What the Koch Brothers Want with Cato

Recap from It's a Free Country.

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, David Boaz, executive vice president of the Cato Institute, talked about the organization's relationship with the Koch brothers, Charles and David Koch, who have filed a lawsuit for control of the libertarian establishment.

Not-so-hostile takeover

Last month Charles and David Koch filed a lawsuit for control of the libertarian-leaning Cato Institute, a think tank that the deep-pocketed conservative donors have played a major role founding, funding, and guiding since the late 1970s.

Until recently, the Koch brothers held only two of four shares in the Cato Institute, Charles being a co-founder and David having been brought on as a donor and eventually a board member. The two remaining shares were held by Ed Crane, another co-founder and president of Cato, and Bill Niskanen, longtime chairman of the organization.

David Boaz said that due to unfortunate circumstances, the balance of power had shifted since last fall.

When Bill died in October, the Kochs assumed that gave them a two-to-one majority of the shareholder arrangement, and therefore, by definition, if you own two of the three shares of a corporation, you own it.

Boaz hopes Cato can prove otherwise.

They moved to tell us, 'Well, we're now in charge.' We believe that's an incorrect interpretation of the shareholder arrangement, that in fact Bill's shares didn't disappear like pixie dust—they still exist and are under control of his executor, who is his widow.

Packing Cato with Koch people

Koch detractors have already made a lot of hay over the brothers' association with the Cato Institute—about four percent of Cato's funds have come from Kochs over the past decade—but taking control of the organization would be new territory for them.

Boaz said that neither of them had ever had any role in the direction or management of Cato other than what any single board member does. Yet over the past few years, the Kochs had stopped giving money to Cato and started installing people of their choosing to Cato's board of directors, which the brothers claimed was within their rights under the initial shareholder agreement.

But David Boaz said that the brothers weren't picking people because their ideology aligned with Cato's: the Kochs' selections were mostly business.

Six of the seven people they've managed to place on our board are financially dependent on Koch Industries. That's not so much packing the board with conservatives, but with people not independent of Koch interests—officers, directors, and employees of Koch Industries.

Joining a partisan machine?

What's the endgame for the Kochs here? What do they have planned for Cato, and why are they trying to wrest control of it now?

David Boaz said he isn't entirely sure. However, he has noticed that Charles and David Koch have seemed increasingly interested in partisan politics, and in using Cato as a reservoir of studies and speakers that can be tapped by allied advocacy, policy, and political organizations with a unified objective: getting Democrats out of power.

That's not what Boaz sees as an appropriate role for an independent think tank.

There's both an ideological aspect—we don't want our libertarianism rounded off until it consists of nothing more than taxes and regulation—and we don't want other groups and groups with partisan interests or any single board member telling us what to do.