By Kathleen Day and Annys Shin
Washington Post Staff Writers
Wednesday, April 19, 2006; A01
Freddie Mac will pay a record $3.8 million fine to settle civil charges that it violated federal election law by using corporate resources to raise $1.7 million at political fundraisers, most of them for Republican members of Congress and many involving House Financial Services Committee Chairman Michael G. Oxley (R-Ohio).
The agreement with the Federal Election Commission also settles allegations that the company violated election law by contributing $150,000 to the Republican Governors Association in 2002.
The settlement, which Freddie Mac agreed to without admitting or denying it broke the law, stems from an orchestrated effort by the McLean-based mortgage company to court key lawmakers through lavish dinners and other events, the settlement shows. Organized by then-Freddie Mac chief lobbyist Mitchell Delk, the effort pumped money into the campaigns of more than 50 politicians who had direct oversight of the government-chartered company or were considered supportive of it.
Federal law prohibits companies from donating directly to candidates or using corporate money for such fundraising.
In a key part of the settlement, Freddie Mac asked and the FEC agreed to end its investigations of the former executives involved in the fundraising activities, including former chief executive Leland C. Brendsel; Delk; and another former lobbyist, Clarke Camper.
Freddie Mac wanted a "global settlement" for the company and all the individuals involved to put the matter behind it, said company spokesman David Palombi. The company would have had to pay any civil fines imposed on Brendsel, Delk or Camper.
The FEC did, however, issue "admonishment letters" to Brendsel, Delk, Camper and two consulting firms they used to help with more than 70 fundraisers from October 2000 through May 2003. Many involved dinners at the expensive restaurant Galileo, where Delk, one of the highest-paid executives at Freddie Mac, hosted dozens of fundraisers at a cost the FEC said appeared to be a discount.
The letters cautioned the former executives "to take steps to ensure that this activity does not occur in the future." Delk is now a private consultant, Camper works at General Electric Co., and Brendsel is retired.
The record fine is the latest in a series of embarrassing episodes for the company since outside auditors uncovered accounting errors in 2003 that forced it to restate earnings by $5 billion and oust its top leaders. It comes as Congress -- including the House Financial Services Committee, chaired by Oxley -- has reached an impasse on how to bolster regulation of Freddie Mac and its larger rival, Fannie Mae, which also is embroiled in an accounting scandal.
Brendsel's lawyer, Joseph E. Sandler, said in an e-mail: "The facts show that Mr. Brendsel conducted himself in all respects in an ethical, appropriate and lawful matter. We are pleased that the FEC has determined to take no further action in this case against Mr. Brendsel."
Delk's lawyer, Ken Gross, said, "We're pleased to have it behind us." Camper declined to comment, as did Oxley, the Republican National Committee and the Republican Governors Association.
The settlement provides details from internal Freddie Mac documents, including a presentation by Delk to the Freddie Mac board in 2000 in which he said, "I am an active fundraiser for a number of key members, hosting events for other donors that have raised nearly half a million dollars during the current Congress."
In a 2002 document, Delk wrote of holding "more than 40 fundraisers" for Oxley. That document's summary stated: "We proposed to Chairman Oxley a political model that was bold and unprecedented. We offered to use our fundraising model to marry his interest as Chairman with our interest in assisting committee members supportive" of Freddie Mac's goals.
Another document, summarizing lobbying efforts from 2000 to 2003, said, "Delk embarked on fundraising effort on behalf of corporation; past 18 [months], held over 75 events for members of House Financial Services Committee; raising almost $3 million (90 percent of events were hosted by M. Delk to benefit Chairman Oxley)."
Not all of the money raised went to Oxley. In many cases, the committee chairman was billed as co-hosting the event, with the funds distributed to other key Republicans on the committee.
Contrary to FEC claims and some internal company documents that Delk wrote, the company maintains that the fundraisers by Delk and Camper were private, not corporate, events. They contend that the payment to the Republican Governors Association was a mistake.
Freddie Mac asked for an FEC review after new chief executive Richard F. Syron ordered an internal investigation that found troubling information. The company ousted Delk and said his receipt of more than $2 million in severance pay would depend on the FEC's findings. Palombi said yesterday that the company has not yet determined whether Delk will get the money.
