Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (18 page)

Even more than the Olin Corporation, Allen-Bradley sponsored an amazing array of generous if paternalistic fringe benefits for its workers, including its own jazz orchestra, led by a full-time music director, which serenaded lunch crowds. There were badminton courts on its roof deck, overseen by an athletic director, and an employee reading room, too. The Bradley brothers, who erected an iconic four-faced, Florentine-style clock tower that soared seventeen stories above the plant on the South Side of Milwaukee, regarded themselves as benevolent civic leaders, overseeing a family of employees. They were therefore bitterly wounded when their employees, who saw the situation differently, unionized and then went out on strike in 1939.

The elder brother, Lynde, died not long after, but the younger brother, Harry, who lived until 1965, became avidly right-wing. Like Fred Koch, he was a vigorous supporter of the John Birch Society, frequently hosting its founder, Robert Welch, as a speaker at company sales meetings. Bradley also was a devoted follower of Dr. Frederick Schwarz, a melodramatically anti-Communist physician from Australia who had converted to Christianity from Judaism, and who stumped across the heartland for his Christian Anti-Communism Crusade preaching that “
Karl Marx was a Jew,” and “like most Jews he was short and ugly and lazy and slovenly and had no desire to go out and work for a living” but also possessed “a superior, evil intelligence like most Jews.” Schwarz, too, was a regular visitor to the company and a favorite among Bradley’s causes. Bradley was also a keen supporter of the Manion Forum, whose followers believed that social spending in America was part of a secret Russian plot to bankrupt the United States. Despite the lifesaving financial boost that federal spending had provided to his own company, Bradley reportedly regarded the growing federal government in America and world Communism as “
the two major threats” to human “freedom.”

The company’s embrace of the free market, however, didn’t preclude price-fixing. In 1961, Harry Bradley’s successor and confidant of many years, Fred Loock, was convicted of price-fixing with twenty-nine other electrical equipment firms. He narrowly escaped incarceration, according to the authorized history. Both the company and its chief executive paid substantial fines.

The company’s relations with federal authorities worsened further in the 1960s as the Allen-Bradley company, not unlike the Olin Corporation, found itself in the crosshairs of new laws driven by more demanding societal expectations.
In 1966, a federal judge sided with a group of female employees who sued the company for paying them lower wages than male employees operating the same machinery. Then, in 1968, federal authorities targeted the company for racially discriminatory hiring policies. In response, the company agreed to institute an affirmative action plan. Meanwhile, unionized employees at the plant went on strike, causing an eleven-day work stoppage. The combination of antitrust, race, gender, and labor disputes at the company provided fertile ground for the politics of backlash building in the executive suite.

T
he Bradley Foundation, meanwhile, also became increasingly politicized. Originally, the foundation’s purpose was to help aid needy employees and the residents of Milwaukee, as well as prevent cruelty to animals. Harry Bradley and his wife were animal lovers, doting on a pet poodle, Dufy, who was named for the modern artist and who had a penthouse dog run. After Joyce took over the foundation in 1985, however, a new mission statement was drafted, directing its grants to the support of “limited, competent government,” “a dynamic marketplace,” and “vigorous defense.”

The Bradley brothers had hoped to keep the company in the private hands of the family, and the jobs in the community, in perpetuity. Their will was explicit about this. Their heirs, however, with the help of the Milwaukee law firm Foley & Lardner, managed to sell the company to Rockwell nonetheless, cashing in handsomely. One of the law firm’s partners, Michael Grebe, subsequently became chairman and CEO of the newly enriched foundation.

What remained of Allen-Bradley, however, did less well. Its sad slide traced the fall of American manufacturing during the end of the twentieth century and the hollowing out of decent blue-collar jobs. In 2010, Rockwell Automation, which is what was left of the company in Milwaukee twenty-five years after it was sold, outsourced the last of the plant’s remaining manufacturing jobs to low-wage areas, largely in Latin America and Asia. Robert Granum, president of Local 1111 of the United Electrical, Radio, and Machine Workers of America, the union that represented the last laid-off workers, told the
Milwaukee Business Journal
that Rockwell’s decision would “
deprive future generations of working people of the opportunity to have decent family-supporting jobs.”

Allen-Bradley’s distinctive Florentine clock tower still rose above Milwaukee’s South Side. But by then Milwaukee was described as “
the most polarized part of the most polarized state in a polarized nation.” The industrial base had collapsed, the manufacturing jobs disappeared, and many of the white immigrants who had worked at Allen-Bradley had long since moved to the suburbs,
leaving Milwaukee close to 40 percent black, with the second-highest black poverty rate in the country and with an unemployment rate that was nearly four times higher for blacks than for whites.

