Kochs

David Koch Blasts Ed Crane, Bob Levy, and the Save Cato Campaign (UPDATED)

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Cato, yesterday

The bitter legal dispute and public feud between the Koch brothers and the (Koch-cofounded) Cato Institute, which I've written previously about here, here, and here, entered a new phase of public recriminations today with the release of a withering statement from David Koch, a Cato shareholder and board member (in addition to being a member of The Reason Foundation's Board of Trustees). Excerpt:

I had hoped that the furor surrounding all this would die down; however, it appears that [Cato Board Chair] Bob Levy and [Cato President] Ed Crane will not let that happen. Bob's recent response to [Charles Koch's] statement is so inaccurate and distorted I cannot let it go unanswered. I am disappointed that Bob would resort to tactics such as making unfounded personal attacks on fellow board members, unjustly challenging our intentions, and helping organize a public smear campaign. […]

For most of its existence, Cato has been controlled (as Bob's talking points describe it) in whole or large part, by the Kochs. In fact, between 1991 and 2008, Cato had five shareholders – Charles; Ed; Bill Niskanen; a long-time Koch Industries employee (then still employed by Koch); and me. During those 17 years, Koch-affiliated individuals had the ability to elect the majority of the board and the ability to acquire the stock of Ed and Bill, but we did not, and there was never any outcry over a "negative impact" during that time.

Koch denies the accusation that he and his brother wish to make Cato more Republican, offering for the first time his version of a much-discussed conversation of five months ago:

The second key area where Bob has been misleading is his media statements regarding prior conversations with me concerning our vision for Cato. Last November I told Bob about my frustrations regarding the current direction of Cato. I told him that Ed's treatment of current board members was inappropriate and unacceptable – that any CEO acting that way should be compelled to stop or be fired. When Bob responded that the board cannot control Ed, I stated that he should be replaced as soon as possible – preferably within six to eight weeks. I further stated that I would withhold my contributions until I was convinced that Cato would honor its commitments and begin to treat others, including board members, with dignity and respect.

I also told Bob that Cato could become much more effective in translating esoteric concepts into concrete deliverables to move the public policy debate at this critical juncture in our nation's history. I said Cato should be supportive of other organizations that are advocating public policies consistent with a free society. As an example, I mentioned a group with which I am involved – Americans for Prosperity. I believe AFP has done a good job of turning concepts into concrete deliverables, but it is just one example of such an organization. I never asserted that Cato should be directed by, or at the whim of, any other organization, or that they should aspire to advocate the way AFP does.

Neither Charles nor I ever said we wanted Cato to be partisan or affiliated with any political party. This is a complete misrepresentation. In explaining how certain organizations are more effective at actually affecting policy, I did state that the Republican Party, however flawed, represented the best chance of stopping the current rush to socialism. This in no way implied that Cato should be partisan or part of an effort to elect Republicans. My comments were taken completely out of context.

The article in question

Koch also accuses Ed Crane of being a key source in the most influential piece of anti-Koch journalism:

During the past decade, Charles and I gave more money to the Cato Institute – more than $13 million – than we had given in any previous decade. Notwithstanding all the wonderful things said about us when soliciting that support, in 2010, Ed became a source for Jane Mayer of The New Yorker, providing negative background on an article that was highly critical of Charles and me. This one-sided and politically motivated piece was driven by Obama supporters at the Center for American Progress as an attempt to prevent us from effectively opposing the Administration's anti-libertarian agenda. […]

(He is the individual quoted as the "top Cato official.") When confronted about this, Ed initially claimed he only spoke briefly and favorably about us. He later acknowledged that he had made the statement as quoted, but it was only for background. Subsequently, he claimed that he was misquoted. As Ed has shown, he will partner with anyone – including those that oppose Cato and what it stands for – to further his personal agenda at the expense of others working to advance a free society.

Toward the end, Koch offers his outline for a resolution:

Cato needs to not only talk about the principles of a free society, it must practice them. Cato must have sound management and a board independent of management. A key aspect of sound management is incorporating a system to ensure that all programs are effective and continuously improved. If and when such an independent and effective board is in place, we are quite willing to work to convert Cato to a board-controlled structure.

Our hope is that the commitment to advancing a free society will become Cato's overriding agenda and that its current issues can be resolved. We will not sit idly by while management takes Cato down a path that will ultimately lead to its failure.

No public reaction from Cato yet (I'll add any to the bottom of this post), other than telling the Washington Examiner that Levy stands by everything in his original statement. The Save Cato Facebook page is here.

UPDATE: Former Reasoner David Weigel interviews Ed Crane. Excerpt:

Slate: I wanted to get your response to this umpteenth he-said, he-said letter. The argument in here is about how their ideas for the organization are being expressed—they say you're not telling the truth about what they're trying to do.

