Dark Money

by Jane Mayer

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Dark Money Summary

Dark Money is a non-fiction book by journalist Jane Mayer that explores how billionaires like the Koch brothers have financed the rise of radical right-wing political movements.

  • Fred Koch built his company by working with the Soviets and the Nazis on oil refineries. Koch had four sons: Frederick, Charles, and twins David and Bill. Charles assumed control of the company.
  • Following the creation of the Environmental Protection Agency and the Occupational Safety and Health Administration, Koch Industries repeatedly violated government regulations.
  • The Koch brothers used their wealth to build a network of conservative politicians and organizations known as the "Kochtopus."

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In Dark Money, bestselling author and journalist Jane Mayer tells the story of how a few billionaires have reshaped the American political landscape and given rise to the radical right. Mayer, a staff writer for The New Yorker, draws on research she compiled over her decades as a journalist to detail how conservative billionaires have used their wealth to attain political power. Mayer focuses on the Koch brothers and their immense political network, but she also talks about several other billionaires, such as Richard Mellon Scaife and John M. Olin. Mayer recounts how all these wealthy families started "weaponizing" philanthropy. She begins by taking readers back to 1900, the year Fred Koch was born. Koch was a bright young man, and at the age of twenty-seven he invented an improved way of extracting gasoline from crude oil. Koch built his company, Winkler-Koch, by collaborating with the Nazis and the Soviets. In the 1930s, Koch taught Soviet engineers how to build oil refineries. Around the same time, Winkler-Koch made a deal with a German company in Hamburg to build an oil refinery on the Elbe River. This was part of Adolf Hitler's industrial expansion plan. Fred Koch profited off the rise of these dictatorships, turning his family-run business into a multinational corporation.

Fred and Mary Koch had four sons: Frederick ("Freddie"), born in 1933; Charles, born in 1935; and the twins, William ("Bill") and David, born in 1940. Fred was allegedly a "John Wayne type" who liked to take his boys hunting and frequently shared his political beliefs with them. Koch cofounded the John Birch Society, a conservative advocacy group that Mayer identifies as spreading conspiracy theories about various Communist "plots" to subvert America. His sons admired him and feared him at the same time. Mayer recounts Fred's use of corporal punishment. From an early age the Koch brothers were subjected to beatings and whippings at their father's hands. Charles appears to have been the most dominant of the brothers. David and Bill both looked up to Charles, while Freddie, more sensitive, retreated into a world of arts and books with his mother. When Freddie was thirteen, his father hired a psychologist to examine the boys. She recommended that the Koch boys be separated and that Mary Koch distance herself from her sons to make them more "manly." Freddie was shipped to Hackley, a prep school in New York. David chose to go to Deerfield Academy. Charles bounced around from school to school until finally graduating from Culver Military Academy. Bill followed in his footsteps.

With Freddie in New York, Charles became Fred Koch's successor. He earned two graduate degrees in science and engineering from MIT and studied laissez-faire economics at the Freedom School, a conservative institution where his economic and political philosophy took shape. Charles led brothers David and Bill in a failed attempt to blackmail Freddie into giving up his stake in the company. Charles had broken into Freddie's apartment and found "evidence" that "proved" Freddie was homosexual, as the family had long suspected. Freddie denied the accusation, and the incident caused Bill to break ranks with Charles and side with Freddie. This small shift took the Koch brothers' sibling rivalry to new heights. In 1980, Bill and Freddie staged a coup against their brothers, hoping to oust Charles as CEO. The coup failed, but the infighting between brothers soon reached epic proportions, with embarrassing, high-profile lawsuits filed on all sides. For years after, Bill and Freddie worked to undermine Charles. In 1999, Bill filed a lawsuit against Koch Industries, charging that the company had been deliberately...

(This entire section contains 2053 words.)

