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Koch Bros. Sue For Control Of Cato Institute

Koch Bros. Sue For Control Of Cato Institute

How do the mega-rich begin to implode? Usually through a shareholder lawsuit.

Charles and David Koch, billionaire activists launched a legal battle over control of the Cato Institute, one of the nation’s best-know libertarian think tanks. The Cato Institute was founded in 1974 as the Charles Koch Foundation and until last year had four shareholders: Charles Koch; David Koch; Edward H. Crane III, Cato’s president; and William A. Niskanen, who died in October.

The Koch brothers believe the shareholder agreement is clear that there should only be three shareholders now, while Crane thinks Niskanen’s 25-percent control should go to his widow, Kathryn Washburn.

Why does any of this matter? Well, an equal 25% split among Cato’s four shareholders meant that the Koch brothers could not act unanimously in the decision-making process–they had to at least get one other shareholder on board. This is a routine structure in these kinds of closely-held corporate structures. It ensures longevity of mission and a steadiness of business purpose since control is effectively diluted across the entire Board of Directors.

But with only three shareholders, there’s nothing stopping the Koch Brothers from effectively squeezing Crane out of all decisions and taking full control over Cato. That’s why this matters.

Up to this point Cato had been able to stay an arms-length away from the Koch brothers more recent overt politicking through Americans For Prosperity. But should the Koch’s take full control over the non-profit think tank then Cato loses that veil of independence which frankly helped bolster its credibility in public policy circles.

The question this lawsuit raises is what else is motivating the Koch’s to make this power play now?

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Photo from ProgressOhio via flickr.

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6:30PM PDT on Mar 17, 2012

For those who got side-tracked, the reason that the Koch Bros. want control on Cato is that it acts independently, much to the dislike of said Bros..

With Cato in tow, they can then use it as a propaganda machine as they do with The Heritage Foundation.

5:23PM PST on Mar 7, 2012

Now that I am heavily involved in law and legality, one thing is constant and found out by me.
I know what is right and what is wrong. To have any sytem with a language all it's own with trained wordsmiths that would put me to shame - if I allowed, is not comforting knowing my fellow laypersons rights are at risk. I spoke with someone in that game and found he too, did not share information when asked straight out. He claims he is the one of the best in SLC, Utah, better what? Deceiver, I say. I brought up the tort reform, he said that is only for insurance. Having paralegal experience was not satisfied with his take. I called him out, yes,

10:55AM PST on Mar 5, 2012

The Koch brothers are a cancer on society.

8:44AM PST on Mar 5, 2012

Like many weddings, this merely adds formality to an already existing situation.

6:40AM PST on Mar 5, 2012

If you want corporate 1984 then vote corpublican.

6:12AM PST on Mar 5, 2012

Let us face facts...the Right is so wrong for America, but just right for anyone desiring a dictatorship.

They continue to confuse the average citizen, they love you until you are born, yet are willing to lead America into the 6th Century.

5:54AM PST on Mar 5, 2012

Hummm. Koch brothers and think tank (libertarian or otherwise).

There's got to be an oxymoron in there somewhere. Or maybe just plain moron but that's giving 'morons' a bad name.

Dying old men wanting to rule the world and change it in their twisted image. The goal of megalomaniacs and other sickos since the beginning of recorded history. The more things change, the more they remain the same.

8:55PM PST on Mar 4, 2012

Well, William, I certainly set you off and I can see why as I re-read my post. I do apologize for upsetting you. Using the adjective bilge would anger me as well and while it wasn't my intent I certainly see how it would be interpreted that way. Please accept my apologies.

I'm not certain what in what I said told you that I am a conservative although, in my view, it is simply a different perspective. We all come at problems from our own life experiences, I suppose.

At any rate, I do apologize William.

8:19PM PST on Mar 4, 2012

Barbara B: You scum have been hiding under your sheets for years, you climbed right out of the garbage can with you despicable lies, scams and ‘jesus freak’ mentality and guess what, thanks to the internet you are finally being exposed for what you really are, scum! You are history and tomorrow their will be more on my side than what you have on you side! Republican Conservatives are on the way out so you have a nice day with your filthy scum ideology. Bye Bye

5:36PM PST on Mar 4, 2012

Oh my gosh, William B. such bilge. Do you really believe all that...Jessica is certainly your kind of "reporter". While some of what you mentioned has indeed happened. Thankfully it has been an outlyer in our society and thus, has made the news. None of what you mentioned is linked to one party or the other. Please, we have enough problems without making them up!

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