General Accounting Office

The General Accounting Office became an independent source of scrutiny in the Watergate investigation when its new Federal Elections Division examined the campaign finances surrounding the bugging. Its preliminary findings, reported during the Republican convention in Miami, gave the inquiry a financial dimension: more than $500,000 in campaign funds had been mishandled, including at least $100,000 in an apparently illegal security fund.

Institutional Role

The General Accounting Office was the investigative arm of Congress, unlike the Justice Department and the FBI, which belonged to the Executive Branch and reported to the President. That distinction mattered as questions arose about whether campaign money had paid for activities against the political opposition: the agency conducting the audit operated independently of the administration whose campaign finances were under scrutiny.

Philip S. Hughes, director of the newly created Federal Elections Division, told Bob Woodward that the day’s Washington Post story had revealed “for the first time [that] the bugging incident was related to the campaign finance law.” Hughes added that Maurice Stans’s reports contained nothing showing the Dahlberg check. The absence of the $25,000 check from those reports connected the Watergate inquiry to the question of whether campaign receipts and expenditures were being properly disclosed.

The First Audit Under the Campaign-Finance Act

Hughes said the agency would conduct a full audit. It would be the first under the Federal Campaign Expenditures Act, which had taken effect on April 7. The law tightened controls on campaign donations and required expenditures to be reported, giving the investigation a new statutory context as well as a financial one.

The audit was not an abstract institutional exercise. A GAO investigator called Woodward that afternoon to ask for more information about the $25,000 check. Woodward replied that he and Carl Bernstein had written everything they knew about it. The exchange showed how the developing newspaper investigation and the congressional audit could inform one another, while leaving the agency responsible for its own examination of campaign records.

Preliminary Findings and the Security Fund

On August 22, the second day of the Republican convention in Miami, the Washington Post published the audit’s preliminary findings on its front page. Based primarily on Woodward’s conversations with investigators, the report said the General Accounting Office had determined that the Committee for the Re-election of the President had mishandled more than $500,000 in campaign funds. At least $100,000 had been kept in an apparently illegal security fund.

The existence of that fund proved more consequential in the immediate response than the larger figure. Paul E. Barrick, the committee’s treasurer, denied that the committee had incorrectly reported or failed to report contributions and expenditures. Van Shumway, who had spent more than five weeks insisting no such fund existed, said he had since learned that it did and feared that some people inside the committee were not telling him the truth. The findings thus exposed not only a possible accounting problem but a gap between the committee’s assurances and what its own staff understood about its finances.

Significance and Limits

The General Accounting Office’s importance lay in the combination of its independence, its new election-finance remit, and the specificity of its preliminary findings. The audit connected a check already under investigation to a broader system of campaign money and brought the concealed security fund into public view. Its congressional position also distinguished its work from inquiries conducted by executive agencies.

The findings described in the account were preliminary, and the evidence here does not establish the audit’s final conclusions. Their immediate force came from what they identified—and from the committee’s denial and Shumway’s changed account—rather than from a completed public accounting. The agency’s work nevertheless shifted the story from suspicion about an individual check toward scrutiny of how campaign funds had been handled and reported.