The Bradley Foundation, meanwhile, had become central to the conservative movement. Thanks to smart investments, its assets ballooned, enabling it to finance a movement that ascribed poverty to dependency on government handouts, not to the trade, labor, and industrial policies that had resulted in American jobs, such as those at Allen-Bradley, getting shipped overseas. By 2012, the Bradley Foundation’s assets had reached more than $630 million, enabling it to dole out more than $32 million in grants during that year alone. The funds continued to finance welfare reform initiatives that required the poor to find jobs, as well as attacks on public schools. The foundation also continued to support conservative beachheads in thirty-five different elite colleges and universities including Harvard, Princeton, and Stanford.

The foundation’s annual Bradley Prizes had by then become the glittering Academy Awards ceremony for conservatives, a night at Washington’s Kennedy Center on the banks of the Potomac filled with evening gowns, tuxedos, overlong acceptance speeches, live musical fanfares, and up to four annual $250,000 prizes given to a Who’s Who of the movement. Over the years, winners have included the newspaper columnist George Will, who subsequently became a trustee of the foundation. Also honored with the award were the founders of the Federalist Society as well as Princeton’s Robert George; Bill Kristol, the neoconservative editor of
The Weekly Standard;
the Harvard professor Harvey Mansfield; the Fox News president, Roger Ailes; and the Heritage Foundation’s stalwarts Ed Meese and Ed Feulner. Almost all of the recipients had played major roles in tugging the American political debate to the right. And almost all had also been supported over the years by a tiny constellation of private foundations filled with tax-deductible gifts from a handful of wealthy reactionaries whose identities and stories very few Americans knew but whose “
overarching purpose,” as Joyce said, “was to use philanthropy to support a war of ideas.”

For twenty-one years, while the Kochs were financing an ideological war aimed at freeing American business from the grip of government, Donald Carlson was cleaning up the dregs their industry left behind. Stitched to the jacket he wore to work at Koch Refining Company, the booming Pine Bend Refinery in Rosemount, Minnesota, was the name Bull. His colleagues called him this because of his brawn and his willingness to shoulder the tasks no one else wanted to touch. “
He wasn’t always the greatest guy or dad, but he got up every morning and went to work. He stepped up to the plate every day,” recalls his widow, Doreen Carlson. “If a job was too hard, they gave it to him.”

Beginning in 1974, when he was hired, Carlson worked twelve- and sometimes sixteen-hour shifts at the refinery. Its profitability had proven the Kochs’ purchase of Pine Bend prophetic. It had become the largest refinery north of Louisiana with the capacity to process 330,000 barrels of crude a day, a quarter of what Canada exported to the United States. It provided over half of the gas used in Minnesota and 40 percent of that used by Wisconsin. Carlson’s job was demanding, but he enjoyed it. He cleaned out huge tanks that contained leaded gasoline, scraping them down by hand. He took samples from storage tanks whose vapors escaped with such force they sometimes blew his helmet off. He hoisted heavy loads and vacuumed up fuel spills deep enough to cause burns to his legs. Like many of the one thousand employees at the refinery, Carlson was often exposed to toxic substances. “
He was practically swimming in those tanks,” his wife recalled. But Carlson never thought twice about the hazards. “
I was a young guy,” he explained later. “They didn’t tell me anything, I didn’t know anything.”

In particular, Carlson said, no one warned him about benzene, a colorless liquid chemical compound refined from crude oil. In 1928, two Italian doctors first detected a connection between it and cancer.
Afterward, numerous scientific studies linked chronic benzene exposure to greatly increased risks of leukemia.
Four federal agencies—the National Institutes of Health (NIH), the Food and Drug Administration, the Environmental Protection Agency, and the Centers for Disease Control—have all declared benzene a human carcinogen. Asked under oath if he’d been warned about the harm it posed to his hemoglobin, Carlson replied, “
I didn’t even know what hemoglobin was.”

In 1995, Carlson became too sick to work any longer at the refinery. When he obtained his company medical records, he and his wife were shocked by what they read. In the late 1970s, OSHA had issued regulations requiring companies whose workers were exposed to benzene to offer annual blood tests, and to retest, and notify workers if any abnormalities were found. Companies were also required to refer employees with abnormal results to medical specialists. Koch Refining Company had offered the annual blood tests as legally required, and Carlson had dutifully taken advantage of the regular screening. But what he discovered was that even though his tests had shown increasingly serious, abnormal blood cell counts beginning in 1990, as well as in 1992 and 1993, the company had not mentioned it to him until 1994.

