Hamas, Abbas’s PLO announce reconciliation agreement

Hamas, Abbas’s PLO announce reconciliation agreement

By Nidal al-Mughrabi and Noah Browning
April 23, 2014

(Reuters) – The Gaza-based Islamist group Hamas and President Mahmoud Abbas’s Palestine Liberation Organization (PLO) announced a unity pact on Wednesday, deepening a crisis in U.S.-brokered peace talks with Israel.

The move, coming after a long line of failed efforts to reconcile after seven years of internal bickering, envisions a unity government within five weeks and national elections six months later.

“This is the good news we tell our people: the era of division is over,” Hamas Prime Minister Ismail Haniyeh said to loud applause at a Palestinian news conference also attended by representatives of the PLO.

Israel said after the announcement that Abbas had chosen Hamas over peace, and canceled a session of U.S.-brokered talks with the Palestinians that had been scheduled for Wednesday night in Jerusalem.

Israeli Prime Minister Benjamin Netanyahu said in a statement that Abbas “chose Hamas and not peace. Whoever chooses Hamas does not want peace.”

Israeli Channel 2 TV said Netanyahu would convene an emergency session of his security cabinet on Thursday to discuss his response.

Washington said it was disappointed by the deal which State Department spokesman Jen Psaki said “could seriously complicate our efforts – not just our efforts but the efforts of the parties to extend their negotiations.”

Along with the United States and the European Union, Israel views Hamas as a terrorist organization and says Abbas’ efforts to unify with the group show he is not serious about extending the troubled negotiations.

The talks, aimed at ending its decades-old conflict with the Palestinians and establishing a Palestinian state in the West Bank and Gaza, are scheduled to end on April 29.

Palestinians have long hoped for a healing of the political rift between the PLO and militant Hamas, which won a Palestinian election in 2006 and seized control of the Gaza Strip from forces loyal to Western-backed Abbas in 2007.

But reconciliation dreams have been dashed repeatedly in the past. Since 2011, Hamas and Fatah have failed to implement an Egyptian-brokered unity deal because of disputes over power-sharing and the handling of the conflict with Israel.

Hamas has battled Israel, which it refuses to recognize, while Abbas’s Fatah party has remained in control of the Palestinian Authority in the occupied West Bank and pursued years of fruitless talks with Israel.

Abbas said the pact would not interfere with peace efforts.

“There’s no contradiction at all between unity and talks, and we’re committed to establishing a just peace based on a two-state solution,” he said in a statement following the deal.


Egypt’s foreign minister Nabil Fahmy welcomed the deal, saying in a statement he hoped it would “support the Palestinian position in the peace talks”. Qatari Foreign Minister Khalid bin Mohamed al-Attiyah congratulated the Hamas prime minister.

The approval of the two influential Arab states, which have been at loggerheads over the role of the Hamas-linked Muslim Brotherhood, implied the agreement had backing from the region as a whole.

It could give Abbas a measure of sovereignty in Gaza and help Hamas, hemmed in by an Israeli-Egyptian blockade, become less isolated.

But Gaza analyst Talal Okal said previous unity agreements signed with great fanfare had amounted to nothing, and the future of this deal may depend on whether the sides agree to extend U.S.-brokered peace talks.

“Will it materialize or not? Let’s wait for April 29th. What will happen if negotiations are extended?” Okal said.

Minutes after the announcement, Israel launched an air strike on northern Gaza, wounding 12 people, including several small children, local medical officials said.

The Israeli military said it had carried out a “counter-terrorism operation in the northern Gaza Strip,” and that it had not identified a hit, suggesting it may have missed its target.

U.S. Secretary of State John Kerry revived the peace talks in July after a nearly three-year hiatus.

The negotiations stalled this month when Israel refused to carry out the last of four waves of prisoner releases unless it received assurances the Palestinian leadership would continue the talks beyond the end of April.

After Israel failed to free the prisoners, Abbas responded by signing 15 international treaties, including the Geneva Conventions on the conduct of war and occupations. Israel condemned the move as a unilateral step toward statehood.