Crane: You've seen the names of the people they've nominated for our board. They're all conservative, Koch Industries supplicants. My god, if they're not trying to take over for Koch's purposes—it's so transparent, it's obvious. Charles likes to create his own reality, build a bubble around him, but they're pretty hamfisted about the way they're going about this. David Koch was a friend of mine until Charles said, not anymore. […]

Slate: One thing that the letter mentions, specifically, is that you criticized the Kochs when you talked to Jane Mayer for her New Yorker story about them.

Crane: Jane knows I'm pissed at her. I told her that off the record. I told her at the top of the interview. First off she says, I'm doing a story on the libertarian impact on the Tea Party movement. I was suspicious of that to begin with. Within five minutes, it's clear that she wants to do a hatchet job on the Kochs. She's a better journalist than that. You don't need to lie to people. I said, look, I'll tell you things about the Kochs. Ninety percent of this was positive. I admire them as businessmen, I agree with their philanthropy. The most critical thing I said—she asked, I heard they had a fallout over "market-based management." I said, Well, we had some disagreements on that. I think it's a case of "the emperor has no clothes." Everybody tells him how brilliant this book The Science of Success is, and in my mind it's one of the worst books ever written. The fact-checker calls me up, and I say, yes, I said that, but it was off the record. Go back to the tape and check it. He says, She said the tape recorder didn't work. Well, in those circumstances, when you think the tape recorder is working so the reporter is not taking extensive notes, you infer that things are off the record. I was not happy about that. […]

Slate: You say you'd leave if it ended the Kochs' move. What exactly would need to happen before you left?

Crane: We end the shareholder agreement and we have a majority on the board of directors who are not part of the Koch group.

NEXT: Smells Like Multiple Fourth Amendment Violations

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  1. I’m still trying to figure out what’s driving this power struggle at CATO. What’s the great prize here that can’t be as easily created outside CATO?

    1. Control of Cato. To what purpose? No idea, unfortunately (VERY unfortunately) I cannot (yet) read minds.

      1. The Cato brand.

    2. What’s the great prize here that can’t be as easily created outside CATO?

      A six figure salary income to Crane for doing jack shit.

  2. Fuck Jane Mayer, btw.

  3. What a mess. It does sound to me like Crane may have created the problem more than the Kochs, but who knows what’s really going on? In any case, this is just going to hurt Cato and the good it can do for libertarianism.

    1. Indeed. I can almost see the “Koch-Sucker” posts being trolled up as I type this. No matter how it ends up, we’ll hear the Media Matters crowd claiming everything CATO says is billionaire propaganda yada yada yada.

      1. You mean they don’t already?

    2. Internecine feuds are always the worst. Everybody loses.

      1. This is the fault of those splitters at the Judean People’s Front.

        1. Bah, it’s the People’s Front of Judea that ruined it all.

      2. Yep. The worst part is that it will probably end up destroying the place, leaving the world with one fewer voice against the status quo.

      3. Thing is, if Crane did what he is accused of, cooperating with Mayer on that hit piece justifying the left’s stratospheric level of moralistic disdain for all things libertarian the Summer it came out, than Crane should be tarred, feathered and ran out on a rail forever expelled from Libertopia. He didn’t just back stab the Koch brothers there, this goes beyond internecine, he fucked us all.

        1. Yes, I find that a little distressing. If that’s true, this may be a lot more about personal conflicts than anything political.

        2. But he made good contacts with important people and that’s more important.

      4. FUCK YOU SPLITTER

    3. Last I recall, Ed Crane wasn’t trying to seize majority control of the board, trying to affiliate the orgainzation with partisan activist groups and stacking the board with non-libertarians and one admitted anti-libertarian.

      1. Sure, that’s what Ed is saying. And that’s what Koch is denying. Someone isn’t telling the truth, I agree. It may well be Koch–my point was just that he sounded a little more credible, from what little I’ve heard. Not like anyone cares what my gut reaction is, nor should anyone be swayed by it.

        1. I mean, he IS trying to seize majority control. He DID advocate more political coordination with AFP, a non-partisan organization in name only. And he DID nominate John Hinderaker and Tony Woodlief to the board.

          1. Well, I agree he’s trying to get control over the board. That’s not in dispute. But I think his explanations for the other points sound reasonable, especially since he doesn’t just flat out deny them.

          2. To be sure, I don’t claim to know what the truth is here. This is just wild speculation.

          3. I will say this: Whatever the Kochs or anyone else’s intent is here, the credibility of Cato hinges very much on it remaining nonpartisan. While I think it should be more active in promoting its views, which I often share, it absolutely shouldn’t jump in bed with either party. Or even the LP, for that matter.

