The other day a researcher with an organization called UnKoch My Campus contacted me. “That article has quickly become a favorite of mine, as I am compiling all known oversteps of the Charles Koch Foundation,” he said, referring to a piece I wrote in 2008. As it turns out, very few campuses have successfully deflected overtures by the billionaire Koch brothers—so stay tuned.
By Jacqueline White Kochak
The article was first published Sept. 18, 2008, in The Auburn Villager
For months, controversy has swirled around Auburn University’s new Center for International Finance and Global Competitiveness, with critics raising questions about the source of funding and the procedure used to hire the center’s director, Dr. Robert M. Lawson. Now, Rep. Craig Ford, a Democrat from Gadsden, has requested documents pertaining to the new center, housed in AU’s College of Business.
The center is being funded by an initial $300,000 grant from the Charles G. Koch Charitable Foundation, with a total of $5.5 million requested over five years, according to a memo distributed to AU deans by College of Business dean Paul M. Bobrowski on Jan. 10.
“…the Kochs share the conviction that the advancement of their philosophy is contingent upon investment in academia.”
Charles G. Koch and his brother David between them control three family foundations, the Charles G. Koch Charitable Foundation, the David H. Koch Charitable Foundation and the Claude R. Lambe Charitable Foundation.
The foundations have contributed so much money to advance conservative causes that they have caught the attention of liberal watchdogs such as the People for the American Way, which says that the Kochs share the conviction that the advancement of their philosophy is contingent upon investment in academia.
Koch is chairman of the board and chief executive of Wichita, Kan.-based Koch Industries, the largest privately held company in the U.S. with annual revenues of about $90 billion. According to Forbes Magazine, his personal fortune totaled some $17 billion in 2008, placing Koch at number 37 on the magazine’s list of the world’s billionaires.
A NETWORK OF CONSERVATIVE THINK TANKS
Koch is also a libertarian whose foundation funds a network of conservative think tanks nationwide and is a growing presence in the academic world. In addition, he is the founder of the influential libertarian Cato Institute, based in Washington, D.C.
Koch is the Charles G. Koch Charitable Foundation’s one and only benefactor. According to the foundation’s IRS form 990, accessed at guidestar.org, the foundation received $40,021,911 in 2006. Charles G. Koch is listed on the form as contributing exactly the same amount.
In 2005, according to tax forms, Koch contributed $30,020,760 to the foundation, and again was its only contributor. The form 990 for 2007 is not yet available online. Directors include Koch’s wife, his children and Koch Business Holdings, making up a majority.
“I have worked for some of these foundations and came up with the answers they wanted,” said one former AU professor who is concerned about the center. “I don’t have a problem with that, though I realize I wouldn’t have been asked back if hadn’t come up with those answers.”
To underscore his point, the professor pulls out a quote from the 2007 book “Radicals for Capitalism,” a 700-page tome that traces the lineage of the libertarian movement in the U.S.
“If we’re going to give a lot of money, we’ll make darn sure they spend it in a way that goes along with our intent,” David Koch told author Brian Doherty. “And if they make a wrong turn and start doing things we don’t agree with we withdraw funding. We do exert that kind of control.”
“If we’re going to give a lot of money, we’ll make darn sure they spend it in a way that goes along with our intent.”
Although the public generally identifies libertarianism with politics, its ideas have actually been much more important in economic theory. In fact, the story of the American libertarian movement has been a combination of small numbers and big influence, to quote a review of “Radicals for Capitalism” that appeared in the New York Times.
“Why is a university working with a foundation like this?” the professor asked. “It might be a good idea to study the stuff they want to study, but if you don’t get the results they want, what happens?”
THE ‘ECONOMIC FREEDOM INITIATIVE’
AU President Jay Gogue was apprised of the proposed institute in a memo dated Dec. 12, 2007, from Provost John Heilman, who said he had been briefed about the project several times. He said the center had the support of his office, and he recommended approval.
According to the memo, the center would “promote understanding of the concept and measurement of economic freedom, and the interaction of economic freedom, political freedom, individual liberty and economic growth and prosperity” through its “Economic Freedom Initiative.”
Key to that mission, the memo said, is “enhancing the research and teaching efforts around the Economic Freedom of the World Index.” The index ranks 123 countries on measures including size of government, top marginal tax rates, interest rate controls and freedom of citizens to use alternative currencies.
The index is published by Canada’s Fraser Institute, a libertarian think tank that has received funding from both the Charles G. Koch Foundation and the Claude R. Lambe Charitable Foundation, according to the Web site Sourcewatch. The Cato Institute, founded by Koch, co-publishes the index as do more than 70 think tanks around the world, according to the Cato website.
Co-authors of the index are Lawson and economist Dr. James Gwartney of Florida State University, where Lawson received his doctorate in economics. Also receiving his doctorate in economics from Florida State is Dr. Dan Gropper, associate dean of AU’s College of Business and one of three people proposed to serve on the center’s board of directors.
The others are Dr. John Jahera, head of the College of Business finance department and Colonial Bank Distinguished Professor; and Dr. James Barth, the Lowder Imminent Scholar in Finance, who will also serve as co-director of the center.
Research efforts would include yearly production of the index, as well as a series of business case studies and academic symposia, perhaps in conjunction with the West Virginia University Center for Entrepreneurship or the Independent Institute. Both the West Virginia University Foundation and the Independent Institute, a libertarian think tank based in Oakland, Calif., were the recipients of Koch largesse in 2006, according to the foundation’s tax filing.
