Heller cites ethics issue for senator proposing investment plan

Friday, Sept. 13, 2002 | 10:02 a.m.

CARSON CITY, Nev. - State Sen. Randolph Townsend could face an ethics problem if he continues pushing legislation to invest state public pension funds in Nevada companies, Secretary of State Dean Heller said.

"It reeks of conflict," Heller said Friday of the efforts by Townsend, a Reno Republican with ties to a company that sought unsuccessfully to manage Public Employee Retirement System money.

"(But) it's not an ethical breach until you vote on it," Heller told the Las Vegas Sun.

On Thursday, Heller branded as a "bad deal" Townsend's proposal to invest up to $200 million in state retirement fund money in Nevada businesses.

Townsend, a 20-year legislator and chairman of the Senate Commerce and Labor Committee, faces little opposition in his re-election bid. He has said he plans to spend $90,000 from his campaign on advertising to promote his cause and theme: "Nevada. Invest in it."

He told the Las Vegas Review-Journal he wants to encourage investments in Nevada companies "at a time when we as a state need to send a message of investor confidence to financial institutions."

Townsend is a co-owner of Northstar Investors in Reno. Some his partners own Millennium Ventures, now called Nevada Ventures, in the same office and with the same telephone number as his company.

Nevada Ventures was rejected when it sought earlier this year to manage part of PERS' $13 billion portfolio.

Townsend told the Las Vegas Review-Journal he could not understand why the PERS invests millions in out-of-state companies in California and the East, "when it invests no money in Nevada."

However, PERS Investments Officer Laura Wallace told the Review-Journal that the retirement system has invested $4 million in IGT and Harrah's Entertainment, based in Nevada, and also invests in Bank of America, Gannett, Newmont Mining and other companies that have a Nevada presence.

Townsend's proposal has drawn legislative criticism.

State Sen. Joe Neal of North Las Vegas, the Democratic nominee for governor, said that if elected, he would veto the plan.

Assemblywoman Marcia de Braga, D-Fallon, who in 1995 was co-chair of Nevadans for Pension Protection Coalition, compared Townsend's proposal to federal debate about investing money from the Social Security Trust Fund.

Heller, a Republican, said Townsend's plan would go against the will of voters in several past elections.

He cited a referendum in 2000 during which voters rejected 59 percent to 41 percent an amendment to the Nevada Constitution that would let the state invest in companies to assist economic development in the state.

"The bottom line, what his proposal seeks to do, is water down and relax the standards that have been utilized by PERS," Heller said. "If those business ventures fail, who is left holding the bag? Taxpayers."