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FEDERAL ELECTION COMMISSION

WASHINCTON, () ( 204b\

March 20, 1981

MEMORANDUM

TO:

FROM:

SUBJECT:

FRED EILAND

PRESS OFFIC~~ .

BOB COSTA /y~

PUBLIC ISSUANCE OF FINAL AUDIT

REPORT - THE BAKER-CONNALLY COMMITTEE

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Attached please find a copy of the final audit report

of the Baker-Connally Committee which was approved by the

Commission on March 12, 1981.

Informational copies of the report have been received

by all parties involved and the report may be released to

the pUblic.

Attachment as stated

cc: FEC Library

RAD

~lic Record
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FEDERAL ELECTION COMMISSION

WASHINGTON. D ( 204ft \

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I

FINAL REPORT OF THE AUDIT DIVISION

ON

THE BAKER-CONNALLY COMMITTEE

I. Background

A. Overview

This report covers an audit of the Baker-Connally

Committee ("the Committee"), to determine whether there has been

compliance with the provisions of the Federal Election Campaign

Act of 1971, as amended ("the Act"). The audit was conducted

pursuant to Section 9038(a) of Title 26 of the Internal Revenue

Code which states, in part, that "after each matching payment

period, the Commission shall conduct a thorough examination

and audit of the qualified campaign expenses of every candidate

and his authorized committees who received pa~~ents under Section

9037."

The Committee registered with the Federal Election

Commission on May 7, 1980. This Committee is a joint

fundraising committee authorized by Senator Howard H. Baker, Jr.

on May 2, 1980 and by the Honorable John B. Connally, IlIon

June 20, 1980. The Committee maintains its headquarters in

\'~<J.shington, D. C.

The audit covered the period from inception through

October 15, 1980. The Committee reported an opening cash balance

of $-0-, total receipts of $74,111.94, total expenditures of

$70,638.36, and a closing cash balance of $3,473.58 during the

period.

This report is based on documents and working 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 Personnc 1

The principal officer of the Cor:unittce during the

Feriod Z'l'..: ...li:.ed \0;115 ~lr. J. S~:anlcy Huc~<J.by, Treasurer.
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c. Scope

The audit included such tests as verification of total

reported receipts and expenditures and individual transactions:

review of required supporting documentation and analysis of

Committee debts and obligations: and such other audit procedures

as deemed necessary under the circumstances.

II. Audit Findings and Recommendations

A. Prohibited Contribution

Section 441b(a) of Title 2 of the United States Code

states, in part, that it is unlawful for any corporation to make

a contribution or expenditure in connection with any election to

any political office, and it is unlawful for any candidate,

political committee, or other person to knowingly accept or receive

any such contribution. .

Section 441b(b) (2) of Title 2 of the United States

Code states, in part, that for purposes of this section and

section 791(h) of Title 15, the term "contribution or expenditure"

shall include any direct or indirect payment, distribution, loan,

advance, deposit or gift of money, or any services, or anything of

value to any candidate, campaign committee, or political party or

organization, in connection with any election to any of the offices

referred to in this section.

Our review of Committee records revealed that in April,

1980, a Committee fieldperson contracted with a vendor in Springfield, Tennessee for printing of Committee solicitation materials.

Committee officials stated that since the fieldperson was well

known as the wife of the President of a corporation, the vendor

thought the fieldperson was contracting on behalf of the corporation

and not for the Committee. Therefore, instead of billing the

Committee for the materials, the vendor billed the corporation for

$1,049.40. The corporation paid the vendor on May 19, 1980. The

Committee reimbursed the corporation on May 27, 1980. Thus, the

corporation advanced the Committee an amount totalling $1,049.40

for a period of approximately nine (9) days. Committee officials

stated that they were unaware of this situation until they received

the bill from the fieldperson via letter dated May 21, 1980. The

Committee then reimbursed the corporation within a week.

Recommendation

Because the advance from the corporation was outstanding for

only approximately nine (9) days and the Committee paid the invoice

promptly upon receipt, the Audit staff recommends no further

action with respect to this matter.
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B. Recordkeeping and Disclosure of Contribution Information

Section 432(c) (3) of Title 2 of the united States Code

states that the treasurer of a political committee shall keep an

account of the identification of any person who makes a contribution or contributions aggregating more than $200.00 during a

calendar year, together with the date and amount of any such

contribution.

Section 434(b) (3) of Title 2 of the United States Code

requires a committee to disclose the identificatiQn of each person

(other than a political committee) who makes contributions in an

aggregate amount exceeding $200.00 in a calendar year together

with the date and amount of any such contribution.

Section 431(13) (A) of Title 2 of the United States

Code defines "identification", in the case of an individual, as

the name, mailing address, occupation, and the name of his or her

employer.

Our review of Committee reports revealed contributions

for which the required contributor information (occupation and

name of employer) was lacking. The Committee failed to disclose

the occupation of 73 contributors making contributions totalling

$23,750.00 (37.06% of total items and 37.50% of total dollar

value of contributions requiring disclosure of such information) • In addition, the name of employer was not disclosed for 75 contributors making contributions totalling $24,750.00 (38.07% of items

and 31.42% of the dollar value of contributions requiring such

information). It was noted that Committee records contained the

occupation of 13 and the name of employers for 14 of the contributors noted above. For the remaining items noted above, the

required contributor information was not maintained in the

Committee records. Copies of solicitation materials presented

during the audit contained no request for this information.

Committee officials stated that efforts to obtain

the required information were made via telephone contact, but

that no records of these efforts were maintained.

In the Interim Audit report, the Audit staff recommended

that the Committee obtain and submit the required information,

or present evidence of their efforts to obtain it within 30 days

of receipt of the report. Subsequently, on February 23, 1981 the

Committee submitted documentation in the form of letters to

contributors requesting the required information. Of the deficient

items noted above, the Committee obtained and submitted the required

contributor information for 31 contributors and demonstrated their

best efforts to obtain the required information for 36 additional

contributors. Therefore, the Committee has either obtained, or

demonstrated best efforts to obtain, the required information for

98% of items originally noted as deficient. As requested by the

Committee, the required contributor information was placed on

the public record to amend the Committee's disclosure report.
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Recommendation

Based on the above, the Audit staff recommends no further

action with respect to this matter.