          4. Where did he say he advocated “more political coordination with AFP”?

            As for trying to “seize” majority control — if you already own the majority of legal shares, you don’t have to “seize” majority control.

            As for adding those two guys to the board, what’s the problem there? You don’t say.

            1. John Hinderaker is as partisan a GOP shill as you can find on these here internets.

            2. Both guys have expressed strong anti-libertarian sentiments.

              “I said Cato should be supportive of other organizations that are advocating public policies consistent with a free society. As an example, I mentioned a group with which I am involved ? Americans for Prosperity.” And that’s in a letter trying to distance himself from his private aspirations supposedly mentioned to Bob Levy.

              He doesn’t own a majority of shares. He owns 50%. Getting Niskanen’s shares from his widow against her will would give him majority ownership.

      2. This was my reaction at first, but if the Koch’s ambition is really to translate the policy work Cato does into political results, having political operators on the board makes sense.

        Corporate boards always have members with diverse backgrounds and skill sets. I wish there were libertarian political operators to put on the board, but that isn’t exactly our strong suit.

        1. If the two candidates lean true free market, then pushing for those ideas in the right-sided political space may work. Is policeman of the world actions consistent with free market ideas? No.

    4. Maybe Frazier’s dad will settle everything.

  4. yep, this definitely hurts the advancement of libertarian ideas no matter who wins.

    1. That, and all male libertarians

      1. So basically all libertarians.

      2. A male society has no art!!!

    2. Not necessarily. The Kochs are such lightning rods for the left that any attempt by them to make Cato “more effective” are doomed to failure – in fact will make Cato *less* effective – simply because Cato can now be dismissed as part of the Koch propaganda machine.

      However, if this fight were to become much nastier and much more public, and then Crane won by forcing those nasty Kochs to back down, wouldn’t that enhance the reputation of Cato as an independent public policy organization?

      It seems to me it might be wise of the Kochs to make this a publicly staged failed coup just to show that they are not the puppetmasters the Left makes them out to be. Sort of the way a magician passes a hoop over a levitated object to “prove” there are no strings attached.

      Or perhaps that is what they have been doing all along?

  5. I don’t know what’s going on. I do know from volunteering during Ed Clark’s presidential campaign that, after meeting and interacting with both David Koch and Ed Crane, I really liked David Koch.

    1. My impression (FWIW – it’s only an impression) is that David is more libertarian that Charles.

  6. I keep reading these articles and I keep glazing over. It’s like a Chinese algebra book printed in Braille.

    1. I thought that was just because you had the attention span of a gnat, or possibly Paula Abdul.

      1. Epi why must you slander our insect brothers?

      2. Huh? Wha?

        1. Where am I? Randy, is that you?

        2. A gnat (play /?n?t/) is any of many species of tiny flying insects in the Dipterid suborder Nematocera, especially those in the families Mycetophilidae, Anisopodidae and Sciaridae.

          In British English the term applies particularly to Nematocerans of the family Culicidae. The common gnat is the species Culex pipiens.[1]

          Male gnats often assemble in large mating swarms or ghosts, particularly at dusk.[citation needed]

          Gnat larvae are mostly free-living and some are aquatic. Many feed on plants, though some are carnivorous. Larval plant feeders (such as the Hessian fly larva) cause root, stem, or leaf galls to be formed by the host plant. Some species of fungus gnats (families Mycetophilidae and Sciaridae) are pests of mushrooms and roots of potted plants in homes and greenhouses.

          Paula Abdul was married to Emilio Estevez from 1992?1994

          No insect would make this mistake.

          1. I see your google career continues

    2. See, I relish these articles, perhaps because I have made a living on these sorts of corporate disputes.

      From my 30,000 foot level, it sure looks to me like the Kochs have the better of it and Crane suffers from CEO disease – he thinks the organization is HIS HIS HIS, and anyone who thinks different because, oh, gosh, they own most of the organization, is just an impediment to his Grand Design.

      I could be wrong of course, but I’ve seen it before.

      1. That’s my gut reaction, too, though there may be more to the story.

        The bit that came out about Cato being wary of being viewed as part of the Kochtopus rang a little false, too, given the years they’ve been connected.

        1. From now on you two should post nice

          1. less than 900 character tl;dr versions for everyone else.

      2. Whenever I see Crane talk, I think “why so pompous?”. He reminds me in way of Romney…it will end badly.

  7. The Save Cato movement seems like an Ed Crane personality cult.

    1. So the Kochs seize control, and Ed Crane, David Boaz, Bob Levy, Julian Sanchez, etc. walk out the door. I think Cato loses immediate credibility if the Kochs win. If Crane wins, Cato gains credibility for fighting off the appearance of a partisan takeover to preserve its integrity.

      I’m sorry, but no matter how strongly David Koch words his letter, I can’t believe him over the people that have made the Cato Institute what it is.

