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FEDERAL ELECTION COMMISSION

WASHINGTON. D.C 204b3

REPORT OF THE AUDIT DIVISION

ON THE

ILGWU CAMPAIGN COMMITTEE

I. Background

A. Overview

This report is based on an audit of the ILGWU Campaign

Committee ("theCommitteell ) (which is the separate segregated

fund of the Interna~ional Ladies' Garment Workers Union) undertaken

by the Audit Division of the Federal Election .Commission in . .

accordance which the Commission's audit policy to determine whether

there has been compliance with the provisions of the Federal 'Election

Campaign Act of 1971, as amended (lithe Act ll). The audit was.conducted pursuant to Section 438(a) (8) of Title 2 of the United

States Code which, at the time of the audit, directed the Commission

to make from time to time audits and field investigations with .

respect to reports and statements filed under the provisions

of the Act.

The Committee registered with the House of Representatives

on April 18, 1972. The primary function of the ILGWU Campaign .

Committee is that of contributing funds to candidates seeking Federal

office.

The audit covered the period January 1, 1977 through

December 31, 1978, the final coverage date of the latest report

filed by the Committee at the time of the audit. The Committee

reported opening cash at January 1, 1977 of $63,468.14, total

receipts for the period of $687,702.81, total expenditures for the

period of $605,601.41, and a closing cash balance on December 31,

1978 of $145,569.54.

This audit report is based on documents and working papers

which support each of the factual statements. They form part of

the record upon which the Commission based its decisions on the

matters in the report and were available to Commissioners and

appropriate staff for review•

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Recommendation

The Audit staff recommends no further act~on in this matter.

Bonds Held By Corr~ittee Not

Reported in Cash on Hand

2.

Section 104.3(a) (1) of Title 11, Code of Federal Regulations,

effective April 1, 1980, clarifies the definition of cash on

hand to include committee investments valued at cost.

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A review of Committee records and reports

revealed that the Committee had investments totaling $533,500

at 1-1-77, $435,812.50 at 12-31-77, and $435,812.50 at 12-31-78.

Although the investments were disclosed as footnotes during

1977, they were not reported during 1978. Further, the

investments are sufficiently liquid to be readily converted to

cash. The Committee had previously included these investments

in beginning and ending cash, but as a result of an audit had

been advised by a former Supervisory Officer to report investments only as a footnote to the Summary Schedule.

The committee reported a redemption of 8%

U.S. Treasury Bonds for $100,000 as a receipt on February

28, 1977. These bonds had been reported in a footnote as of

January 1, 1977 with a value of $96,687.50. On August 26,

1977 the Committee reported as a receipt a redemption of $1,000

in U.S. Government Ship Financing Bonds (Matson Navigation

company) that were reported in a footnote as of July 1, 1977

with a value of $1,000. As a result of these transactions,

the Committee's receipts were overstated by $101,000 and income

understated by $3,312.50.

Section 434(b) (1) of Title 2 of the United

States Code requires that a political committee report the

amount of cash on hand !/ at the be9inning of a reporting

period.

. The Audit staff recommended that the Committee file

an amended Statement of Organization disclosing all previously

undisclosed bank accounts.

On November 13, 1980, the Committee filed an amended

Statement of Organization disclosing all previously undisclosed

bank accounts as required.

In addition, the Audit staff recommended that the

Committee advise Local 361 and New England Region to maintain

checking accounts for depositing campaign contributions. By

"letter dated November 12, 1980, the Committee notified Local 361

and New England Region to maintain checking accounts. These

accounts were also disclosed as required.

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The Audit staff recommended that the Committee file

amendments to reflect the value of investments in cash on hand

and to reflect a reduction in receipts for bonds that were redeemed

in 1977.

On November 13, 1980, the Committee filed amendments for

year end 1977 and 1978 to reflect the value of investments in

beginning and ending cash. The amendments also reflect a reduction

in receipts of $97,687.50 for the bonds that were redeemed in 1977.

The Audit staff.reviewed these amendments and noted a $1,000

.discrepancy in cash on hand figures. In addition, there was no

deletion of the itemization of the actual redemptions.

Recommendation

Since the correct figures are sUbstantially disclosed in

these amendments, the Audit staff recommends np further action

in this matter•

.... 3. Notices Required on Solicitation Material

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Section l14.5(a) (5) of the Commission's Regulations

requires that all solicitation materials for contributions to a

separate segregated fund inform the member that the contributions

will be used for political purposes. and that the member may refuse

to contribute without fear of reprisal~

A review of available"Committee records indicated

that the notices were absent on a substantial portion of solicitation material. The Committee was advised of these provisions

and expressed a willingness to include this information on future

solicitation material.

Recommendation

The Audit staff recommends that the Committee include

the required notices on all solicitation materials used in

the future and no further action is recommended.

B. Local Union Activity

The Committee solicits contributions through direct

solicitations, raffles, trips, sales, and similar events held

by its 51 Union locals. Records relating to these events are

maintained by the locals, with the proceeds transferred to the

national headquarters.

