“Who the Hell is Going to Take a Think Tank Seriously If It’s Controlled by Billionaire Oil Guys?’ Cato’s President Speaks.

This afternoon, as the Koch PR arm was blasting out a memo about the War for Cato, the libertarian think tank’s board was meeting to talk about membership. Before today, the sixteen-member board had seven members affiliated in some way with the Kochs. That put them very close to majority control. Today, the board’s majority agreed to simply expand to 20 members, invoking a bylaw that allows that many people to serve if it’s so desired. They added four people – William A. Dunn, John C. Malone, Lewis E. Randall, and Donald G. Smith – who are more supportive of the non-Koch faction. “We now have a 13-7 majority,” said Ed Crane, Cato’s president since 1977. “It was a contentious meeting.” When was the last time the board had 20 members? “I don’t think we ever have.”

I talked to Crane about the latest Koch accusations and about the new moves. A lightly edited transcript follows.

Slate: I wanted to get your response to this umpteenth he-said, he-said letter. The argument in here is about how their ideas for the organization are being expressed – they say you’re not telling the truth about what they’re trying to do.

Crane: You’ve seen the names of the people they’ve nominated for our board. They’re all conservative, Koch Industries supplicants. My god, if they’re not trying to take over for Koch’s purposes – it’s so transparent, it’s obvious. Charles likes to create his own reality, build a bubble around him, but they’re pretty hamfisted about the way they’re going about this. David Koch was a friend of mine until Charles said, not anymore.

Slate: When was that?

Crane: I guess it became contentious at a board dinner we had. Nancy Pfotenhauer – they’d put her and Kevin Gentry on our board. Both of them were Republican activists, and social conservatives. Never been to a Cato event, never given a dime to Cato. Nice people, but didn’t have the stature to be on our board. At this dinner, she starts lecturing us on how Cato’s spending too much on physical capital and not enough on human capital. She has no clue! So I tell her, this is a proper thing to bring up at a board meeting. But this is a dinner. She kept talking! So I got up and maybe yelled at her a little, stomped out, and that’s the excuse they’ve been using to say I’m not civil. David’s memo is just off the wall. My goodness, you’d think I was Simon Legree or something.

Crane: The really insulting thing is that he talks about five shareholders, and one is a “former Koch employee.” It implies, “we could have gotten rid of Crane at any time.” Well, the longtime employee has a name. It’s George Pearson. He’s a man of incredible integrity. The idea they could have forced him to kick me and Bill Niskanen out is insulting. It’s just the way they are. And to say it the way they said it – or whoever wrote it for them, David can’t write – it’s indictive of what they do.

Slate: One thing that the letter mentions, specifically, is that you criticized the Kochs when you talked to Jane Mayer for her New Yorker story about them.

Crane: Jane knows I’m pissed at her. I told her that off the record. I told her at the top of the interview. First off she says, I’m doing a story on the libertarian impact on the Tea Party movement. I was suspicious of that to begin with. Within five minutes, it’s clear that she wants to do a hatchet job on the Kochs. She’s a better journalist than that. You don’t need to lie to people. I said, look, I’ll tell you things about the Kochs. Ninety percent of this was positive. I admire them as businessmen, I agree with their philanthropy. The most critical thing I said – she asked, I heard they had a fallout over “market-based management.” I said, Well, we had some disagreements on that. I think it’s a case of “the emperor has no clothes.” Everybody tells him how brilliant this book The Science of Success is, and in my mind it’s one of the worst books ever written. The fact-checker calls me up, and I say, yes, I said that, but it was off the record. Go back to the tape and check it. He says, She said the tape recorder didn’t work. Well, in those circumstances, when you think the tape recorder is working so the reporter is not taking extensive notes, you infer that things are off the record. I was not happy about that.

Slate: The Mayer incident is the the basis for this argument: “As Ed has shown, he will partner with anyone – including those that oppose Cato and what it stands for – to further his personal agenda at the expense of others working to advance a free society.”

Crane: That’s a bald-faced lie. There are very few people in town here who do more to help other organizations that are on the same philosophical path as I have. I help all these groups. As far as my personal agenda is concerned, I have told the Kochs – through Bob [Levy] – that if you want me to step down, I’ll step down. I want to save Cato. I’ll step down if it ends this thing. It can’t be a wholly owned subsidiary of Koch Industries. Who the hell is going to take a think tank seriously that’s controlled by billionaire oil guys? It’s just nuts!

I feel the same way about Americans for Prosperity. Why, if you have a grassroots group activist group – and I’m a free market guy, I’m for AFP – but why do you make an oil billionaire the chairman? Soros does a lot of this stuff, but he’s a hell of a lot more clever about it. To say that I will compromise my principles, or that I’ll team up with anybody, that’s not true. That Jane Mayer thing is the only substantive thing they can point to, and that was not intended to be public.

Slate: The letter also says “Ed recently e-mailed Cato’s donors, telling them that he ‘can understand why you might not want to contribute to our capital campaign.’” The implication is that you’ve got a rule-or-ruin strategy, it’ll either be Cato independent of Kochs, or it’ll be scorched earth.

Crane: That email – well, we had a strategy meeting on how to deal with the crisis of contributions. Our contributions have dropped precipitously from people who like us. They call in and say, until this thing’s settled, I’m not giving you another dime. My position, in writing to contributors, was, look: We still are Cato. We still are a libertarian think tank doing what we’ve always done and we need your money. Then I said, if your concern giving to the capital campaign means that down the road the Kochs will have that money, I understand that. But it was an appeal. It was a responsible thing for a CEO to do in a crisis environment. We’re not just losing contributors, we’re losing scholars.

Slate: You say you’d leave if it ended the Kochs’ move. What exactly would need to happen before you left?

Crane: We end the shareholder agreement and we have a majority on the board of directors who are not part of the Koch group.