According to the memo, some of the center’s activities would involve marketing the Economic Freedom of the World Index. The center would produce high-quality Economic Freedom of the World maps to disseminate to schools and other organizations, as well as high-school-level materials. The center would also host a comprehensive Web site and produce a one-minute video series called “Freedom Minutes,” as well as other video projects.
Finally, a speaker’s bureau would offer a “cadre of well-trained faculty” to communicate with the press and general public about “economic freedom issues,” would invite seminar speakers, host lectures on campus, offer seminars for finance professionals and support a number of undergraduate, masters and doctoral level assistantships or fellowships.
DISSENT PERCOLATED THROUGH RANKS
Concern started percolating up through the ranks of the College of Business in January of this year, when many faculty members first learned of the proposed center after the memo to deans.
Key to the existence of the center, obviously, was recruiting someone associated with the Economic Freedom of the World Index, around which most of the center’s proposed activities would initially revolve. That someone was co-author Lawson, then George A. Moor endowed chair at tiny Capital University, an institution of fewer than 4,000 students in Columbus, Ohio.
According to the memo from Heilman to Gogue, the proposed budget called for a $95,000 supplement to the director’s salary, as well as $95,000 in salary from AU starting Aug. 16, 2008. It is unclear how much the director will actually receive in salary, but it appears that at least part of it would come from grant proceeds, straight out of Charles G. Koch’s pocket.
When they learned of the center, some faculty members asked if a national search had taken place and started looking for the job announcement. The job was not advertised on the AU Web site or on any of the recognized venues where economics faculty are usually recruited, they say.
“So we think that we have, and we will have, enough protections in order to ensure that it’s without strings.”
One professor said he finally found the job advertised only once on a Web site called Social Science Research Network. The advertisement was posted Nov. 4, 2007, with enquiries to go to Jahera. Review of applications was to take place Dec. 1, 2007. On Nov. 9, however, Lawson was already going to be on campus to give a seminar, according to e-mail to a College of Business faculty member on Nov. 5, one day after the job was advertised.
According to a faculty recruitment checklist posted online by AU’s Office of Affirmative Action and Equal Employment Opportunity, a search committee is mandatory. The search committee reviews the advertisement and sets a timetable to review applications. The search committee then screens applications on the basis of advertised criteria, requests letters of reference and prepares a short list of candidates to be interviewed. Then candidates are interviewed and a candidate is selected.
‘PEOPLE OUT TO DESTROY PROPOSED CENTER’
After learning of the center in December and finding out that many senior faculty did not even know about the project in January, Gogue purportedly urged more openness. On Feb. 12, the center was included on the agenda for that month’s University Senate meeting.
At that time, Bobrowski told faculty members that the College of Business had looked at other universities, both public and private, that had engaged with the Koch Foundation, which he described as an umbrella organization including many charitable organizations.
“So we think that we have, and we will have, enough protections in order to ensure that it’s without strings,” he said. “Therefore, it is not any kind of strategy that guarantees a certain outcome based on funding source.”
The College of Business has been troubled by dissension within the economics department for years, and Gropper told senators there were people out to destroy the proposed center.
“They’re out to get the provost, and they’re out to get the dean,” he said. “I’ve seen the emails. I’ve seen the schemes for the last few years.”
“I don’t know if it would hold up in court, but it sure looks suspicious for Auburn.”
Gropper said the college had the opportunity to move forward, bring in money, build programs and support graduate students.
“At a time where we have a chance to bring in potentially millions of dollars, it’s sort of incredible to me that somebody would say, ‘Well, let’s slow that up. Let’s not do this. Let’s cast aspersions and so on,'” he said.
By that time, however, Lawson had already been hired and the center was a fait accompli. He is now an associate professor in the department of finance.
The state representative, Craig Ford, did not respond to several calls from The Villager. In his letter, however, he asked for an array of documents pertaining to the creation of the center and the hiring of Lawson, as well as copies of all announcements of the position of director and the dates and outlets where they were published.
He also asked for all responses to the advertisement, the dates they were submitted, the list of final candidates and the dates they visited campus. He also asked for e-mail traffic related to the center, the position of director and the hiring of Lawson between the office of the president, the office of the provost, Bobrowski, Gropper, Jahera, Barth and others.
“…it has been brought to my attention, by persons both inside and outside the university, that there may have been a number of administrative ‘irregularities’ in both the creation of the center, the design of the center’s administrative structure, the funding of the center, and in the hiring of its director,” Ford wrote in his May letter to Gogue.
“Given current investigations into the two-year college system in this state, I am deeply troubled and concerned by potential improprieties at Alabama’s largest universities and specifically in the College of Business at Auburn University (my alma mater),” he wrote.
According to the June 10 minutes of the College of Business executive committee, the Koch Foundation memorandum of understanding had been signed, with provost Heilman signing for AU. Sometime in July, the college would receive $300,000 as called for in the memorandum.
At the time, Gropper noted that Florida State had just signed a memorandum of understanding, as well.
“The center is fine as long as they produce independent research,” said one of several professors interviewed by The Villager, none of whom wanted to be named.
“I don’t know if it would hold up in court,” he said, “but it sure looks suspicious for Auburn.”