The national headquarters provides very little written

guidance on fundraising to the local representatives and

national officials were unable to provide detailed information

on local fundraising efforts.
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In order to evaluate the Conunittee's fundraising~_

techniques, five (5) local unions were chosen for review.

'l'hese locals 2/ account for. 26.7% of the total contributions'

received by the Committee., Each local was visited, local

officials. interviewed, and records reviewed. ' ,

Discussions with'Committee officials at loc~l offices in Johnstown and Scranton, Pennsylvania revealed that ~heseoffic~sregula~lyhold "50-50 raffles" where,.half of the

proceeds from thesale,of raffle tickets is used as the prize

and the, other half is deposited into the campaignconunittee

account as profit. Therefore, only half,of'total receipts are

reported 'as contributions and .the ,amount of the prize is not

reported as an expenditure. No, record of participants in these raffl~s is maintained, as indicated above.

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Scranton, Pa.

Johnstown, Pa.

Local 23-25, New York

Ne\\" Jersey Region, ,( formerly Eastern Region)

New York Coat, Suit, Dress & Rainwear .Allied \'lorkers

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Accounting For' Raffle Contributions

and Expenditures "

During the period covered by' the audit, Section

"432(c) (l)'and (3) of Title. 2, United States Code required the"

'treasurer of a political committee to keep a detailed and exact" . accounting' of'. all contributions mad~ to a political committee and , . all expenditures made on behalf of a political committee. During

the period covered by the audit, Section 434(b) (6) (A) of Title 2,

United States Code required. a political committee to disclose the,

total amount of proceeds from the-sale, of tickets ,for each fund-·' ' raising event. ' Section', 434 (b) (11) 'of Title .2 ,United States Code

required ,a political committee to disclose the total sum of

expenditures made by the committee •

'The auditors were limited in the review by a'lack

of detailed records on individual contributors. Discussions

with Committee officials at local offices in Scranton and

Johnstown, Pennsylvania revealed that no aggregation system

:or individual contributor records were maintained. However, these

'locals conducted several sales, trips, and raffles for the Committee

each year and the possibility exists that some individuals gave

more than $100 ,a year although none were reported. Since records

,cwere not maintained the auditors could not determine if any

violations had actually occurred. Findings relating, to the ,locals ".' are shown below: ': '

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Recommendation

The Audit staff recommends no further action in this matter.

2. Transfer of Funds from ILGWU Education Account

section 44lb(a) of Title 2 of the United States

Code prohibits a union general treasury from making transfers

to its separate segregated fund.

A review of Committee records revealed that

between May 16, 1978 and July 6, 1978 the Local 91 office

of the Campaign Committee deposited $1,453.97 of campaign

contributions in the Political Education Account which also

contained union treasury funds. ,On June 6, 1978 and September

18, 1978, $1,100 was transferred from the Political Education

Account to the ILG~~ Campaign Committee national account and

on September 29, 1978, $353.97 was transferred to Local 91's

Campaign Committee Account.

"The Audit staff recommended that the Committee devise

and implement written procedures to bring itself into compliance . with the"Act ,and Commission Regulations in ,the following areas:

a. The requirement that an account of all contributions

made to the Committee should be keptOto include the name and

address of every person making a contribution in excess of $50

'and, if a person's contributions aggregate more than $200 , during a calendar year, the account should include occupation,

and the principal place of business (if any), as presently , required by Section 432(c) (1), (2) and (3). Also, direct all

,olocals to implement and maintain an aggregation system to insure

individuals contributing more than $200 in a calendar year are

identified and itemized on reports to the Commission as presently

required by 2:U.S.C.'4341b) (3).

b. The 'requirement of reporting the total amount of all . '~~c~ipts, including proceeds from fundraising events (such as

'trips, sales, and raffles) and total expenditures relating to

such events ,as presently required by 2 U.S.C. 434(b) (2) and (4).

On November 13, 1980, the written directive explaining

the procedures to the locals was submitted to the Audit staff as

required. '

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FEDERAL ELECTION COMMISSION .

1325 It: SlREET ~.w.

WASHINGTON.D.C. 204&3

. AIl)mONAL I:NFOm-'ATION REGARDING '!HIS ORGANIZATION .

MAY BE lOCATED IN A CXJMPLE'lE) CXJMPLIANCE ACrICN

FILE RELEASED BY 'tHE CDMISSION AND MADE PUBLIC IN

mE PUBLIC RECDRDS OFFICE. FOR mIS PARTICUlAR

ORGANIZATION'S CDMPLE'1E) CDMPLIANCE: ACrION FILE

SD1PLY ASK FUR. 'llm PRESS St.&'MARY OF MJR it ;':Jti7

'tHE PRESS SLW.ARY WIll. PROVIDE A BRIEF HIS'roRY OF .

mE CASE AND A. SlJI.""MARY OF 'llm ACTIONS TAKEN. IF N1'l•