RNC board seeking independent review of party spending

By R. Jeffrey Smith
Washington Post Staff Writer
Friday, April 23, 2010

The executive board of the Republican National Committee moved quietly this week to order an independent review of the organization's spending practices, a move that reflects internal concerns about cost controls and oversight of the $121 million in tax-exempt receipts the committee collected this election cycle.

The move came after Illinois GOP Chairman Pat Brady, a former federal prosecutor in the Justice Department's fraud section, helped conduct a confidential review of party spending at the request of national Chairman Michael S. Steele. Brady's review concluded that while the party's internal controls are good, its policies for approving expenditures warrant a deeper look, RNC officials said.

Brady and Utah businessman Bruce R. Hough, who co-chaired the review, said the independent assessment by an accounting firm will not focus on committee expenditures that have generated recent controversies, including a payment for entertainment of a Young Republicans group at a bondage-themed West Hollywood nightclub. Hough said the review will look at "what is currently happening and how to improve on it." RNC spokesman Doug Heye said, "It is not an audit."

Word of the independent review came after disclosure of another report written by Randy Pullen, the party's national treasurer, that cited cost control weaknesses. It specifically criticized finance officials for planning fund-raising events without having an approved budget

It also questioned two contracts given to RNC Finance Director Rob Bickhart, allowing his consulting firm to earn $390,000 this year in addition to his committee salary, which reports list as $162,851 per year.

The report recommended canceling the larger contract and said the failure to secure appropriate approval for the smaller one "brings into question whether or not the Good Governance Resolution is being followed."

The existence of Pullen's memo was first reported by the Washington Times.

Pullen also accused finance officials of holding up the establishment of strict controls on the party's distribution of American Express cards until the week of April 12, four months after its director of administration urged the controls. Pullen said that after conducting interviews, he was unable to establish who had approved numerous American Express card payments, because Bickhart -- who he said apparently shows up in RNC offices just three days a week -- "could not recall if he had authorized and initialed these requests."

The party's expenditures have attracted controversy partly because much of its recent revenue has been spent on the care and comfort of its staff and on further fundraising. Some of its expenditures were mislabeled in reports to the Federal Election Commission, and hefty sums have been paid to staff members for tips and office supplies without detailed public accounting.

Heye has said that the party has an overall "burn rate" of 70 percent, meaning that for every dollar it collects, it spends 70 cents on fundraising and other expenses, a percentage considered high for tax-exempt groups that bring in money to finance select causes. The Democratic National Committee has recently spent 59 percent of its revenue on administrative and fundraising costs, according to the nonprofit Center for Responsive Politics.

Research director Lucy Shackelford contributed to this report.

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