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mismeasuring oil in order to cheat everyone else in the industry. "If we sold a barge with fifteen hundred barrels," said Phil Dubose, a former employee of Koch Industries, "you'd say it was two thousand…. That was the Koch Method." In 2001, Bill agreed to sign a pact stating that all four Koch brothers would stop fighting and put an end to the lawsuits.

Jane Mayer also traces the family histories of billionaires Richard Mellon Scaife and John M. Olin. Richard Mellon Scaife was born in 1932, just a year before Freddie Koch. His great-uncle Andrew Mellon was instrumental in rolling back the economic reforms of the Progressive Era, a decision that Mayer points out was partly responsible for the stock market crash of 1929. Scaife's family fortune remained intact. After his father's death in 1958, the twenty-six-year-old Scaife was left in charge of his mother's finances. Scaife, who had been expelled from Yale and suffered from alcoholism, was plagued by tragedy all his life. Yet he commanded his family's vast fortune and was in charge of his mother's charitable organization, the Sarah Scaife Foundation. He used the foundation to pursue his own political interests, giving money to other groups and organizations interested in promoting conservative political ideals. Scaife funded the Heritage Foundation and the American Legislative Exchange Council (ALEC), both tax-exempt 501(c)(3) nonprofits whose primary goal is to further a conservative agenda. ALEC was influential in passing the "stand-your-ground" law made famous by the acquittal of George Zimmerman. The Heritage Foundation's policy playbook, Mandate for Leadership, deeply influenced President Ronald Reagan, who Mayer says adopted 61 percent of the 1,270 policies in the playbook. John M. Olin, another billionaire, "weaponized" philanthropy in a different way: by using donations to impose conservative ideas on institutes of higher education. In reality, each one of these donations came with conditions attached, such as the creation of a series of lectures by libertarian scholars or of first-year courses in thinly veiled conservative politics. Olin, a Cornell alum, decided to target universities three years after Cornell's Afro-American Society took control of the student union to protest racism on campus. Olin had already founded the John M. Olin Foundation, which he then used to establish conservative "beachheads" in otherwise liberal institutions. The Kochs would follow his example.

For decades, Koch Industries was able to operate with relatively few government restrictions. Then, in 1962, Rachel Carson's Silent Spring exposed the devastating environmental impact of unregulated pesticide use. Public outcry over the pesticide industry's campaign of misinformation about DDT, an industrial pesticide now banned in the United States, led Congress to pass the Clean Air Act and the Clean Water Act. In 1970, President Nixon created the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA). Both federal agencies posed a threat to Koch Industries by imposing government regulations on company operations. The Kochs soon began a campaign to dismantle the EPA, OSHA, and other federal organizations with the power to regulate big business. A good portion of their political contributions have been devoted specifically to fighting EPA regulations. Meanwhile, Koch Industries has repeatedly failed to comply with EPA regulations. Mayer points to the suit brought against Koch Industries by Doreen Carlson, the widow of Donald Carlson, a former Koch Industries employee. For twenty-seven years, Donald Carlson worked for Koch Refining Company in Minnesota, where he cleaned the tanks that stored hazardous chemicals, including benzene, a known carcinogen. Koch Industries provided free annual blood screenings to employees working with benzene, but company doctors failed to inform Carlson of his abnormal cell count until years after detecting it. Carlson developed leukemia as a result of his exposure to benzene on the job. Koch refused to admit this and settled with Doreen on the condition that their agreement never be put into writing.