Charles Koch had disparaged government regulations as “
socialistic.” From his standpoint, the regulatory state that had grown out of the Progressive Era was an illegitimate encroachment on free enterprise and a roadblock to initiative and profitability. But while such theories might appeal to the company’s owners, the reality was quite different for many of their tens of thousands of employees.

Carlson continued working for another year but grew weaker, needing transfusions of three to five pints of blood a week. Finally, in the summer of 1995, he grew too sick to work at all. At that point, his wife recalls, “they let him go. Six-months’ pay is what they gave him. It was basically his accumulated sick pay.” Carlson argued that his illness was job related, but Koch Refining denied this claim, refusing to pay him workers’ compensation, which would have covered his medical bills and continued dependency benefits for his wife and their teenage daughter. “The doctor couldn’t believe he was never put on workmen’s comp,” she added. “We were just naive. We didn’t think people would let you die. We thought, ‘They help you, don’t they?’ ”

In February 1997, twenty-three years after he joined Koch Industries, Donald Carlson died of leukemia. He was fifty-three. He and his wife had been married thirty-one years. “Almost the worst part,” she said, was that “he died thinking he’d let us down financially.” She added, “My husband was the sort of man who truly believed that if you worked hard and did a good job, you would be rewarded.”

Furious at the company, Doreen waged a one-woman battle to get Koch Industries to acknowledge some responsibility for her husband’s death and apologize. “
I’m looking for some accountability,” she told Tom Meersman, a reporter for the Minneapolis
Star Tribune
. For three years, Carlson pressed her legal claim. The company offered her some money but refused to call it compensation for a work-related death. It resisted until minutes before the case was about to be heard by a judge. And when it did finally agree to her terms, it did so only if she would sign a confidentiality agreement, keeping the matter private. “They never admitted it. They avoided court. There was no written record. They just gave me those little crumbs and told me to keep my mouth shut,” she recalled.

More than a dozen years later, Carlson’s confidentiality agreement had expired, and she could speak out. “I don’t think you could write what I think of Koch. You’re just collateral damage. It’s just money for them, and they never have enough.” Pressed about whether it was fair to pin the blame on the Kochs themselves, rather than on lower-level executives she dealt with, she retorted, “Charles Koch owns the refinery.” She went on, “And they want less regulations? Can you imagine? What they want is things that benefit them. They never cut into their profits. I hear they’re backing a lot of people politically, and I bet it’s all about getting rid of regulations,” she said. “But those regulations are for safety. It’s not to make your workers rich; it’s so they don’t die.”

C
arlson’s case was just one of many targeting Koch Industries’ corporate conduct in the decades after Charles took over the company. The company was expanding at a breathtaking rate into a global conglomerate with vast chemical, manufacturing, energy, trading, and refining interests. But growing at an equally astonishing pace were its legal conflicts. Rather than making peace with the government overseers who frustrated his libertarian ideals, Charles declared war. As he portrayed it, his defiance was a stand for high principle. In 1978, for instance, he wrote an impassioned call to arms to other businessmen in the
Libertarian Review
, arguing, “
We should
not
cave in the moment a regulator sets foot on our doorstep…Do not cooperate voluntarily; instead, resist wherever and to whatever extent you legally can. And do so in the name of
justice
.”

It’s difficult to disentangle Charles’s philosophical opposition to regulations from his financial interest in avoiding them. As he described it, he was trying to “
unceasingly advance the cause of liberty” in the face of “arrogant, intrusive, totalitarian laws.” Critics such as Thomas Frank, the author of
What’s the Matter with Kansas?
who grew up in Kansas watching the Kochs, saw it quite differently. “
Libertarianism is supposed to be all about principles, but what it’s really about is political expedience. It’s basically a corporate front, masked as a philosophy.” What is indisputable is that whatever the motivations were, in the quarter century between 1980 and 2005, under Charles Koch’s leadership, his company developed a stunning record of corporate malfeasance.

In April 1996, for instance, as Bull Carlson was dying of leukemia in Minnesota, Sally Barnes-Soliz, a Koch Industries environmental technician, knocked on the door of government regulators in Corpus Christi, Texas, where the Kochs owned and operated another refinery, and blew the whistle on the company for lying about illegal quantities of benzene that it was leaking into the air. Environmental regulations, even more than those dealing with workplace safety, proved to be constant obstacles for Koch Industries, as the problems at the refinery in Corpus Christi exemplified.

Barnes-Soliz later told
Bloomberg Markets
magazine, “
The refinery was just hemorrhaging benzene into the atmosphere.”
Rather than comply with a new 1995 federal regulation requiring reductions in such emissions, Koch Industries had tried to conceal its output in a report that it was required to file with the Texas Natural Resource Conservation Commission. Internally, a Koch lawyer conceded that the company’s self-reporting was “misleading and inaccurate,” so the company had then called in Barnes-Soliz to provide a more accurate account.

