Rep. Mike Conaway (R-Texas), a certified public accountant, had pushed for months for an internal audit of the National Republican Congressional Committee, according to GOP members, but the committee’s treasurer at the time was reluctant.
Finally, at a recent meeting, the now former NRCC treasurer, Christopher J. Ward, relented, giving Conaway what was supposed to be an official internal audit from 2006. That document was a fake, the GOP members said. Even the letterhead on which it was sent was a forgery.
Revelations about the falsified document touched off an unfolding scandal that has rocked the NRCC and spurred a criminal investigation by the FBI into the committee’s accounting procedures.
Fearing the fallout from the discovery, the NRCC informed its principle lender, Wachovia, of potential accounting problems. Wachovia, which declined comment Thursday, had lent the committee $9 million in 2006, according to Federal Election Commission records.
Knowing the bank was required by law to notify federal investigators of any “suspicious activity,” the NRCC also alerted the FBI, Republican insiders confirmed.
At the same time, NRCC officials notified the FEC that the committee may have filed inaccurate disclosure statements.
Since the accounting irregularities were first uncovered in late January, NRCC Chairman Tom Cole (R-Okla.) has retained an outside law firm, Covington & Burling, to advise the committee and hired the accounting firm PricewaterhouseCoopers to review the committee’s finances, the chairman told members during a closed-door briefing in the Cannon Caucus Room Thursday.
But it may take four to six weeks for a forensic audit of the NRCC to be completed, one senior Republican lawmaker said, and until then, it is unclear what, if any, wrongdoing occurred or the scope of potential losses to the committee.
Thursday’s session was Cole’s first chance to address a large number of Republican colleagues since the investigation began, and he sought to reassure them that the irregularities would not hamstring the party in this fall’s elections, despite concerns they could add to the GOP’s pre-existing money woes.
Cole told his colleagues that he wasn’t sure if the committee had done a real audit since 2001, and that could open the door for a lengthy and expensive review of the committee’s financial records.
Cole spoke to members with notes detailing what he could – and could not – say, according to one member present. Conaway and Rep. John Kline (R-Minn.), who chairs the committee’s management team, also spoke.
But none gave members any more details about the alleged transgressions. And no one mentioned Ward’s name.
The former treasurer signed every FEC report the NRCC submitted from 1993 to 2003, and he was also affiliated with dozens of other Republican campaigns and leadership political action committees, some of which have already begun their own internal audits.
Ward has not responded to repeated attempts to seek comment.
In an effort to calm some of the most anxious Republicans, Cole said they could set up a private briefing with the committee’s general counsel, Don McGahn, to learn more, members said after the briefing. That way, lawmakers would be protected by attorney-client privilege.
But most members and aides have shown a distinct unwillingness to learn much more about the investigation for fear of getting ensnared in it.
The acknowledgement that the committee’s financial records might be inaccurate or falsified opens the possibility that the accounting problems could run much deeper than initially suggested in Cole’s original public statement on the matter.
Campaign committees are not required by law to perform an internal audit each year, a group of election lawyers said. But most corporations and large campaign committees do perform regular reviews to ensure their numers match the reports they file with the FEC.
Cole, Conaway and Kline were careful not to suggest in the briefing that the committee had lost any money, members said. The NRCC, Conaway and Kline all refrained from public comment.
In the short term at least, House Republicans have rallied around Cole and his NRCC team, giving him a warm ovation during Thursday’s briefing.
“Tom Cole and the audit committee at the NRCC are doing everything to get to the bottom of it,” House Minority Leader John A. Boehner (R-Ohio) told reporters after the briefing.