supporter of the company since 2005,” Wilkinson said at Innate's annual meeting.
Anthony Klan, a business reporter for The Australian, that nation's largest national newspaper, contributed to this report after attending Innate's annual meeting in Sydney.