Koch brothers, Cato Institute reach settlement


David Koch, shown in April 2011. (Mark Lennihan/AP)

The two have been embroiled in a public battle since March 1 when the Kochs filed a lawsuit over the distribution of controlling shares of the think tank, first reported by The Washington Post.

A subsequent lawsuit was filed in April in response to additions Cato made to its board.


Charles Koch (Bloomberg News)

Crane, who is nearing retirement, told Think Tanked in an interview this spring that he offered to step down multiple times in the last year in exchange for dissolution of the shareholder’s agreement, despite having “at least a few good years” left in him. The Kochs declined.

Details of the settlement outlined in the National Journal report could not be confirmed because Cato declined to comment until the staff has been briefed on the matter, which will occur Monday.

Cato Chairman Bob Levy issued a statement urging caution regarding the National Journal Story.

“The story in the National Journal is both incorrect and incomplete.  We will have more to say about this on Monday. Any assessment prior to that time would be without substantiation and very likely wrong in important respects,” said Levy.

Wes Edwards, Deputy General Counsel for Koch Companies Public Sector, concurred with the following statement: “The National Journal story is not fully accurate. The parties have agreed to prepare a joint release early next week to explain the terms of the resolution.”

It is unclear how Cato will emerge from this very public battle, in which many have argued since it began that its reputation would be tarnished if the think tank is viewed as losing its independence and falling under complete control of the Koch brothers.

But did the dispute end early enough to avoid that criticism?

The Koch brothers will remain on Cato’s board and have the opportunity to exercise power through those channels, but they will no longer have vetoing power if the shareholder’s agreement is indeed terminated, provided the governing rules of the board stay intact.

However, Crane, who may have made the ultimate sacrifice for Cato’s independence by stepping down for the dissolution of the shareholder's agreement, may not be totally out of the picture.

It is not immediately clear whether or not the agreement requires Crane to resign from his position from the board.

Keeping him a board member would certainly be one way to give the perception of a level the playing field and a savvy way to keep broad support behind the organization in an uncertain period.

This post was updated at 2:25 pm 6/20/12.

Allen McDuffee writes about politics and policy and covered think tanks for The Washington Post from 2011 to 2013. He blogs and hosts a podcast at governmentality.net and is currently working on a book about the influence of think tanks in Washington.

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