Talks were last held on Tuesday, with no reported progress.

(Additional reporting by Jeffrey Heller in Jerusalem and Ali Sawafta in Ramallah; Writing by Noah Browning; Editing by Sonya Hepinstall)


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Korea Confronts Tendency to Overlook Safety as Toll in Ferry Sinking Grows

Korea Confronts Tendency to Overlook Safety as Toll in Ferry Sinking Grows

The New York Times
April 22, 2014

JINDO, South Korea — As Navy divers recovered the bodies of dozens of teenagers drowned waiting for a rescue of their doomed ferry, South Korea has begun a national bout of hand-wringing over the country’s tendency to overlook safety precautions in its quest for economic success.

With a mounting list of errors that appeared to have contributed to the disaster, maritime experts, the news media and regular citizens venting their anger on social media have begun to question what they describe as inadequate safety precautions and often lax regulation of businesses.

On Tuesday, an opposition lawmaker released data showing that the ship was carrying three times its recommended maximum cargo, though it remained unclear if that could have helped destabilize it.

In addition, President Park Geun-hye, who has been withering in her criticism of the crew, has also argued that cozy relations between regulators and shippers may have contributed to the catastrophe, one of South Korea’s worst in peacetime. The prime minister cited specific problems that might have been addressed by better regulation, including suspicions that renovations to add more sleeping cabins made the ship top-heavy and more likely to keel over.

The country’s top newspapers reflected the growing sense of anger, and shock, over what they suggested was a lack of proper oversight. “Are we a safe society or a third-rate people?” read one editorial headline in the newspaper Joong-Ang. And the daily newspaper Dong-A ran an editorial titled “Cry Korea,” in which it argued that Ms. Park should live up to her campaign promise to run an “administration of safety.”

For years, South Koreans called their country “a land of disasters” after a lack of regulation or a cavalier attitude toward safety, or both, were at least partly blamed for a string of accidents.

In 1993, an Asiana Airlines jet slammed into a hill not far from the site of the ferry accident, killing 68 people aboard. Later that year, an overloaded ferry sank, killing 292. In 1994, a bridge collapsed in Seoul, killing 32. In 1995, about 100 died in a gas explosion, and roughly 500 in the collapse of a department store in Seoul that was weakened after the owner violated building safety codes by adding a swimming pool at the top. Two years later, a Korean Air jet crashed in Guam, killing 228.

With no large-scale disaster reported since arson caused a subway fire that killed 192 people in 2003, South Korea appeared to have put its curse behind it — and the country appeared to be moving past its culture of “ppali ppali,” or “hurry hurry,” loosely translated as a tendency to justify cutting corners to get work finished quickly.

Now, many Koreans are expressing shame at how far their country still needs to go to address safety concerns, adding to the grief and anger that has gripped the country since the accident last Wednesday.

On Tuesday, anger at the crew’s apparent missteps in the evacuation only grew as investigators said the crew was not even the first to notify the authorities that the ship was in trouble. The first call, they said, came from a high school student who called the police.

“Save us! We’re on a ship and I think it’s sinking,” the student is quoted as saying, according to the South Korean national news agency, Yonhap. The boy is among the missing.

As of Wednesday afternoon, the death toll had risen to 150, but 152 were still missing.

Analysts said the ferry accident appeared to be a reminder that South Korea did not shed its easy acceptance of loose regulatory enforcement even as it became a high-tech economic powerhouse flooding the world markets with Samsung smartphones. The culture of lax enforcement is such a given, experts say, that government officials consider working in public safety a second-rate job.

In South Korea, more than 31,000 people, including 3,000 students, die every year in accidents, accounting for 12.8 percent of the country’s total annual deaths, the highest rate among major developed nations.

Those episodes include everything from car accidents to fires, and it is unclear how much can be attributed to a lack of focus on safety. But there is a general acknowledgment in hypercompetitive South Korea that success is often measured by how quickly and cheaply a job is done, and that spending too much time and resources trying to follow rules is sometimes seen as losing a competitive edge.

