Harter defends involvement with company

Jennifer Knight

Friday, Oct. 24, 2003 | 9:45 a.m.

In a letter to the Board of Regents Thursday, UNLV President Carol Harter defended her involvement with a company now facing legal action for corporate waste, securities violations and breach of fiduciary duty.

Harter said while serving as a director on the board of the now bankrupt PurchasePro.com, she exercised "good corporate governance," by voting to replace the company's management team and its chief executive officer, Charles "Junior" Johnson.

"After I did my duty as a board member in electing a new CEO, I resigned from the board because of time commitments I could not and would no longer make," Harter said in Thursday's statement.

Harter was named as a defendant in a federal lawsuit filed Monday. The lawsuit said the defendants entered into "illegitimate transactions and manipulated certain financial information to make it look like PurchasePro earned more revenue than it did."

After finding out about the suit, Regent Mark Alden wrote a letter to the board Tuesday asking for Board Chairman Stavros Anthony to get complete disclosure about Harter's involvement with PurchasePro.

In her letter Thursday, Harter pointed out that she served on the board for four months "as a result of a request from a significant donor to UNLV who was then the CEO of the company." She was referring to Johnson.

During that time, Harter said she received no compensation and participated in analyzing the company's financial condition and management practices, which later resulted in the removal of the CEO.

Alden said he is still on the fence about Harter's involvement but said he supports her.

"I can't criticize her or praise her," Alden said. "I'm stuck in the middle until all of this unfolds."

Alden said he has yet to see the other part of his request fulfilled -- a statement from Anthony backing Harter.

"I have yet to see a letter of affirmative support," Alden said. "I certainly would have given her that support and I do now. I support her. All it is is an allegation."

Regent Steve Sisolak said Tuesday the suit raised doubts about Harter's financial oversight over the University of Nevada, Las Vegas' budget, but Anthony said he has no concerns about her ability to do her job.

"It does not impact the university in any way that I can see," Anthony said. "As far as I'm concerned this needs to be adjudicated and the outcome of that will determine what the board will do."

Regent Linda Howard said she too saw no evidence that Harter had done anything wrong but said the lawsuit may prompt the board to take a closer look the issue.

"I now know that we need a policy that says whether or not presidents can serve on boards," Howard said. "As of now, I do not believe we have such a policy."

There is no policy, university officials said.

Before Harter took the position on the PurchasePro board of directors, she told the board she was going to do it, but that was of her own volition.

Bill Sullivan, of Paul, Hastings, Jonofsky & Walker in San Diego, Calif., represents the officers and directors of PurchasePro. He said there are several factors that will likely help Harter's case. "The fact that Dr. Harter was on the board for a short period of time and during that period time she was involved in fixing something that was wrong with the company is very much going to serve her well," Sullivan said. "But keep in mind there's no proof of breach of fiduciary duty here. No one has made that case."

Harter is expected to get her own attorney in the case.