Koch Brothers Sue To Take Over Cato Institute, Allegedly To Turn It Into 'Ammo Shop' For Americans For Prosperity

[oldembed src="https://www.youtube.com/embed/sNXLWm5FQ74" width="425" height="300" resize="1" fid="21"]

If you were on a scavenger hunt and had to come up with a principled conservative, you might find one at the Cato Institute. They're slightly more intellectually consistent than the rest of the Republican think tankers (remember, in the valley of the blind, the one-eyed man is king), although of course they have their barking mad moments, too - like most conservatives. Now Charles and David Koch have filed suit to take control of the organization, and the Cato people are not very happy. Via the Volokh Conspiracy:

The Kochs deny any such intent, but it seems like they want to buy the Cato credibility and use it as an attack dog in the presidential election:

We seek no ‘takeover,’ and this is not a hostile action.

This is at odds with both the words and deeds of the Koch brothers of late. Last year, they used their shares to place two of their operatives – Kevin Gentry and Nancy Pfotenhauer – on our board against the wishes of every single board member save for David Koch. Last Thursday, they used their shares to force another four new board members on us (the most that their shares would allow at any given meeting); Charles Koch, Ted Olson (hired council for Koch Industries), Preston Marshall (the largest shareholder of Koch Industries save for Charles and David), and Andrew Napolitano (a frequent speaker at Koch-sponsored events). Those four – who had not previously been involved with Cato either financially or organizationally – were likewise opposed by every member of our board save for Gentry, Pfotenhauer, and David Koch.

To make room for these Koch operatives, we were forced to remove four long-time, active board members, two of whom were our biggest donors. At this moment, the Kochs now control seven of our 16 board seats, two short of outright control.

Why are they forcing out Cato board members, all strong, principled libertarians who have been heavily involved with Cato – financially and organizationally – for years? The answer was given in early November of last year when David Koch, Richard Fink (he of many Koch hats), and Kevin Gentry met with Cato board chairman Bob Levy. They told Bob that they intended to use their board majority to remove Ed Crane from Cato and transform our Institute into an intellectual ammo-shop for American for Prosperity and other allied (presumably, Koch-controlled) organizations. That statement of intent is certainly consistent with what we’ve been hearing from both Kevin Gentry and Nancy Pfotenauer. They’ve frequently complained during their short time on our board that Cato wasn’t doing enough to defeat President Obama in November and that we weren’t working closely enough with grass roots activists like those at AFP.

We want to ensure that Cato stays true to its fundamental principles of individual liberty, free markets, and peace into the future, and that it not be subject to the personal preferences of individual officers or directors.

Let’s take a look at a few of these new board members of ours. Kevin Gentry is a social conservative activist who’s also vice-chair of the Virginia GOP. Nancy Pfotenauer is a former spokesperson for the McCain campaign who has argued on television in favor of the Iraqwar and the “don’t ask, don’t tell” policy pertaining to gays in the military. Ted Olson is a Republican super-lawyer who’s never identified himself as a libertarian.

Just before the last shareholders meeting, the Koch brothers also nominated –but were unable to elect – eight additional individuals for our board. Those nominees included the executive vice president of Koch Industries, a staff lawyer for Koch Industries, a staff lawyer for the Charles Koch Foundation, a former Director of Federal Affairs for Koch Industries, a former Executive Director of the National Republican Senatorial Committee (and who was, incidentally, a McCain bundler), and a lifelong Wichita friend of Charles Koch. Aside from those functionaries, they also nominated a couple of people with public profiles that make the jaw drop:

  • John Hinderaker of the Powerline blog, whose firm counts Koch Industries as a client. Hinderaker has written, “It must be very strange to be President Bush. A man of extraordinary vision and brilliance approaching to genius, he can’t get anyone to notice. He is like a great painter or musician who is ahead of his time, and who unveils one masterpiece after another to a reception that, when not bored, is hostile.” Hinderaker supports the Patriot Act and the Iraq War and calls himself a neocon.
  • Tony Woodlief, who has been president of two Koch-created nonprofits and vice president of the Charles Koch Foundation. Woodlief has blogged about “the rotten heart of libertarianism,” calling it “a flawed and failed religion posing as a philosophy of governance” while complaining about libertarians “toking up” at political meetings.
  • Now, who’s more likely to “ensure that Cato stays true to its fundamental principles of individual liberty, free markets, and peace into the future” – these Republican operatives and bloggers or the ousted board members who are among the most independent, principled, and energetic libertarians you’ll ever find?

Moreover, is there any reason for the Kochs to worry about Cato “staying true to its fundamental principles?” What, exactly, signals to them that we are straying, or likely will stray, from those principles?

As far as Charles’ declaration that Cato “not be subject to the personal preferences of individual officers or directors,” it’s hard to square that with the obvious implications of his suit. If Ed were to have his way and the shareholder agreement was dissolved, Ed would answer to 16 autonomous board members. If Charles were to have his way and the shareholder agreement was to govern Cato, then the board – and the president – would ultimately answer to Charles.


We welcome relevant, respectful comments. Any comments that are sexist or in any other way deemed hateful by our staff will be deleted and constitute grounds for a ban from posting on the site. Please refer to our Terms of Service (revised 3/17/2016) for information on our posting policy.