Charles Koch Issues New Statement about Cato

by Patrick Brennan

In the latest development in the battle over the Cato Institute, Charles Koch has offered a new statement laying out the Kochs’ perspective, their reasons for the lawsuit, and their intentions regarding Cato. Notably, the statement indicates, as I reported on Tuesday, that Crane and his supporters do not appear interested in settling within the existing shareholder agreement:

I am troubled by recent false allegations that our actions to preserve shareholder rights were done in disregard of Cato’s interests. Here are the facts behind what we have done and why.

For months we made every effort to resolve, avoid, or delay this issue. . . . We made every effort to avoid this dispute — finally requesting just an additional four days to negotiate a potential resolution — but all of our proposals were rejected. Every counterproposal we received required we forfeit our shareholder rights and act contrary to the corporate governance documents.

The third Cato shareholder, Ed Crane, insisted that we have a shareholder meeting on March 1 to vote on new directors. At this meeting, a new shareholder was to be recognized in violation of our longstanding written agreement and the Institute’s bylaws and articles of incorporation. We warned Cato’s leaders about the negative consequences of forcing a shareholder meeting. They scheduled the meeting anyway. Faced with this intransigence, we did not seek damages or make claims of misconduct by individuals. Rather, we merely filed a declaratory relief action asking the court to confirm the meaning of the relevant corporate documents.

They lament the nature of Cato’s defense so far:

The actions of Cato’s leadership since the filing have provided evidence of their strategy. They thought we would back down rather than risk additional criticism from them and others on top of the many attacks we already face from opponents of a free society. They thought wrong. We will not capitulate to these threats and mistruths any more than we have bowed to other threats.

In their explanation of a positive vision for Cato, one could read some subtle message about the Kochs’ vision for Cato including a new emphasis on organizational effectiveness (though they also deny accusations that they would “micro-manage” the institute):

My objective is for Cato to continually increase its effectiveness in advancing a truly free society over the long term. . . . To that end, we would seek to elect board members and officers who will ensure that Cato becomes increasingly effective in advancing liberty while remaining dedicated to its core principles.