Audits of Bush/Cheney '04 and Clark for President
On March 22, 2007, the Commission approved the final audit reports on Clark for President, Inc. (CFP) and Bush-Cheney '04, Inc. (General Committee) and the Bush-Cheney '04 Compliance Committee, Inc. (Compliance Committee). The agency has now completed 10 of the 14 required audits from the 2004 Presidential election.
Federal law requires the Commission to audit every political committee that receives public funds to ensure that those funds were not misused and that the committee maintained proper records and filed accurate reports. If a committee received funds in excess of its entitlement, incurred non-qualified campaign expenses, had surplus funds or committed an apparent violation of the law, the Commission requires it to repay public funds to the U.S. Treasury.
Clark for President audit
Clark for President, Inc. (CFP) was the principal campaign committee of General Wesley K. Clark, a candidate for the Democratic Party's nomination for President in 2004. The audit of CFP's finances included six findings and recommendations, two of which resulted in payments to the U.S. Treasury. CFP's $257,226 payment is the result of the audit finding that the committee:
- Received excessive in-kind contributions resulting from improper payment for travel on private aircraft; and
- Failed to properly remedy excessive monetary contributions.
Excessive in-kind contributions. The term "contribution" is defined as a gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for federal office. An in-kind contribution is most typically the provision of goods or services at less than the usual and normal charge. 11 CFR 100.52(a) and (d).
Some of CFP's campaign flights involved private aircraft owned by Cullman Ventures LLC (Cullman), a Limited Liability Company that had not elected corporate status with the Internal Revenue Service. CFP reimbursed Cullman for these flights using the 1st Class rate between the cities served. The audit revealed that the flights in question were on aircraft operating under a FAA commercial certification, and according to the travel rules in place at the time, the flights should have been paid at the usual and normal charter rate. 11 CFR 100.52(a) and (d); 100.93(a)(2). Since the 1st Class rate paid is less than the required reimbursement amount, the difference results in an excessive in-kind contribution from Cullman to CFP. As a result, CFP must pay $9,315 to the U.S. Treasury—the amount of the excessive in-kind contribution.
Receipt of Excessive Monetary Contributions. Under Commission regulations, if a committee receives contributions that appear to exceed the limits, the committee may remedy the violation by refunding the excessive amount or, if the check is drawn off a joint checking account, the committee may seek a reattribution of the excessive portion to the other account holder, within 60 days of receipt. 11 CFR 110.1(k)(3).
CFP retained a consultant, The Synetech Group (Synetech), to collect, process and record contributions. This service included sending reattribution notices and other notification letters to contributors who appeared to have made excessive contributions. CFP states that Synetech failed in many instances to send reattribution letters to cure excessive contributions in a timely manner. As a result, CFP must pay $247, 911 to the U.S. Treasury—the amount of unresolved excessive contributions.
Bush/Cheney audit
Bush-Cheney '04, Inc. (General Committee) was the principal campaign committee for President George W. Bush, the Republican Party's nominee for the office of President in 2004. The Bush-Cheney '04 Compliance Committee, Inc. (Compliance Fund) was established to accept contributions solely for legal and accounting services to ensure compliance with federal campaign finance laws. Based upon an examination of the reports and statements filed by the Compliance Fund, no material non-compliance was discovered. The General Committee's audit raised questions about its receipt of possible in-kind contributions from air charter providers and expenditures that might have exceeded the general election expenditure limit, but neither resulted in a repayment.
Potential in-kind contributions from air charter providers. For a candidate to be eligible to receive any payments from the Presidential Election Campaign Fund, the candidate of a major party in a presidential election shall certify to the Commission that no contributions to defray qualified campaign expenses will be accepted, except to make up any deficiency in payments received out of the Fund. 26 U.S.C. 9003.3(b)(2).
During the course of the general election campaign, a number of flights were taken using aircraft owned by individuals, corporations and others. The flights were all reimbursed by the General Committee using the 1st Class airfare rate. The audit called into question whether the flights should have been reimbursed at the higher usual and normal charter rate. If so, the resulting underpayments would be prohibited general election contributions from the aircraft service providers. In the end, the audit found no repayment necessary since the flights in question were either not flown under an FAA commercial operating certificate or were flown on corporate-owned aircraft, justifying, at the time, the 1st Class rate payment made. 11 CFR 100.52(a)(d); 100.93(a)(2).
Hybrid ads
Another issue raised in the General Committee audit was the treatment of hybrid advertisements. These hybrid ads were communications that mentioned clearly identified Presidential candidates and generically referenced other candidates of the party. The cost of the ads was shared equally by General Committee and the Republican Party. While no determination was made during the audit, the Commission approved Notice of Proposed Rulemaking concerning hybrid ads at its open meeting on April 19, 2007. A copy of the document may be found on the FEC web site at http://sers.fec.gov/fosers/, and a summary of the NPRM will appear in next month's Record.
Copies of the audit reports are available on the FEC website at https://www.fec.gov/legal-resources/enforcement/audit-reports/.