My oh My what a costly lapse.
;) M
Disclosure lapses cost state Democrats $150,000
By Ralph Thomas
Seattle Times Olympia bureau
OLYMPIA — In the largest campaign-disclosure fine ever imposed against a political party in Washington, the state Democratic Party will pay a $150,000 penalty for failing to properly disclose about $7 million worth of campaign donations and expenditures during the 2000 election.
Under a deal finalized yesterday with the state Attorney General's office, the Democrats agreed to a $250,000 fine. The state agreed to suspend $100,000 of the penalty but can reimpose the full amount if the party has any serious campaign-finance infractions during the next five years.
The Democratic Party's reporting violations were the largest ever investigated by the state.
"It was a significant violation and that's reflected in the high level of penalty," said Vicki Rippie, director of the state Public Disclosure Commission (PDC), the campaign-finance watchdog agency.
Under the agreement, filed yesterday in Thurston County Superior Court, the party must also provide annual audits to the PDC for the next five years.
"I felt terribly bad about the problems, but there was never any intentional effort to deceive the public," said Paul Berendt, state Democratic Party chairman. "I'm relieved that we're coming to a settlement."
The agreement heads off a possible court fight between the state and the party. Under the deal, the party must pay $100,000 by the end of the year and then $10,000 a year for the next five years.
Berendt said he has already raised about $75,000 in donations to help pay off the fine. The party has about $165,000 in the bank, according to the latest PDC records.
Washington's campaign-finance-disclosure rules are among the strictest in the nation. Political parties, candidates, lobbyists and special interests are required to regularly report campaign donations and expenditures.
Both major parties and their national affiliates had trouble keeping up with the reporting requirements during the 2000 election.
Last year, the PDC initially ruled that the state Republican Party would have to forfeit $4.8 million received from the Republican National Committee because the national party failed to report the contributions within 10 days. But the PDC later allowed the GOP to keep the money.
Republicans argued that they had followed the spirit of the law by reporting the money to the Federal Election Commission. The failure to report to the state was an innocent mistake caused by a changeover to electronic filing, party officials said.
Washington was considered a pivotal state in the battle for the White House and for control of the U.S. Senate. On top of that, control of both the Legislature and the governor's office was up for grabs.
The state Democratic Party raised and spent nearly $11.3 million that year; the Republicans topped $12.6 million. That was more than double what either party had spent in any previous election.
The Democrats' faulty campaign-reporting practices came to light nearly a year ago after several national campaign-finance watchdog groups found gaps in the party's disclosure records.
A more in-depth analysis by The Seattle Times found that the state party failed to properly disclose millions of dollars in "soft money" — large, unregulated contributions, usually from corporations and labor unions. The bulk of the money came to the state party via national Democratic Party committees.
That sparked an investigation by the PDC. Its investigators found that the Democrats failed to file timely reports on 57 separate contributions totaling more than $5.9 million. Most of the donations were reported more than a year late; some disclosure reports were more than two years overdue.
The PDC also found the party failed to properly disclose about $1 million worth of campaign expenditures and did not file required "last-minute" reports on more than $520,000 that it took in during the final weeks of the election. PDC investigators said they did not believe the violations were intentional. But they said the party was guilty of "gross negligence" for failing to have an adequate campaign-accounting system.
Larry Noble, executive director of the Center for Responsive Politics, one of the Washington, D.C.-based watchdog groups that first spotted the party's disclosure problems, said the fine "sends a message that enforcing these laws is going to be taken seriously."
But he added, "You always have to look at the size of the penalty vs. the amount in violation. A $250,000 civil penalty sounds like a lot, but you are talking about a $7 million violation."
Berendt refuted the "gross negligence" charge but acknowledged the party had a "compliance meltdown" during the 2000 election. He blamed the lapses on a failure by the party to get its new computer accounting program to work properly and the fact that its comptroller quit just months before the election.
In its report, the PDC said the party's campaign records wound up being kept by a replacement comptroller who had no experience or training in complying with state campaign-finance laws, did not have time to do the job properly and was given little supervision.
As part of yesterday's agreement, the party must provide PDC-approved training to all state, county and local party officials who submit disclosure reports.
Democratic Party leaders tried to negotiate a settlement with PDC officials last summer. But party lawyers said the agency was seeking unreasonably harsh penalties. Rippie said she doesn't know the exact amount her agency was seeking but said yesterday's settlement was "in the same range."
After the talks fell through, the commission voted to turn the case over to the attorney general, who has the power to seek much stiffer fines than the PDC.
Attorney General Christine Gregoire, a Democrat who received $1,000 from the party in 2000, approved yesterday's agreement but did not participate in the negotiations. To avoid conflict-of-interest criticisms, the attorney general enlisted King County Prosecutor Norm Maleng, a Republican, to help with the negotiations.
Material from Times reporter Katherine Pfleger and The Associated Press is included in this report.
Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com
Copyright © 2003 The Seattle Times Company
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