Friday, March 14, 2008

Sham Audits May Have Hid Theft by G.O.P. Committee Treasurer, Lawyer Says

By NEIL A. LEWIS

WASHINGTON — The former treasurer of a Republican Congressional fund-raising committee may have stolen hundreds of thousands of dollars by submitting elaborately forged audit reports for five years using the letterhead of a legitimate auditing firm, a lawyer for the committee said Thursday.

Robert K. Kelner, a lawyer with Covington & Burling, who was brought in by the National Republican Congressional Committee to investigate accounting irregularities, said a new audit showed that the committee had $740,000 less on hand than it believed. Mr. Kelner said it was unclear whether that amount represented money siphoned off by the former treasurer, Christopher J. Ward.

Mr. Ward, who is under investigation by the Federal Bureau of Investigation, had the authority to make transfers of committee money on his own, Mr. Kelner said.

He said an investigation with the help of PricewaterhouseCoopers had “found a pattern in which Mr. Ward would transfer funds by wire out of the N.R.C.C. to outside committees.” From those outside committees, Mr. Kelner said, money was then transferred to “personal and business accounts of Mr. Ward.”

Mr. Kelner said that all of this was discovered on Jan. 28 after the current chairman of the committee’s auditing panel, Representative Michael K. Conaway of Texas, a certified public accountant, made repeated requests to speak to the committee’s outside auditors.

Mr. Conaway has said that after he was repeatedly put off by Mr. Ward, a meeting supposedly with the auditors was scheduled for that day.

But 30 minutes before it was to take place, Mr. Ward sent an e-mail message to colleagues saying that there had, in fact, been no outside audit. Party officials notified the F.B.I. and the Federal Election Commission.

Mr. Kelner said subsequent investigation showed that the five previous audits submitted to the committee by Mr. Ward for the years 2002 through 2006 were bogus. “The last genuine audit was in 2001,” he said.

The audit reports, Mr. Kelner said, “looked very genuine” and carried the logotype of a recognized auditing firm that he declined to name. He said they might have appeared real to most people who were not sophisticated readers of such reports.

Ronald Machen, Mr. Ward’s lawyer, declined to comment.

The committee is the chief fund-raising arm for Republicans running for the House.

Representative Tom Cole of Oklahoma, its chairman, briefed the Republican Congressional leadership on Thursday. In a statement, Mr. Cole said he had told them that “the information we have today indicates we have been deceived and betrayed for a number of years by a highly respected and trusted individual.”

Mr. Ward was named treasurer of the national Republican committee in 2003 after serving for several years as an assistant treasurer. He had also been a partner in a political consulting firm, Political Compliance Services, that worked in 2004 on behalf of Swift Boat Veterans for Truth, the group behind advertisements attacking the military record of Senator John Kerry of Massachusetts, the Democratic presidential nominee.

Mr. Kelner lamented the fact that the finances of the Republican committee had been set up to allow Mr. Ward to authorize wire transfers of money unilaterally.

“In hindsight, it would have been better to have had tighter controls,” he said.

Copyright 2008 The New York Times Company

End of NYT Story. Beginning of commentary by yours truly:

The rot in the Elephant party continues apace. From bribery to hooker scandals to foot tapping to shady ear-marks; the Republican ethical limbo goes every lower. This latest story is absolutely mind-boggling.

Now the Republicans are ruining their own political machine. Money is critical to all political endeavors, to pay staff, to run ads, to purchase goods and services. Republicans absolutely depend on their money advantage to remain a competitive party. They have to run more ads to convince folks to vote against their economic interests. They have to fund opposition research and polling to drive those wedge issues home. Fortunately for them, the interests they represent are rolling in cash.

In a normal election cycle business interest and others of the economic elite would gladly participate in the quid-pro-quo of campaign donations with the GOP. This year is not normal. Democrats are heavily favored over Republican in the general. The electorate is in a very foul mood thanks to the War-without-end-amen in Iraq and the economy going in the tank. This year it is the Democrats that have the fund raising advantage. The Democrats are crushing the GOP in On-line contributions. The Internets really are a collection of tubes, and those tubes are showering cash on the Donkey Party.

Even in more traditional areas of fund raising the Democrats are leading. Corporate donors are hedging their bets again, both out of necessity and as pay-back against De Lay's high-handedness. Now that "The Hammer" has been sent back to his Texas shed, the Republicans are experiencing blow-back from all his arm-twisting. Captains of industry don't like being told "my way or the highway" any more than other people. The K street project has blown up against the Elephants in a big way.

Now this little gem comes along. We have the head of the NRCC possibly imbezeling funds. No fridge full of cash for this man, he might have socked away a cool million. Exactly why should anyone be giving this man and his "organization" any cash? One contributes money to the NRCC to help elect more Republicans to office not to meet the personal needs of Christopher J. Ward. If anything points out how bad the cancer of corruption has infested the body politics this has. Republican corruption is now eating at the very structure that allows it's existence. It is like back in the times of South Vietnam when corrupt military men in the ARVN would sell munitions to the Vietcong. Corruption became suicidal self-destruction in South Vietnam. Are we seeing a repeat with Mr Ward's shenanigans?

The Republican party has alway had a problem with selfish and self serving politicians. It is at its core a philosophical issue. With the Goldwater-Regan mantra of Government is the problem; the party naturally attracts people who are interested more in power and self-aggrandizement than public service. If you don't believe in government at all, government becomes a way to line your pockets and the pockets of your cronies. Taken to its logical end, the contempt for others and the me first attitude does seem to lead inevitably to this type of institutional self destruction. When you put forth of philosophy of selfishness as the highest good, you really should not be surprised when individuals act out on that idea in socially unacceptable and sometimes illegal ways.

Even while indulging in schadenfrued Democrats and good government types should not get too carried away. Even with this bit of egregious bad behavior staring them in the face neither party in Congress has the will to tackle substantive ethics reform. It was the refusal to hold anyone to account that caused this god-awful mess in the NRCC in the first place.
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