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This report is based on documents and work papers supporting each of its factual statements. They form part of the record upon which the Commission based its decisions

on the matters in this report and were available to

,Commissioners and appropriate staff for review.

B.Key Personnel

According to documents received by the Commission,

the Treasurer of the Commmittee during the period of the audit

was Mrs. Burton Barnes. The current Treasurer is Mr. Bradley

O'Leary.

C.Scope

.~he audit included such tests as verification of total

reported receipts and expenditures and individual transactionsi

review of required supportingdocumentationi analysis of.

Committee debts and obligationsi and such other audit procedures

as deemed necessary under the circumstances.

II. Audit Findings and Recommendations

A. Luncheon Expenses

Section 44la(a) (1) (A) of Title 2, united States Code,

prohibits a political committee from contributing amounts

aggregating in excess of $1,000 per election for federal office

to any candidate or the candidate's authorized political committees. Section 100.7(a) (1) (iii) of Title 11, Code of

Federal Regulations defines contributions to include anything of value contributed to influence Federal elections. The term

"anything of value" includes in-kind contributions.

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On August 20, 1980, the Committee made contributions

of $1,000 each to Senate candidates Dave O'Neal from Illinois and

Armistead Selden from Alabama. On August 25 a luncheon honoring

Dave O'Neal was held in Houston, Texas. The Committee made

expenditures which were for the travel costs of Senator John.

Tower and his aide to attend the luncheon. These expenditures' totaled $759.93. Supporting documentation for these expenditures revealed that the purposes of the payments were for the O'Neal

fundraiser and some of the amounts were reported as "Re-O'Neal

fundraiser." within 30 days of the Houston meeting, Citizens For

O'Neal (O'Neal's Principal Campaign Committee) reported itemized

receipts totaling $24,400 from individuals and Political Action

Committees (PACS) with addresses in Texas. Prior to the Houston

meeting, Citizens For O'Neal reported itemized receipts of only $5,100 from individuals ~nd PACs in Texas.
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In late July 1980, the Committee held a luncheon in

Dallas, Texas. An initial review of Committee disbursement

records indicated that a total of $849.60 in disbursements were

apparently related to the meeting. The disbursements were

primarily for the travel costs of senator Tower and staff.

Supporting documentation for these expenditures stated that the

purposes of the payments were for the Selden fundraiser and some

of the amounts were reported as "Re-Selden fundraiser."

The Committee was informed that these expenditures may

meet the definition of in-kind contributions and therefore, were

possibly excessive contributions of' $759.93 to Senate Candidate

,O'Neal and $849.60 to Senate Candidate Selden.

At the exit conference, Committee Treasurer Brad

O'Leary said he had asked questions about PAC events and in-kind

contributions at an FEC seminar in Austin, Texas. He also said

that other candidates had been invited to the Dallas and Houston meetings~ none of Mr. O'Neal's or Mr. Selden's personal expenses

were paid for~ and although Mr. O'Neal and Mr. Selden were

introduced, they were not permitted to solicit contributions. It

was his opinion that no in-kind contributions had occurred.

In the interim Audit report, the Audit staff

recommended that the Committee submit evidence demonstrating that

these transactions were not in-kind contributions and hence not

excessive, or seek refunds of the excessive portion of the

contributions from Candidates Selden and O'Neal and provide

evidence of such refunds to the Audit ·Division.

Based on the Committee's response to the interim audit

report, the Audit staff identified an additional expenditure of

$1,177.90 ~hich related to the Selden meeting. This expenditure

was apparently for the luncheon expense. In the response, the

Treasurer further explained that the meeting Selden attended was

a luncheon for supporters of the Committee and Senator John Tower

gave a report on his activities as Chairman of the Platform

Committee of the 1980 Republican National Committee. Mr. Selden

was a guest at the luncheon and was allowed to say a few words.

The response does not make it clear whether or not he solicited

funds. The response also explains the Senator's itinerary for

the trip and points out that this meeting was one of many

functions attended including the official opening of his west

Texas office.

Mr. O'Leary stated that the luncheon attended by Mr.

O'Neal was not a Committee sponsored event. It was a luncheon

sponsored by a private organization where Mr. O'Neal was the

guest of honor and Senator Tower was one of the attendees. The

response further states that as with the earlier trip, the

luncheon was one of several events on the Senator's itinerary.
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, '~ . In addition, Mr. O'Leary stated that these expenditures . were reported as being related to Selden and 'O'Neal fundraisers

due to a misunderstanding by the Committee's bookkeeper. He ~~indicated that the primary"purposes of the expenditures were to

open a field office and speak on behalf of a candidate for state

office, and that the contacts with Selden and O'Neal were

extremely incidental to other activities. Based on these

arguments Mr. O'Leary felt that 'the finding was erroneous and

requested that it be deleted from the final audit report.

Recommendation

In view of the explanation contained in the Committee's

,response and the amounts involved, the Audit staff recommends

no further action.

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B. Committee Debt

Section 44lb(a) of Title 2, United States Code

prohibits political committees from accepting contributions from,corporations~for the purpose of infl.ue~cing federal .. , elections.' "' -

The Committee'reported an outstanding debt owed . to a corpOrate media firm totaling $11,500. The debt had been

outstanding since early 1980 and was continuously reported until

June 1982. No interest expense has been reported~ During the

audit fieldwork Committee personnel informed the' Audit. staff that, ' the amount represents 100 hours of unused media services.

However, related bills indicate the amount includes "office rent" .. as well as fees. Since the amount was outstanding more than 2 .

years and no apparent effort has been made to settle the debt, it:

appeared that the debt owed to' the media firm may have been a "

corporate contribution. The auditors reviewed records of the

media firm filed with the District of Columbia Superintendent of

Corporations and noted that the CoJiuni tteeTreasurerwas' a .

Director of the corporation to whom the debt was owed • ..'

.. ,'. In ithE! interim audit report, the' Audit staff

recommended that the Committee submit evidence demonstrating that

the debt due the media firm should' not be considered a corporate contribution or take steps to settie the debt within 30 days of

receipt of· this report.

In his written r~sponse Mr. O'Leary explained that in

1979 the Committee had an oral agreement ,with the media firm for

fundraising services. The contract provided for a fee of $1,000

per month plus $250 per month for an office for the period JUly