In a Power Grab, the Kochs' Struggles Are Revealed

PHOTO: CEO Charles Koch of Koch Industries poses for a portrait in Kansas, Nov. 10, 1998.| David Koch attends the 2011 David Rockefeller Award Luncheon at The Museum of Modern Art on March 8, 2011 in New York City.

Charles and David Koch have been demonized by Democrats as a power couple bent on buying the 2012 election for Republicans, but a rare lurch into public view shows that the Kansas oil men don't even have control of the major think tank they helped create.

The Koch brothers have spent millions since the 1970s to support that think tank, the Cato Institute, a libertarian refuge in Washington that aligns most of its views with the presidential candidate Ron Paul. The Koch brothers, though, are far more mainstream, financing a political group called Americans for Prosperity that has spent waves of cash to tear down Democratic candidates.

Now those political differences are at the center of Cato's future, and the Kochs have taken the uncharacteristic approach of suing the very influential group they funded for years, dissolving their shroud of secrecy. The lawsuit, which would effectively give the brothers control of the small group that runs Cato, was filed after a November meeting reported by The New York Times in which David Koch proposed to the group's chairman plans to merge operations. The chairman, Robert Levy, declined out of fear that the Koches would have too much control over what the think tank researches.

While the case is pending in a Kansas court, the short-term result has been a public debate over the role of Cato, and whether the mainstream Republican Koch brothers would ruin its libertarian reputation.

Charles Koch even wrote a lengthy statement explaining the lawsuit. "There is a great deal of speculation as to what direction we would take Cato if we were to be in a position to elect a majority of the board," he wrote. "Some have speculated that we would micro-manage the enterprise. Others have suggested we would turn Cato into a partisan Republican organization. These rumors are absolutely false."

The round of publicity is surprising for the Kochs not because they're unknown to the public — they've been the subject of a swarm of stories since the 2010 midterm elections in which their advocacy group backed Republican candidates — but because they both started the storm and are participating in it. That cuts against the billionaires' usual role as private power brokers and owners of their eponymous energy conglomerate in Kansas.

Even that mammoth company, Koch Industries, is secretive. Donald Haider-Markel, a politics professor at the University of Kansas, said a friend of his applied for a job there and was subject to a series of screening interviews before he was introduced even nominally to the company's philosophy.

"It's like joining a fraternity club," Haider-Markel said. "This is more, sort of, 'you'll get the book that tells you sort of the secret code only when you pass through stage five of this process.'"

The Kochs have reportedly donated $30 million to Cato since the group was founded nearly 40 years ago, but their contributions have waned, and last year they didn't give any money.

A senior policy fellow at Cato who asked not to be named to discuss the dispute said Charles Koch "hasn't been involved with Cato for years" and that "nobody's talked to him." Tensions between Koch and Cato's president, Ed Crane, have fluctuated over the years, stemming from their "bad blood" that no one can seemingly explain, the fellow said.

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