She had been working with Koch Industries for five years and loved the job because she felt she was contributing directly to the health and safety of employees and the public. As directed, she carefully re-tabulated the refinery’s benzene emissions and found the company had released fifteen times more than the legal limit. Her bosses were unhappy with her findings. She had a bachelor’s degree in science and environmental health and a master’s of science in industrial hygiene, so she knew what she was doing, but nonetheless she redid the math many times. But she kept getting the same unwelcome results. “There were a lot of meetings to try and get me to change the number. It was hard, but I held firm to my convictions,” she recounted to
Bloomberg Markets
. She was thus shaken when she saw the subsequent report submitted by Koch to the Texas authorities. It falsified the benzene emissions to 1/149th of the amount she had calculated.

“When I saw they had actually falsified that document, I had no recourse but to notify the authorities,” she told
Bloomberg Markets
, which described the episode as part of a pattern of outlaw behavior by Koch Industries. On her lunch break, she drove to the state regulators’ office and reported the fraud.

Defenders of Koch Industries have suggested that the whistle-blower was merely a disgruntled employee, looking for a pretext to save her job. But Koch Industries in Corpus Christi was hit with a ninety-seven-count indictment on September 28, 2000, charging it with covering up the discharge of ninety-one metric tons of benzene. The company faced the potential of $352 million in fines, and four Koch employees faced potentially long prison sentences and fines of $1.75 million each. The company fought back hard in the courts, trying to withhold hundreds of internal e-mails about its emissions, but the presiding judge rejected its argument that these were trade secrets, castigating its lawyer as a “front man” who was trying to “impede” regulators from discovering the “extent of its noncompliance.” During the course of the wrangling, the company revealed that it would have cost $7 million to comply with the emission standards. High though the cost might seem, it was dwarfed by the refinery’s profits. Prosecutors testified that the Kochs’ Corpus Christi refinery earned $176 million in profits during 1995 alone.

Eventually, Koch Industries pleaded guilty to one felony charge of “concealment of information” about its benzene emissions and paid $10 million in fines, and made another $10 million payment for projects to improve the environment in Corpus Christi. A spokeswoman for the company stressed afterward that the charges against the individual Koch managers had been dropped, and she argued, “
The government’s case ultimately collapsed.” David Uhlmann, the career prosecutor who headed the environmental crimes section of the Justice Department at the time, however, said that to the contrary Koch Industries pleaded guilty to “an orchestrated scheme to conceal benzene emissions—a known carcinogen”—from regulators and the community. He calls the suit “one of the most significant cases ever brought under the Clean Air Act.” He notes, “Environmental crimes are almost always motivated by economics and arrogance, and in the Koch case there was a healthy dose of both.”

An eye-opening sideline was the company’s treatment of Barnes-Soliz.
For her whistle-blowing, she said she was quarantined to an empty office with no responsibilities and no e-mail access. Eventually, she quit and sued the company for harassment, and in 1999 Koch paid her an undisclosed amount in a sealed settlement.

Around the same time, another would-be whistle-blower, Carnell Green, who was a low-level employee at Koch Industries in Louisiana, said that the company threatened to arrest him if he didn’t recant.
According to two statements that Green gave in 1998 and 1999 to a private investigator who was working for Bill Koch, Green was a pipeline technician and gas meter serviceman for Koch Industries when he ran afoul of the management. He had worked for the company from 1976 until 1996, during which time he said that he was told to sweep mercury spills from the thirty-six gas meters that he monitored out the door and onto the ground. He said that he was also told to dispose of the old meters, which contained about a quart of mercury each, in dumpsters and to pour additional containers of mercury down the sink, as he witnessed his supervisor doing. Green said the mercury was so pervasive that when he got home, balls of it would roll off his clothes and out of his shoes.

After attending a class on hazardous materials in 1996, though, Green said that he sent a report to his supervisors alerting them that mercury posed a serious health hazard and should be disposed of more carefully. Green said his supervisors told him not to talk about it. Soon after, Green said, a man who identified himself as “FBI Special Agent Moorman” came to interrogate him and accused him of lying about the mercury. He said the official threatened to arrest him and put him in jail if he did not retract his allegations against the company and also warned him that if he told anyone else, including outside authorities, about the mercury, he would be fired. Green said his immediate supervisor then presented him with a prepared statement to sign, saying there was no mercury at the Koch facilities. Fearing that he would otherwise be imprisoned, Green signed it.