Presidential spokesman Jody Powell yesterday defended the 1976 Carter campaign's decision not to report $134,000 owned the Gerald Rafshoon Advertising Agency, describing it as a minor matter about which "there was never any secret."
The Rafshoon debt is the subject of a Federal Election Commission inquiry, in part because the Carter committee did not disclose it on public campaign finance reports.
Powell said the debt had been settled through a bookkeeping arrangement between the campaign and Rafshoon after the presidential race ended. "We considered the matter closed," he said.
Tht FEC apparently disagrees. "The FEC came back and said they though we should have reported" the money, Powell said in an interview, "and we finally agreed." What was left of the debt - about $16,000 - was reported two years after the election as an amendment to FEC campaign finance reports, according to FEC records.
Federal regulations require that "any debt or obligation over $500 shall be reported as of the time of the transaction." The law also prohibits, with a few exceptions, the use of any private funds to finance presidential general election campaigns, which now are fully funded with federal money.
FEC auditors discovered the campaign debt to Rafshoon during their regular audit of the Carter committee and concluded that it should have been reported. The matter has since been referred to the general counsel of the FEC for further inquiry.
In his regular press briefing and in an interview, Powell explained the Rafshoon arrangement as follows: When the campaign closed in November 1976, it still owned more than $100,000 to the Rafshoon agency, which managed campaign advertising. At the same time, various television and radio stations owned the campaign refunds of about $100,000" for spots purchased but never run.
Powell said campaign told Rafshoon to collect that money from the stations and keep it as repayment of the campaign debt.
"Rather than us keeping our campaign general election books open," Powell said, Rafshoon was told, " . . . we will sign over [to the agency] the money that is owned to us [by the stations] and we will call it square."
"We owned Rafshoon money . . . all along" during the campaign, Powell said. He did not explain why those debts, incurred before the close of the general election campaign, were not reported as were similar obligations during Carter's primary election campaign.
Under the arrangement, Powell said the debt was to be considered settled, whether the refunds from the stations were more or less than the campaign debt to Rafshoon.
FEC auditors have questioned that part of the arrangement, suggesting that refunds exceeding the Rafshoon debt should go to the U.S. Tresury, where the money originally came from. Powell said the Rafshoon agency has since agreed to repay any excess to the Treasury. So far, the station refunds are still about $16,000 short of the debt, he said.
On a related subject, Powell disputed press reports yesterday saying that the FEC had requested a $50,000 repayment from the Carter campaign in connection with various reporting violations. About half of the repayment relates to refunds of telephone deposits - not considered a violation by the FEC.
Powell criticized the FEC yesterday for allowing references to the Rafshoon matter to appear in audit workpapers when under FEC law it was supposed to have been handled condientially by the general counsel.
"We got blind-sided on this," Powell said at this briefing. But "it didn't make any difference to us one way or the other . . . because it doesn't amount to much of anything."
Meanwhile, FEC officials have removed the documents from the public file, where they "inadvertently" were placed, according to FEC spokesman Fred Eiland. He declined further comment.