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NRCC Scandal: How Did It Happen?

Greg Walden had a problem.

The Oregon Republican lawmaker was serving as the head of the National Republican Congressional Committee's audit committee, and he had been badgering the NRCC's treasurer, Christopher Ward, to set up a meeting with the committee's accounting firm.

"I sought for several years to meet with the outside auditors," said Walden. "There was always some seemingly legitimate reason why that didn't happen."

Well, now we know the reason, and it appears to have been anything but legitimate.

Walden ran the audit committee for several years through 2006, during which time, the NRCC publicly disclosed Thursday, the campaign arm never actually had a real outside audit. Instead Ward -- who is now being investigated for allegedly transferring several hundred thousand dollars from the committee's coffers to his own accounts -- put together fake audits, complete with forged stationery from a real auditing firm.

For five years, Ward forged audits, and not a single member of Congress or any other NRCC staffer ever actually met with or talked to anyone from the outside firm that was supposedly reviewing the books. No one from the outside firm actually ever came to the NRCC offices to meet with anyone or pick up any papers. The NRCC never paid the outside firm a dime for its services supposedly rendered, and no one noticed that, either.

It was Walden's successor as audit committee chairman, Rep. Mike Conaway (R-Texas), a certified public accountant, who finally forced the issue in January when he similarly demanded a meeting with the auditors and then realized that the 2006 audit Ward had submitted was a fake.

But Walden had his concerns long before that. And he says he complained to other members of the NRCC's executive committee and the NRCC's chairman in 2006, Rep. Tom Reynolds (N.Y.), about his inability to get a meeting with the auditors. Those complaints filtered down to Ward himself, who told Walden, "I'm as mad as you are," and blamed the auditors themselves.

Walden said Ward always gave a reason for why the meeting couldn't happen: A different firm was doing the audit, we're waiting for the newest audit to be finished, the auditors are too busy, and so on.

"It frustrated me that I could not get it done," Walden said.

In the end, Walden felt that there was only so much he could do at a committee that he now believes was far too staff-driven. "It's always been that way," he said.

Current NRCC Chairman Tom Cole (Okla.), who took over the job after the 2006 election, says he is trying to change that culture, putting members more directly in charge of all aspects of the committee's operation.

"If you remember when I first got there, I was accused of being a micromanager," Cole said. "You don't hear that much anymore."

If there's a bright side to any of this, Cole said he at least takes pride that "our team found it, our team reported it and our team fixed it." And, Cole said, the committee has already spent upwards of $360,000 on legal and accounting fees to clean up the mess, a number that is sure to grow larger.

The NRCC is lucky that Conaway is a CPA. Though Walden had served before on the board of a bank, he was not a professional accountant. "I read the audit and it looked fine. There was no material issue," Walden recalled.

The NRCC has now put in stricter internal controls, not only requiring more member involvement but also ensuring that major financial transactions are not solely controlled by any one person. But even with tougher controls, members still must be able to trust their staff.

"You put your confidence and trust in the people you name as treasurer," said Rep. Steve LaTourette (R-Ohio). "I have a treasurer of my campaign, and if he tells me there's $300,000 in the bank, I believe there's $300,000 in the bank."

By Ben Pershing  |  March 14, 2008; 7:00 AM ET
Categories:  2008 Campaign , Ethics and Rules , GOP Leaders  
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