Talk about beating the clock. Last night's National Republican Congressional Committee Dinner raised $8.6 million. President Bush gave his remarks without that annoying ketchup colored stain of lost donations distracting the crowd. Today, The Washington Post reported on the unfolding NRCC accounting scandal. Treasurer Christopher J. Ward may have absconded with as much as $1 million from the Republican fundraising arm. The article stated:
The former treasurer for the National Republican Congressional Committee transferred as much as $1 million in committee funds into his personal and business accounts, officials announced today, describing a scheme that could prove to be one of the largest campaign frauds in recent history.
For at least four years, Christopher J. Ward, who is under investigation by the FBI, used wire transfers to funnel money out of the NRCC and into other political committees he controlled, then shifted the funds into his own personal accounts, the committee said.
The committee also announced that it had submitted to banks five years of audits and financial documents allegedly forged by Ward, some of which were used to secure multimillion-dollar loans. It is a violation of federal bank fraud laws to obtain loans through false statements; such crimes are punishable by up to $1 million in fines and 30 years in prison.
Five days ago I did a piece detailing the leadership failures amongst the NRCC Executive Committee, many who voted for tougher laws intended to prevent such financial malfeasance. While my Representative, Mike Conaway R-TX made the catch, it took a full year for the illicit behavior to come to light.
The article had several other interesting nuggets. As for the committee's internal controls consider this statement from the forensic auditor:
Ward had the sole power at the NRCC to use wire transfers to shift money into any accounts he wanted. "He was able to get a wire transfer without getting a second sign-off," Kelner said.
Hear are my questions. One, why didn't Republican leadership have the expectation that they would meet with auditors during the audit process? Sarbanes-Oxley changed audit practices even for non-profits, adding interviews with those responsible for governance.
Two, why didn't they receive the audit results and management letter from a full partner in the audit firm? Accepting "an audit" from the CFO at full face value is a red flag in an of itself.
Rep. Thomas Davis, R-VA who now chairs an executive committee that serves as the NRCC board, said that for several years, Ward turned over documents to lawmakers that appeared to be legitimate reviews by an outside firm. They showed accurate balance sheets. "This guy produced audits, and they looked fine," he said.
And three, why did it take a full calendar year for CPA Mike Conaway to become suspicious? He knows audit and accounting cycles. Depending on the NRCC's fiscal year, some activity between the audit firm and leadership, including governance, should have transpired before January 2008.
The first inkling of trouble came when Conaway took over the NRCC's auditing subcommittee in early 2007. A certified public accountant himself, Conaway said in interviews that he asked for something considered routine in the corporate world: an audit of NRCC books for the previous year by an outside firm and a meeting with the auditors. "My expectation was that that frank meeting would take three minutes," Conaway said.
Instead, Ward kept putting him off, he said. "Okay, we'll get it for the next meeting, we'll get it for you," Ward said, according to Conaway, who became suspicious of what he described as Ward's "passive aggressive" behavior.
He said Ward avoided the issue for months, until January, when Ward told Conaway that he and GOP lawmakers would meet with auditors. But Ward canceled the meeting 30 minutes before it was scheduled to begin.
Republicans called the outside firm and found out that no audits had been done since 2003. After looking at the documents Ward had given them for each year, they determined that he had fabricated them, according to Davis and other officials with knowledge of the matter, who spoke on the condition of anonymity.
The matter is being portrayed as an unethical individual but it is clearly a failure of Republican leadership. . I’ll bet none of them step up to the plate of governance accountability, especially those who voted for Sarbanes-Oxley in 2002. Enron, WorldCom, NRCC…
The former treasurer for the National Republican Congressional Committee transferred as much as $1 million in committee funds into his personal and business accounts, officials announced today, describing a scheme that could prove to be one of the largest campaign frauds in recent history.
For at least four years, Christopher J. Ward, who is under investigation by the FBI, used wire transfers to funnel money out of the NRCC and into other political committees he controlled, then shifted the funds into his own personal accounts, the committee said.
The committee also announced that it had submitted to banks five years of audits and financial documents allegedly forged by Ward, some of which were used to secure multimillion-dollar loans. It is a violation of federal bank fraud laws to obtain loans through false statements; such crimes are punishable by up to $1 million in fines and 30 years in prison.
Five days ago I did a piece detailing the leadership failures amongst the NRCC Executive Committee, many who voted for tougher laws intended to prevent such financial malfeasance. While my Representative, Mike Conaway R-TX made the catch, it took a full year for the illicit behavior to come to light.
The article had several other interesting nuggets. As for the committee's internal controls consider this statement from the forensic auditor:
Ward had the sole power at the NRCC to use wire transfers to shift money into any accounts he wanted. "He was able to get a wire transfer without getting a second sign-off," Kelner said.
Hear are my questions. One, why didn't Republican leadership have the expectation that they would meet with auditors during the audit process? Sarbanes-Oxley changed audit practices even for non-profits, adding interviews with those responsible for governance.
Two, why didn't they receive the audit results and management letter from a full partner in the audit firm? Accepting "an audit" from the CFO at full face value is a red flag in an of itself.
Rep. Thomas Davis, R-VA who now chairs an executive committee that serves as the NRCC board, said that for several years, Ward turned over documents to lawmakers that appeared to be legitimate reviews by an outside firm. They showed accurate balance sheets. "This guy produced audits, and they looked fine," he said.
And three, why did it take a full calendar year for CPA Mike Conaway to become suspicious? He knows audit and accounting cycles. Depending on the NRCC's fiscal year, some activity between the audit firm and leadership, including governance, should have transpired before January 2008.
The first inkling of trouble came when Conaway took over the NRCC's auditing subcommittee in early 2007. A certified public accountant himself, Conaway said in interviews that he asked for something considered routine in the corporate world: an audit of NRCC books for the previous year by an outside firm and a meeting with the auditors. "My expectation was that that frank meeting would take three minutes," Conaway said.
Instead, Ward kept putting him off, he said. "Okay, we'll get it for the next meeting, we'll get it for you," Ward said, according to Conaway, who became suspicious of what he described as Ward's "passive aggressive" behavior.
He said Ward avoided the issue for months, until January, when Ward told Conaway that he and GOP lawmakers would meet with auditors. But Ward canceled the meeting 30 minutes before it was scheduled to begin.
Republicans called the outside firm and found out that no audits had been done since 2003. After looking at the documents Ward had given them for each year, they determined that he had fabricated them, according to Davis and other officials with knowledge of the matter, who spoke on the condition of anonymity.
The matter is being portrayed as an unethical individual but it is clearly a failure of Republican leadership. . I’ll bet none of them step up to the plate of governance accountability, especially those who voted for Sarbanes-Oxley in 2002. Enron, WorldCom, NRCC…
