Charles and David Kochs’ masterplan to buy up America

Everyone knew the Koch brothers were big in politics, but no one knew quite how big, says The Independent. A forensic accounting study has now revealed that, during the 2012 election cycle, a Koch-backed network of groups spent $400m in total trying to influence the presidential and other elections. Cue outrage from political opponents who accuse the Kochs of “trying to buy the country” (see below).

It’s hardly the first time that the brothers, who fund a host of libertarian think-tanks and advocacy groups, have been accused of wielding undue influence, says The Washington Post. While “heralded on the right” for their anti-big-government crusade, they have been “pilloried on the left”.

Critics accuse them of promoting their own interests through a network of secret organisations – the “Kochtopus”. The Kochs counter that they are acting within the law and only behaving like any other politically interested group.

Brothers Charles, 78, and David, 73, can certainly afford the cash. Their combined fortune (put at $36bn each by Forbes last year) is exceeded only by that of Bill Gates. Between them, they own virtually all of Koch Industries – a Wichita, Kansas-based conglomerate with revenues of around $115bn a year.

The company has grown spectacularly since its founder, their father Fred, died in 1967. As well as operating three oil refineries and controlling 4,000 miles of pipeline, Koch Industries extends to paper towels and cups, lumber and Stainmaster carpets. Forbes ranks it as America’s second-largest privately held company after Cargill.

This supremacy hasn’t come without a cost, says The New Yorker. A bitter struggle for control of the company with their brothers, William and Frederick, saw the other two bought out in 1983. There followed 17 years of litigation. “In 1990, they walked past one another with stony expressions at their mother’s funeral.”

Charles, generally acknowledged as the company’s “driving force”, cuts a stately, grandfatherly figure, says Forbes. But that’s at odds with the juggernaut he and his brother have built.

Charles, who used to give his children economics lessons on Sunday afternoons, says he runs the company along Hayekian lines: the Kochs call it “market-based management”. Ironically, they also owe a good deal to Stalin, say The New Yorker.

Their father’s original business was based on helping the Stalinist regime construct oil refineries in the 1930s. But after losing several Soviet colleagues during the purges, Fred became a virulent anti-communist. His sons were schooled young about the dangers inherent in over-powerful government.

As Charles told Forbes in a rare 2012 interview, their goal has always been “true democracy”, where people “can run their own lives and… choose how they spend their money”. And the Kochs are in for the long haul. They admit that the 2012 Obama victory was “a huge blow”. But they see it as “a blip on a master plan measured in decades”.

‘This right-wing, red-neck stuff works for them’

It’s not just the amount of cash that the Kochs direct to their favoured causes that raises hackles in America, says Matea Gold in The Washington Post. It’s the secrecy. A vast political network “shields the identities of donors through a maze of organisations”.

The $400m raised in 2012 beat not just all other Republican efforts, but the entire labour-union contribution to the Democrats. The sophistication – involving “a dozen limited-liability companies with cryptic, alphabet-soup names, such as SLAH LLC AND ORRA LLC” – stunned even experts.

“Given their strict adherence to the principles of transparent free markets, the Kochs’ secrecy seems hypocritical,” says Daniel Fisher in Forbes. But funnelling millions anonymously through putative charitable organisations doesn’t “seem to jive with their convictions”.

Charles Koch says anonymity is necessary. “We get death threats… We get Anonymous
and other groups trying to crash our IT systems,” he says. “The president attacks us and we get threats from… Congress, and this is pushed out and becomes part of the culture – that we are evil, so we need to be destroyed or killed.” So long as we live in a society like that, why force people to disclose?

One reason may be to consider how often the Kochs’ political views “dovetail” with their corporate interests, says Jane Mayer in The New Yorker. They believe in drastically lower taxes, and “much less oversight of industry – especially environmental regulation”.

A Greenpeace report shows that, between 2005 to 2008, the Kochs “vastly outdid ExxonMobil in giving money to organisations fighting legislation”. New donor disclosure rules, proposed by the US tax office, may rule out the most opaque manoeuvres, but they’re unlikely to change their game completely.

As one former Koch adviser observes: “This right-wing, red-neck stuff works for them. They see this as a way to get things done without getting dirty themselves.”