      1. But he is one of those people. That’s the problem. Not lately, no, but much of that fun libertarian stuff we got from Cato in the past was funded by him.

        Like I’ve said before, this is an internecine squabble. I don’t buy that the Kochs are pure Republican shills, as that isn’t consistent with some of the things they’ve done. On the flip side, I don’t think Crane and the others are totally insane, either.

        1. There’s no question the Koch Brothers have helped Cato immensely, but without the people actually generating the quality content the Cato Institute would not have the credibility and respect it does. Those are the people they risk losing if they attempt to shift the balance and independent leadership of the organization. Cato isn’t and shouldn’t be a political activist organization, and whether in truth or in perception, that’s what it will become under full Koch control.

          1. The perception part is crap. If that’s what this is really about, Cato should tell the world to go to hell. The people who see the Kochs as bogeymen will hate Cato, anyway.

            That said, I agree completely that Cato must avoid getting actively political. I think it’s safe to say that it’s probably been viewed slightly more favorably by the right than by the left over the years, but that’s never been because Cato has played the partisan game. Some think tanks lack that kind of credibility, after all. Perhaps most.

            1. Perception by the media is very, very important when presenting ideas. If the media believes they’re in the Koch Brothers’ pocket, they will be written off and ignored. If the media writes them off, it’s much harder to sell the organizations’ “product” to the public and to policymakers in both parties. So in concept, it would be nice to tell the biased media to jump off a bridge, but that’s kind of self-defeating when you’re a think tank.

              1. If it’s the Kochs are icky, this whole thing is pointless. Other potential large donors are likely to get painted the same way.

      2. What Propretist! You can’t be bought? What kind of free market libertarian are you?

        1. Oh, he can be bought, but nobody’s offered a market clearing price yet.

      3. Ed Crane, David Boaz, Bob Levy, Julian Sanchez, etc. walk out the door.

        I see this as a win.

        Two libertarian organizations are better then one.

        Then again perhaps you see some magical unicorn filled economy of scale that I am missing.

        The part you wrote about credibility is bullshit. Either they will produce credible work after this civil war or they won’t.

        The work will determine that not some nefarious appearances you allude to.

        1. If the Koch Brothers took over Reason and replaced Matt Welch and Nick Gillespie with, say, Charles Krauthammer and George Will it might “boost” Reason’s effectiveness and readership, but it won’t be the same organization. It wouldn’t even be a libertarian organization.

          And sorry, the Koch Brothers lost all libertarian credibility to me when they decided to back Perry and Cain instead of Paul and Johnson.

          Sure, Boaz, Crane, et. al. could possibly start over elsewhere and luckily have the reputation to quickly establish a credible organization. But Cato would forever be a shell of its former self in my mind.

          1. So it’s ok if CATO puts liberals in positions of management at the board, but any conservatives is a no-go, right?

            And I think it’s hilarious you think that Julian Sanchez is libertarian.

            1. He’s a civil libertarian at minimum, and that’s all he focuses on there.

  8. 1000 comments here we come! 950 from rectal and White Idiot alone!

    And we’re off!

    1. The Kochs just want Crane to be free to gambol across the plain.

  9. “resort to tactics such as making unfounded personal attacks on fellow board members, unjustly challenging our intentions, and helping organize a public smear campaign.”

    That’s so libertarian!

  10. “Ed became a source for Jane Mayer of The New Yorker, providing negative background on an article that was highly critical of Charles and me”

    Tread lightly Reason, Sugar Daddy shall not be mocked.

  11. I propose they fight it on H&R; I know the little bitches visit my site, and I’m sure they would let me be moderator: no rules, and the loser gets castrated

    1. You have a site? I can’t believe this is the first I’ve heard of it. It must be quite popular.

      1. honey, you and I both know that’s not the truth
        -do I need to whip your ass?

  12. Taint-withering comments, or just plain withering comments?

  13. Koch claims that Crane was mistreating board members. So what did Koch do for these board members? He threw them off the board and replaced them with Koch operatives. Shouldn’t he have apologized and asked them to forgive Cato? But instead he chucks them out. Right, we believe the Kochs are doing this because board members were badly treated. Odd the board members were criticial of Koch.

  14. I *heart* Cato, of course, and don’t want to see it change, but I can’t help love this stuff. Finding out Crane was a source on that New Yorker article is the best part.

  15. Can somebody identify the painting behind David Koch in the “Covert Operations” pic?

  16. All power to the Soviets

  17. Is the Romney campaign like an Etch A Sketch?

  18. So Crane admits getting snookered by Mayer, which was really dumb. He’s over the hill and off his game. Time to sit down with the Kochs and the biggest current funders and pick some under 50 replacements. Thanks for all the good work Ed, now please emeritus yourself.

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