Lizer voted for $300M investment in ‘company’ that may be Remington
Last weekend, after word that the Navajo Nation might purchase Remington Arms Co. hit the national news, President Jonathan Nez confirmed to the Navajo Times that the $300 million “Remington proposal” was again on the table.
Because of concerns about lack of transparency the last time the idea was considered in 2018, Nez said, “The Navajo people demand the committees who are discussing this proposal do so openly and not in executive session…” In an ironic twist, Nez’s own vice president, Myron Lizer, voted for the $300 million investment proposal on June 12 while sitting on the Navajo Nation Investment Committee as Nez’s proxy, according to Speaker Seth Damon, begging the question, once again, who knew what when?
Neither Nez nor Lizer responded to a request for comment. The story about the possibility of a revived Remington deal broke last Friday when The Wall Street Journal announced that the firearms manufacturer was “preparing to file for chapter 11 protection … and is in advanced talks for a potential bankruptcy sale to the Navajo Nation…”
Damon explained that as a normal course of business, the Nation can work on potential investments through the Investment Committee process with the Nation’s financial advisor RBK, where recommendations go from the Investment Committee to the Budget and Finance Committee for approval and then to the president.
Damon stated he could not officially verify if the “company” in play was indeed Remington. “There could be ongoing investments and dealings with investors but I can’t comment on any negotiations that may or may not exist,” said Damon.
The last time the Remington purchase was considered by the Navajo Nation, the potential deal was revealed to the public in a July 16, 2018, New York Times article that referred to a “draft letter” from the Nation offering to buy the gun manufacturer for $475 to $525 million in cash.
The story shocked the Nation, including then-President Russell Begaye, Vice President Jonathan Nez and then-Attorney General Ethel Branch, who all claimed to have no knowledge of the offer until they read about it in the New York Times.
Pearline Kirk, the Navajo Nation’s controller, remained mum on the matter, Branch promptly launched an investigation, and a firestorm of dueling press releases between the president’s office and speaker’s office ensued. “As president, I question the secrecy by which this offer was made,” said Begaye at the time.
“Offers that include high-dollar amounts and do not include the involvement of the executive branch are highly questionable. It’s my responsibility to protect the Navajo people’s money.”
The Times article also quoted a mystery attorney involved with the deal named Drew Ryce, erroneously referred to as “the tribe’s lawyer,” who is also a former colleague of Kirk. “My office will of course investigate what appears to be a highly irregular manner by which this supposed investment was pursued,” said Branch.
Certain Navajo Nation Council delegates at the time, including Tom Chee and Leonard Tsosie, decried the article as “fake news.”
Former Speaker LoRenzo Bates said there was never an offer and that Controller Kirk had only been instructed to conduct due diligence in considering the possibility of buying Remington.
At that time, Tsosie said the president’s office had been made aware of the discussions about the possible purchase in Sihasin Fund and Investment Committee meetings and that Begaye and Nez were feigning ignorance.
Three weeks ago, on June 12, the Investment Committee approved a resolution that recommends a direct equity investment to the B&F. The resolution states, “The Investment Committee hereby authorizes an investment from the Navajo Nation Master Trust Fund, not to exceed three hundred million dollars ($300M) for the acquisition of the company.”
Damon clarified that the investment Committee is made up of three members each from the legislative and executive branches, including B&F Chairman Jamie Henio, B&F member Jimmy Yellowhair, delegated Auditor General Helen Brown, Controller Kirk (chair), Tax Commission Director Martin Ashley and President Jonathan Nez.
Damon said Henio, Ashley, Yellowhair and Lizer (acting as a proxy for Nez) voted to support the proposal with Brown abstaining. Damon confirmed Investment Committee meetings are public meetings although they are not well publicized. Legislation No. 0133-20, sponsored by Henio and co-sponsored by Damon, would have the B&F Committee approve the direct equity investment “in a Company set forth in (resolution) NNICJU-08-20…”.
B&F is authorized to approve direct investments in non-public companies provided they have a projected annual rate of return of more than the five-year average rate of return on the Nation’s Master Trust Fund, which was at 4.48 percent as of March 31.
The “company” referred to in the legislation is a “manufacturing entity with a strong brand,” which would apply to gun manufacturer Remington Arms, and that due diligence was done by outside legal counsel on behalf of the controller’s office.
However, the due diligence and negotiations concerning the company are covered by non-disclosure agreements and are not publicly available, it states. The B&F Committee met on June 23 to consider Legislation No. 133-20 in executive session but it was tabled in a motion by Delegate Amber Kanazbah Crotty in order to have a work session with the Investment Committee.
B&F delegates, including Chair Henio, did not respond to a request for comment. ‘Everything blew up’ (sub) Damon verified that in 2018, the Council’s Sihasin Subcommittee voted to have the controller do the due diligence to consider the Remington deal and see what options might be available.
However, after the public backlash over the potential half-billion dollar purchase was revealed in the news media, everything came to a halt, he said. “Once everything blew up, everyone backed off of the deal,” he said. “There was never a follow-up after that.” Damon, who was the B&F chairman at the time, confirmed as far as he knew there was never an offer made.
While Kirk had presented due diligence updates to the Sihasin and Investment committees, nobody ever saw an offer, he said. The New York Times refused to share a copy of the referenced “draft (offer) letter” with the Navajo Times.
Damon said after the NYT article appeared, he asked Kirk specifically if there had been an offer made and she responded, “No, there is no offer.” Branch, the attorney general, got the same answer from Kirk, he said. Nonetheless, Damon says he is fully in support of investments that can bring revenues and jobs to the Nation.
“I think the Navajo Nation should do more direct investments that yield high returns on investment and get returned back to the Master Trust Fund,” he said. As stated in Legislation No. 133-20, the B&F is also committed to diversifying the Nation’s investment portfolio to include direct investments as a means of increasing the Nation’s overall revenue and rate of return.
Regular investments in the stock market and bond market and real estate average 1.8 to 3 percent annual returns, while direct investments in businesses can yield much more, said Damon.
He said a good example of a profitable direct investment was when the Navajo Nation casinos were created in 2008. If there is more direct investment, it can create economy for the Nation and can also help make up for the loss of revenue from Navajo Generating Station, he said.
With gun sales at an all time high during the pandemic and the bid for the “company” down to $300 million, time will tell if the deal has enough firepower.