James O’Keefe and his Project Veritas have just released part two of their NPR investigation, which claims to show an NPR executive telling a fake Muslim donor how his group can be shielded from a government audit if it donates $5 million.

The video features phone calls between a member of O’Keefe’s fake Muslim organization and Betsy Lily, the NPR executive who played a supporting role in the original video. It is a lengthy 44 minutes long, but that’s because O’Keefe claims it also includes the unedited phone calls.

“Senior Director of NPR Betsy Liley says she may be able to shield from a govt audit $5mm donation from a reporter posing as a donor from Muslim Brotherhood front group,” the video’s YouTube description says.

We’ve included it below, and will update this story with any necessary reaction:

In light of the O’Keefe videos, you can read our stories on the ethics of undercover journalism as well as our dissection of the original NPR video.

In early reaction on its news site, NPR blogger Mark Memmott notes that one of the actors “presses the question of whether NPR could shield the group’s donation from the government and Liley, who earlier this week was placed on administrative leave, says she thinks so but will have to check with NPR’s legal counsel. That’s among several mistakes she made during the call, NPR said this evening in a statement.”

The statement referenced by Memmott can be viewed in a follow-up story on The Blaze.

Editor’s note: The author has included his thoughts below as an update.

As in our story on the first video, there are some points worth mentioning.

1. In its story on the issue, the Daily Caller says the new video suggests NPR always intended to accept the fake group’s $5 million donation. You may remember that in its first press release, NPR maintained, “The fraudulent organization represented in this video repeatedly pressed us to accept a $5 million check, with no strings attached, which we repeatedly refused to accept.”

Both the DC and others suggest Liley’s e-mail to the actor after the phone call directly contradicts NPR’s earlier assertion that it “repeatedly refused” to accept the donation. That might not be the case.

If you look at the e-mail, Liley never says NPR will either accept or reject the donation. She only says, “NPR can list MEAC as an anonymous donor in our database.” The e-mail seems to be more of a statement of fact rather than a “Welcome to the $5 million donation club.” In the call, Liley promises to look into — and confirm — anonymous donor protocol. The e-mail is her fulfilling her promise.

2. Could the new video actually bode well for NPR? There’s an important point that some are missing. In the video, NPR’s Liley can be heard asking for the fake organization’s 990 form, which provides “a snapshot of key financial, governance and operating information, including a comparison of the current year’s revenues, expenses, assets, and liabilities, with those of the prior year.” That would expose O’Keefe’s actors, wouldn’t it?

And while she does discuss how anonymous donors may inherently be sheltered from government audits, she also says she will have to look into it further (which, as mentioned above, is the origin of the e-mail).

In the end, it seems NPR asked for much more information from the group — not only requesting the 990 form but also a statement of where the funds should be directed — information that would have exposed the group’s “connections” or in this case, its fraud.

Might the video show, then, that NPR was doing due diligence in following up with a potential donor? After all, it never accepted O’Keefe’s money.

3. As a side note, anonymous donations are not uncommon, as Liley points out. It would seem she is discussing details she would with any other potentially donor that wanted to shield its identity.

4. It’s also interesting that Liley explains gifts can be turned down, which follows a curious question by her implying that since the fake Muslim organization is a trust that itself accepts gifts, the actor should be familiar with donation practices. Still, she does go out of her way to say she is not implying NPR will turn down the Muslim organizations gift. However, she also reiterates that there are pieces of additional information NPR needs to proceed.

5. There’s an obvious question burning in everyone’s mind: Why didn’t Liley ask why the group wanted to steer clear of government audits? In some senses that’s a good question. But, if anonymous donations are legal and common, why would she have? Still, that might not hold up in the court of public opinion.

6. The video offers possible additional insight into why Vivian Schiller was fired. The caller specifically says his board might want to meet with Schiller, and Liley lets on that that could be arranged. It’s also insinuated that Schiller knew about the possibility of the donation. NPR’s board could have uncovered that information prior to the new video’s release and decided that she was too involved in the ordeal to emerge unscathed.

7. It’s interesting that in the wake of the new video, NPR has not radically defended itself. Instead, it has said the information provided by Liley was “factually inaccurate,” and that NPR does report everything to the IRS. Which begs the question, why isn’t NPR defending Liley? Does it view the video as just too damning, and there’s too much proof to deny? Or, would it rather just admit fault and move on? We’ll see: its currently conducting its own investigation.

Whatever happens, it seems that the entire controversy proves wrong the old statement, “there’s no such thing as bad press.” Just ask Ron and Vivian Schiller.

UPDATE II:

Just as I posted this update, NPR released e-mails between Vivian Schiller, Betsy Liley, and NPR’s legal counsel saying that NPR would have to get much more information from the fake group before it could accept the donation. Those e-mails also say the group would have to be reported to the IRS.

We should have a full story on this development shortly.

This is a breaking story. Updates may be added.