Charles Koch Misleads CBS On Dark Money And Oil Subsidies

In an interview on CBS Sunday Morning, oil industry billionaire Charles Koch made two false or highly implausible claims that were not addressed by CBS' Anthony Mason: that all of his political spending is “reported” and that he opposes all government subsidies. In reality, Koch-backed dark money groups are heavily involved in elections, and Koch Industries officials have lobbied to protect oil industry subsidies.

Koch Claims: All Of His Political Spending Is Publicly Reported

Koch On Political Contributions: “What I Give Isn't 'Dark.'” CBS Sunday Morning aired the first portion of an interview with Charles Koch on October 11, during which Senior Business Correspondent Anthony Mason asked Koch: “Do you think it's good for the political system that so much [of] what's called 'dark money' is flowing into the process now?” Koch responded: “Well, first of all, what I give isn't dark. What I give politically, that's all reported. It's either to PACs or to the candidates. And what I give to my foundations is all public information.” [CBS Sunday Morning, 10/11/15]

But The Facts Show: Koch-Backed Dark Money Groups Are Key Players In Elections

Center For Media And Democracy: “No, the Kochs' Political Spending Is Not 'Reported.'” In an October 12 post on the Center for Media and Democracy's (CMD) website PR Watch, CMD General Counsel Brendan Fischer detailed how “Charles Koch misled CBS when he suggested that the Kochs' political spending is publicly disclosed” :

In addition to the hundreds of millions flowing into politics by way of the Kochs' network of foundations and funding vehicles like Freedom Partners, funds from the corporate treasury of Koch Industries--the second-largest privately held company in the world--flow into politics, and Charles' brother David is known to have written millions of dollars in personal checks to political groups each year.

None of this spending is publicly disclosed.

[...]

The Koch political network has also established a complicated array of funding vehicles, like Freedom Partners and the Center to Protect Patient Rights (now known as “American Encore” ), to funnel hundreds of millions to politically-active nonprofits like Americans for Prosperity and American Future Fund. Although the original donors for these funding vehicles are kept secret, by law, these groups must disclose the grants they make to other groups, providing some insight into the Koch network's political spending.

In contrast, there is no public reporting requirement for donations directly from the personal bank accounts of David and Charles Koch, who together are worth an estimated $83 billion, unless donating directly to a candidate or PAC.

And, there is no public reporting of contributions from Koch Industries itself. Koch Industries is a closely-held company, so its majority owners, David and Charles Koch, do not have to publicly disclose how they use profits from the company's $115 billion in annual revenue to fund their personal political agenda.

Yet documents obtained by CMD show that that the Kochs themselves and Koch Industries are pouring millions into politics, with zero public disclosure. [PR Watch, 10/12/15]

Huffington Post: Charles Koch's Dark Money Claim Is “An Almost Impossible Pill To Swallow.” In an October 12 article, Huffington Post Money in Politics reporter Paul Blumenthal noted that the Koch brothers are “best known for the network of nonprofits they operate and raise money for that do not disclose their donors,” and that three Koch-linked “grant distribution hubs” -- Freedom Partners Chamber of Commerce, Center to Protect Patient Rights and TC4 Trust -- have “distributed more than $450 million in grants to other nonprofits, many of them active in elections, since 2009, according to nonprofit tax forms compiled by the Center for Responsive Politics.” He also pointed out that KochFacts.org, a website operated by Koch Industries, states that “Koch companies, Charles Koch, David Koch, and/or the Koch foundations” have provided “monetary support” for Americans for Prosperity, a dark money group that Blumenthal described as “the most politically active of all the nonprofit groups in the Koch orbit.” [Huffington Post, 10/12/15; ProPublica, 8/13/12]

Center For Responsive Politics: “At Least 1 in 4 Dark Money Dollars in 2012 Had Koch Links.” Following the 2012 elections, the Center for Responsive Politics reported:

Political money flowed freely in the world of conservative billionaires David and Charles Koch in 2012.

With most of the annual tax filings for non-disclosing nonprofits now in, it's clear that no other conservative or liberal dark money network matched, in combined size and complexity, the constellation of Koch-linked groups that churned hundreds of millions of dollars into elections around the country last year.

[...]

The politically active nonprofits with the closest ties to the Kochs are some of the biggest spenders in the dark money world. Three of them are in the top 10, and six are in the top 20.

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The Center for Responsive Politics estimates that roughly $86 million of [political spending] -- or more than one-fourth of all dark money spending reported in 2012 -- came in the form of grants from other Koch-linked groups. [OpenSecrets.org, 12/3/13]

Center For Public Integrity: “Koch-Linked Organization Uses 'Dark Money' To Fight Political Disclosure.” The Center for Public Integrity reported in November 2014 that a group called American Commitment was “fighting back” against the Internal Revenue Service's proposed rules to crack down on dark money, “using money traceable to billionaire brothers Charles and David Koch.” [Center for Public Integrity, 11/20/14]

Koch Claims: He Opposes All Government Subsidies

CBS' Mason: Koch Says “He Wants An Economy That Doesn't Have Government Subsidies.” While discussing his interview with Koch during the October 12 edition of CBS This Morning, Mason reported: “What really drives him, [Koch] says, is he wants an economy that doesn't have government subsidies. He thinks that corrupts business.”  In a lead-in to a portion of the interview itself on CBS Sunday Morning the previous day, Mason similarly stated:   “To spread his free-market philosophy, in the '70s Koch co-founded the libertarian think tank, the Cato Institute, to advocate for a radically smaller government with reduced regulation and no subsidies.” [CBS This Morning, 10/12/15; CBS Sunday Morning, 10/11/15]

But The Facts Show: Koch Industries Has Lobbied To Protect Oil Industry Subsidies

Center For Public Integrity: Koch Industries Has Lobbied To Protect Oil Subsidies. In a detailed report on Koch Industries, the Center for Public Integrity wrote: “Oil is the core of the Koch business empire, and the company's lobbyists and officials have successfully fought to preserve the industry's tax breaks and credits.” The report documented that Koch lobbyists have worked to preserve billions of dollars in oil industry subsidies, including the Section 199 manufacturing tax deduction and the “last-in, first out” accounting rule. [Center for Public Integrity, 4/6/11]

Koch Front Group Americans For Prosperity Opposed Congressional Effort To Repeal Oil Subsidies. Americans for Prosperity (AFP), which has been described by Politico as the “Koch brothers' main political arm,” included a vote to repeal oil industry subsidies - specifically, S.940, the “Close Big Oil Tax Loopholes Act” -- in its Scorecard for the 112th Congress, noting that a vote to eliminate these subsidies was a vote “against AFP's position.” [Americans for Prosperity, Scorecard for the 112th Congress, accessed 10/13/15; Media Matters, 7/31/15; Congress.gov, accessed 10/13/15]