Barely 6 1/2 months before the midterm elections, an internal investigation by the Republican National Committee has revealed that the organization is beset with questionable financial management and oversight and is spending more money courting top-dollar donors than it raises.
The investigation found that the Republican Party's national governing body is losing money on its major-donors' fundraising program -- spending $1.09 for each $1.00 raised, according to RNC members privy to the investigation's findings. It typically costs about 40 cents for every dollar raised from donors who give more than $1,000.
The investigation also found that the RNC has allowed employees to forge Finance Director Rob Bickhart's initials on expense-reimbursement request approvals, according to an RNC member who spoke on the condition of anonymity for fear of retaliation. The RNC's top elected and appointed management have united in defense of the committee's practices. RNC Chairman Michael S. Steele can withhold or increase RNC contributions to a state party.
The Washington Times obtained a copy of a report on the investigation -- prepared by RNC Treasurer Randy Pullen -- that he sent to the 28-member RNC Executive Committee before a conference call hastily scheduled for Wednesday afternoon by Mr. Steele's office. It includes some of the findings.
RNC communications director Doug Heye disputed the fundraising figures when reached for comment about the report. He said year-to-date the RNC has received $2,649,586 from major donors at a cost of $1,832,642, netting the organization more than $800,000.
The report says several RNC Finance Department employees have been forging Mr. Bickhart's signature for reimbursement for the purchase of clothing, wine and entertainment expenses, including some that were labeled as office supplies.
One such expense was the nearly $2,000 that a Finance Department employee named Allison Myers -- since fired -- received for money spent by a friend and non-employee at an Los Angeles nightclub that featured a sexual-bondage theme. Many small and large RNC donors alike were not amused.
The report also said widespread employee abuse of RNC-provided American Express cards prompted a recommendation at the end of last year that the cards be yanked from all employees and officers except for Mr. Steele and his chief administrative officer, Boyd Rutherford.
Mr. Pullen's report noted that although the recommendation was first made in December, the cards were not yanked until April 12. The RNC's Mr. Heye, however, said that date is inaccurate and that the committee started phasing out credit cards last year.
That was the same day The Washington Times reported that Mr. Pullen said an RNC check had been "forged" by an RNC employee with Mr. Bickhart's permission to cover the cost of an entertainment tab that turned out to be the sex-club incident. The check was made out to a friend of Ms. Myers, who headed a young major-donors fundraising program for the RNC.
In his written report on Wednesday, Mr. Pullen said that Mr. Bickhart's contract as RNC finance director calls for his company, eCapitol Direct LLC, to be given $22,500 for every $9 million raised through "direct marketing sources every two months."
This is in addition to Mr. Bickhart's salary as finance director. Mr. Pullen found that Mr. Bickhart shows up at RNC headquarters about three times a week but exercises little or no financial control and gets paid well over a half-million dollars, more than twice the $223,500 in salary Mr. Steele gets as chairman.
"Based on budgeted direct marketing revenues for 2010," Mr. Pullen said in his report, Mr. Bickhart's extra compensation arrangement "will result in over $270,000 in additional compensation to Mr. Bickhart."
Mr. Pullen noted that the way Mr. Bickhart structured his RNC contract, it provides the wrong incentives, allowing Mr. Bickhart to increase his take even as the RNC loses money through his efforts.
"This contract does not take into consideration the cost to generate the revenue; therefore, there is no incentive for costs to be minimized as he receives compensation regardless of the net cash generated," Mr. Pullen wrote.
"This contract was not reviewed and approved by an officer or the Executive Committee," he wrote, noting that Mr. Bickhart's contract "can be canceled at any time by written notice to the other party."
"This contract should be canceled," he added.
Since Mr. Steele's term as national chairman began in January 2009, there has been controversy over his fiscal management of the committee. Over Mr. Steele's objection, members have ordered that all contracts worth more than $100,000 be authorized by an officer or by the whole Executive Committee.
Mr. Pullen said he found more instances of the RNC's "good governance" rule being ignored under Mr. Steele's leadership. "The prior contract with eCapitol Direct LLC that called for $37,500 per $9,000,000 had not been approved," Mr. Pullen said. "I also discovered a third contract with GKV LLC that called for a fundraising consulting fee of $10,000 a month for the period September 2009 through November 2010. This contract had not been approved by an officer or the Executive Committee."
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