On Wednesday, ABC News reported that a nice little brawl had broken out at the RNC over “more than $7 million in debt” that was not reported to the FEC in its April and May filings:
A GOP civil war has broken out between RNC Chairman Michael Steele and RNC Treasurer Randy Pullen.
The dust-up reveals new levels of dysfunction at the RNC and suggests the Republican National Committee is having real money problems.
In a memo obtained by ABC News, Pullen makes startling allegations against Steele’s chief of staff, (Michael Leavitt), accusing him of trying to hide unpaid invoices and causing the RNC not to report more than $7 million in debt in its April and May filings with the Federal Election Commission.
RNC officials categorically deny charges – made by its own treasurer – that Steele or his chief of staff tried to conceal any debt, but they do acknowledge that RNC did file amended reports for April and May accounting for the previously unreported debt.
What was not clear initially was that the unreported debt didn’t consist of formal loans. It consisted of overdue unpaid invoices, which must be reported as debt under FEC rules:
The Republican National Committee filed amended financial reports Tuesday showing about $3 million (sic)* in debt for April and May that was previously unreported.
RNC Treasurer Randy Pullen said in a memo to the party’s budget committee that he had discovered unpaid bills for telemarketing, legal consulting and other services. Pullen accused RNC Chairman Michael S. Steele’s chief of staff of hiding invoices and telling staff members to withhold information from Pullen.
A political party must report an invoice as a debt to the Federal Election Commission if it’s undisputed and remains unpaid for 60 days past the date the services were rendered.
This, of course, raises the question of why invoices worth millions of dollars remained unpaid for more than 60 days.
In March, the RNC reported record fundraising:
The RNC raised $11.4 million, a record high for a mid-cycle March. The RNC has $11.3 million cash-on-hand and $0 debt.
So why were invoices received well before the end of March not paid in March?
Similarly, the RNC claimed to have “$12.5 million in cash on hand at the end of April.” And yet the invoices remained unpaid at the end of April
If the money really was there, why wasn’t it used to pay the unpaid invoices? Millions of dollars of cash in hand and millions of dollars of unpaid invoices just doesn’t add up.
It’s perfectly possible that Randy Pullen is sadly out of touch with reality. However, given Michael Steele’s past shenanigans and his dismal record of financial stewardship at the RNC, I’m not sure anyone can dismiss out of hand Pullen’s allegation that Steele’s chief of staff had instructed RNC staff to hide unpaid invoices from the treasurer.
If we assume for a moment that might be true, one suspicion that inevitably comes up is that perhaps the cash that was supposed to be on hand actually wasn’t, for some reason. That’s one way to make everything add up. If the cash was actually available, why would millions of dollars of invoices remain unpaid, and the unpaid invoices be hidden from the treasurer?
And if the cash wasn’t available, what happened to it? If someone took the money and ran, that would presumably have come out by now. So was it diverted for some undercover political use?
But that, of course, isn’t the only possible explanation. It may have been just an exercise in deliberately window-dressing the RNC’s financial situation. That’s certainly the interpretation that Fox News offered:
In other words, the RNC simply wasn’t paying its bills on time to make it look as though it had more cash than it did.
Under this scenario, invoices were deliberately not paid even though they could have been, and then the unpaid invoices were deliberately hidden from the treasurer so that, for example, he would file an FEC report for April showing $12.5 million cash-on-hand and $0 debt, instead of $12.5 million cash-on-hand and $3.3 million in debt.
Of course, deliberately falsifying FEC reports with a view to misrepresenting your financial situation for political advantage is something the FEC takes an extremely dim view of, and comes down on like a ton of bricks.
If the RNC is to come out of this without serious damage, they’re going to have to convince everyone that there’s a third explanation that adds up. Which may explain why the RNC felt the need to retain former FEC chairman Michael E. Toner as outside counsel.
* The discrepancy between ABC News‘s figure of $7 million and the $3 million in the Washington Post story may lie in the fact that “RNC Treasurer Randy Pullen amended Federal Election Commission reports to show some $3.3 million in debt for April and $3.8 million for May.” It looks like ABC News assumed the April debt was paid off by the end of May, and the May debt was new debt; so they added up the two numbers. Perhaps the Washington Post assumed that all of the April debt was carried forward to May? If so, the total debt in question was $3.8 million, and they should have reported the debt as $4 million and not $3 million.