Secret Account Used to Pay Bakkers and Aides $2 Million Uncovered

PTL officials have uncovered a secret executive payroll account

administered by an outside auditor--that was used to pay more than $2 million in salaries and bonuses to ministry founders Jim and Tammy Faye Bakker and their top aides last year without the knowledge or approval of the ministry’s board of directors and chief financial officer, according to ministry officials, copies of board minutes and former board members.

The recent discovery of the secret executive account, along with accompanying ledger sheets and copies of canceled checks, has provided officials with new evidence of how the Bakkers were able to collect millions of dollars from their tax-exempt ministry without oversight from the ministry’s board of directors, according to ministry officials.

While new auditors for Arthur Andersen & Co. continued to pore over these records Thursday, PTL officials said they were unable to find any minutes of board of directors meetings during the first three months of 1987, when more than $1.16 million in salary and bonuses were paid to the Bakkers and their two top aides, Richard Dortch and David Taggart.

Records of the confidential executive payroll account, through which all bonuses flowed, were kept by the Charlotte office of Laventhol & Horvath, the country’s 10th largest accounting firm, which until last month served as PTL’s outside independent auditors.

Handled by Auditor

The executive payroll “was handled by the auditor,” said Peter Bailey, a PTL vice president. “They prepared the checks from their office. . . . I’m the chief financial officer, but I didn’t know what was going into that account.”

William Spears, the Laventhol partner who handled the PTL account, said Thursday that there was nothing improper in his handling of the executive account, which he described as a “clerical payroll” function that in no way compromised the firm’s independence as an auditor.

He also said that he was “confident” that the board of directors would have been aware of all bonuses and their dollar amounts being paid to the Bakkers and their top aides, an assertion that conflicts with public statements of two board members.

“A board member has a fiduciary responsibility. It seems to me they would have an obligation to know how much (in bonuses) they approved,” Spears said.

Central Issue

The payment of $1.9 million to the Bakkers in 1986--as well as another $640,000 in the first three months of 1987--has emerged as a central issue in the clash between Bakker, the exiled PTL founder, and his successor, the Rev. Jerry Falwell. During an interview on ABC’s “Nightline” Wednesday night, the Bakkers contended that all the sums paid them were approved by the board, usually while they were out of the room, and sometimes over their objections.

Speaking through a spokesman Thursday from Palm Springs, Bakker said: “Anything that reflects salaries or bonuses awarded by the board of PTL is in the minutes in possession of Mr. Falwell.”