It began as a fairly straightforward story about a shareholder lawsuit: The Koch brothers, Charles and David, who together own 50 percent of the libertarian Cato Institute, filed suit to recover a 25 percent stake held by longtime chairman William Niskanen, who died last autumn and whose widow has yet to relinquish those shares.
Cato’s shareholder’s agreement is “pretty clear,” according to legal writer Alison Frankel shareholders cannot sell or transfer their shares without first offering them back to the Institute and then to the remaining Cato shareholders. But there’s one legal ambiguity: Cato’s shareholder agreement “doesn’t specifically address what happens when a shareholder dies.”
What started as a rather arcane legal dispute between the Koch brothers and their longtime lieutenant, Cato president Ed Crane, quickly transformed into a PR-manufactured Washington melodrama: the famed and revered (in some quarters) Cato Institute has turned against its Dr. Frankenstein, Charles Koch, attacking its maker with the full range of PR-weaponry that has served Cato effectively over these past four decades. The same pundits who only yesterday fell over themselves defending the billionaire Koch brothers as principled libertarians now denounce their benefactors as venal Republican Party warmongers out to crush the Cato Institute’s “nonpartisan” “independent” “scholarship” for the crime of being, yes, principled libertarians.
It would all be good for a laugh, if the spin hadn’t succeeded in conning the media and confusing the public, even roping in some well-meaning progressives like Common Cause, who defended Cato’s “independence.”
But in order for progressives and others to make an honest and practical assessment about the Cato Institute and its battle with the Kochs, we need to first set the record straight about some of the claims being spun.
Fact: The Cato Institute’s actual record during the Bush administration years was anything but principled and far from heroic.