The AFL-CIO yesterday disputed charges by the Federal Election Commission that it has been violating federal campaign spending laws and vowed to proved its point in court.
AFL-CIO Secretary-Treasurer Lane Kirkland said the disputed transfers of some $392,000 from the giant labor federation's general treasury to a special Political Contributions Fund represented a long-standing practice never previously challenged by federal auditors.
In a lawsuit filed in U. S. District Court here, the commission charged that the payments were illegal and asked for an injunction to stop the practice. The commission also asked that the AFL-CIO be requird to pay a $10,000 fine.
Under federal elections laws, unions and their political committees are required to rely on voluntary donations for any partisan political spending or campaign contributions. These funds are supposed to be kept separate from general union treasuries, which are fled by union dues.
In a prepared statement, Kirkland protested that "the FEC complaint does not completely state the fact." He said the money transfers to the Political Contributions Fund of the AFL-CIO's Commmittee on Political Education were actually partial repayments of loans that this fund had made to COPE's nonpartisan Education Fund.
Kirkland said this was done "under a long-standing practice approved by the General Accounting Office, which policed political contribution funds before establishment of the FEC."
In response to a question, AFL-CIO spokesman AL Zack acknowledged that the loans carried no interest and were listed as "transfers" on federal election spending reports. But he maintained that from the background accompanying those reports, "it was quite apparent both to the GAO and to the election commission that these were loans."
"You can invest this money," Zack said of COPE's Political Contributions Fund. "We thought we were investing it in the public good."
COPE's Education Fund conducts programs such as voter registration and get-out-the-vote drives which are supposed to be confined to union members and their families. These activities can be supported by general union treasury money.
In addition, according to Kirkland, a total of $704,500 "was loaned to the Education Fund and only $392,500 was repaid" to the Political Contributions Fund.
Phillip S. Hughes, former director of GAO's Office of Federal Elections and now with the Department of Energy, said in a telephone interview that he could recall "a lot of discussion about how thin you can slice that baloney" but could not remember any particular resolution of the matter.
In any case, the six-member election commission took the position Aug. 11 that transfers to COPE's Political Contributions Fund apparently violated the law requiring that it be a "separate segregated" account.
According to Kirkland, the AFL-CIO "started our willingness, in view of the FEC's interpretation of the statute, to cease this practice" but wanted first to repay the $312,000 still due the Fund.
"The FEC refused our proposal and filed this complaint," Kirkland said. "We shall respond to it in court, demonstrating that we never used nonvoluntary funds for any illegal purpose . . ."
Acting under a court-imposed deadline obtained by the National Right to Work Committee, the six-member commission finally decided Thursday by a vote of 4 to 1 that there was "probable cause to believe" that law had been violated. The FEC filed suit the next day. Commisssion Chairman Thomas E. Harris, a former associate general counsel of the AFL-CIO, disqualified himself and commission member Neil Staebler dissented.
Before that, insiders at the FEC said there had been rumors within the agency that the commission might drag out the matter until President Carter's two new nominees, Sam Zagoria and John W. McGarry, were installed - on the theory they might be more sympathetic to labor's point of view.
"I hadn't heard that," Zack said when asked about such talk. "I can see how some people would gossip to that effect, but I would doubt it like hell."