Charles Koch's war with the EPA escalated in the twenty-first century, when Al Gore's An Inconvenient Truth and increased environmental activism made addressing climate change a global priority. Most of the Republican party (about 75 percent) supported environmental regulations in 2003. To change that, the fossil-fuel industry turned to Frank Luntz, a prominent political consultant whose memo "Winning the Global Warming Debate" was leaked. In the memo, Luntz described how conservatives would sow the seeds of doubt about climate change by questioning the science, making it look like the scientific community had yet to come to a consensus about the reality of climate change. From 2005 to 2015, the Charles G. Koch Foundation gave $230,000 to Wei-Hock Soon, a climate denier who claimed that he worked at the Harvard-Smithsonian Center for Astrophysics. In fact, Soon had a part-time, unpaid position and didn't have a degree in climate science. Yet he coauthored a non-peer-reviewed paper claiming that polar bears aren't endangered by climate change. Climate scientists, Mayer says, reached consensus on the subject years ago: climate change is real and poses a danger to many, including polar bears. There is no doubt in the scientific community, she argues, except in the group of scientists paid for their opinions by Koch and other conservatives.

Charles Koch's interest in deregulating businesses and lowering taxes led him to pursue more political influence and power. In 1974, he created the Charles Koch Foundation, a libertarian think tank that has since been renamed the Cato Institute. The Cato Institute is known for its support of the privatization of federal programs like NASA and Social Security and of cutting taxes, particularly for the wealthy. In the mid 1980s, Charles gave $30 million to the Mercatus Center, a think tank that moved to George Mason University in Virginia. Mayer brings her discussion to the present by noting that both the Cato Institute and the Mercatus Center are outspoken opponents of the Affordable Care Act. The Mercatus Center funded many attack ads and pushed hard for the Affordable Care Act to be overturned by the Supreme Court. Though the Cato Institute and the Mercatus Center have not yet succeeded in overturning the ACA, Mayer suggests the sheer amount of money poured into their campaign is serious cause for alarm. Over the years, the Kochs have poured billions of dollars into various conservative organizations and politicians. Charles and David personally funded Citizens for a Sound Economy, which later split off into Americans for Prosperity. With Americans for Prosperity, the Mercatus Center, the Cato Institute, and countless other organizations supporting their aims, the Kochs have wielded immense political power. In 2003, Charles and David began sponsoring annual donor summits, which have collectively raised billions of dollars for conservative politicians. The Koch network on its own raised $889 million for the 2016 election cycle. These political contributions, Mayer notes, come at a price. As an example she offers Mitt Romney, who, she says, had to reverse his position on climate change in order to earn Charles Koch's support. Many other Republicans have similarly changed their positions in order to win Charles Koch's favor. As a result, the Koch brothers now have a significant degree of control over the Republican Party's agenda, which often supports policies advantageous to the Koch brothers and billionaires like them. Mayer calls this network of politicians, nonprofit organizations, think tanks, and advocacy groups the "Kochtopus": a multiarmed approach to achieving political power.

The 2010 Citizens United decision only helped the Koch brothers. In a controversial 5–4 decision, the United States Supreme Court ruled that political contributions were a protected form of free speech, giving corporations the same First Amendment rights as citizens. In other words, the Kochs could give as much money as they wanted without anyone knowing about it. In the wake of Citizens United, political contributions from the "Kochtopus" skyrocketed. Most of the money was still funneled into tax-exempt 501(c)(3) nonprofits, but a lot of it went to 501(c)(4) nonprofits, which enjoyed the privileges of unlimited donations and no requirement that they disclose their donor lists. 501(c)(4) nonprofits are labeled "social welfare" organizations and can participate in partisan political activity provided that it isn't their main focus. Donations to 501(c)(4) nonprofits are called "dark money," and 40 percent of all political spending now falls in this category. Dark money may not have won Republicans the White House in 2012, but it did affect Congress and the Senate, due in large part to political tactician Ed Gillespie. Prior to the 2010 census, Gillespie devised the REDMAP strategy: a plan to redraw district boundaries to give Republicans the edge in elections. In 2011, Republicans won the majority in the House of Representatives. In 2014, Republicans gained the majority in the Senate. Only the White House was left. In 2016, the Kochs decided not to support Donald Trump in his campaign for president. Mayer suggests that his win has provided them with a big opportunity, however, and notes that vice president Mike Pence and other Koch-backed conservative politicians have since been appointed to prominent positions in Trump's administration.