“The country has grown so rapidly that a lot of shortcuts have been made, so that it’s waiting for an accident to happen,” said Tom Coyner, a member of the American Chamber of Commerce in Korea and the author of “Doing Business in Korea.”

Kim Chang-je, a professor of navigation science at Korea Maritime and Ocean University, said the complaints appeared to be true of the ferry business. “We have the safety regulations and systems that were similar to global norms,” he said. “But they are not properly enforced.”

He and other experts pointed out a host of issues they said undermined safety on the ferry, including that the crew had several contract workers, who might have been less familiar with the ship than a regular crew.

Investigators have also said the decision by the company that owned the ferry, Cheonghaejin Marine Company, to add more sleeping cabins probably undermined the ship’s ability to regain its balance after tilting.

The Korea Register of Shipping approved the change to the ship’s design after advising Cheonghaejin Marine to carry less cargo and more ballast water to compensate for the loss of stability. But on Tuesday, Kim Young-rok, an opposition lawmaker, said that when the ship left Incheon, it carried 3,608 tons of cargo, three times the recommended maximum. The company’s audit data showed it has depended increasingly upon cargo to compensate for declining passenger revenues.

Prosecutors were investigating whether the ferry carried enough ballast water to accommodate the extra cargo. One of the two first mates arrested on Tuesday told reporters that when he tried to right the ship after tilting, the ballast “didn’t work.”

Prosecutors raided Korea Register’s headquarters on Tuesday and barred the head of Cheonghaejin Marine, as well as the company’s family owners, from leaving the country.

It has also become clear that the captain most likely violated national navigational guidelines when he left the ship in the control of the least experienced ship’s mate through a waterway notorious for its rapid currents. The guidelines stipulate a captain should be in control in busy or dangerous waters.

The ferry also had no extra captain, as ships often do when they are on long overnight voyages so the two can take turns in the bridge, experts said.

Experts say they suspect some of the problems with the ship resulted from lax enforcement of safety standards made possible by ties among the Ministry of Oceans and Fisheries, the Korea Shipping Association and shipping companies.

The shipping association is a lobby for shipping companies and is financed by them. But it is also charged with inspecting ships for safety measures, such as a proper and balanced stowage of cargo. In addition, many senior officials from the ministry — which is supposed to oversee the association’s enforcement — also join the association after they retire.

“We will never be able to expect safety regulations to be properly enforced until the shipping association becomes independent,” said Jung Yun-chul, another maritime safety expert at Korea Maritime and Ocean University.

In an editorial on Monday, The Chosun Ilbo, the nation’s largest newspaper, summed up the sense that with more care for safety, the calamity might have been avoided.

“In Korea, people who insist on abiding by basic rules are often considered annoying or inflexible, while those who are adept at dodging them are seen as smart,” it said. “But the country is full of such smart people, and the result has been catastrophic.”


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South Korea Ferry Probe: Cargo Was Three Times Recommended Maximum

South Korea Ferry Probe:  Cargo Was Three Times Recommended Maximum
Officials From Ship Operator Are Banned From Leaving the Country

By In-Soo Nam, Min-Jeong Lee and Jeyup S. Kwaak
The Wall Street Journal
April 23, 2014

Prosecutors expanded their investigation into the owner of the sunken South Korean passenger ferry on Wednesday as inspectors confirmed that the cargo weight declared by the ship on its final voyage was more than three times the recommended maximum.

Officials from Chonghaejin Marine Co., the operator of the ferry, were banned from leaving the country as investigators searched the offices of the company and its affiliates, as well as the residence of the firm’s owner, Yoo Byung-eun, and other companies he owns, prosecutors in the Incheon District Prosecutor’s Office said.

Prosecutors also collected documents from the Korean Register of Shipping, a government-commissioned inspector that conducted safety checks on the ship this year. The expanded investigation is looking into whether regulations were enforced and inspections properly completed on the vessel, the prosecutors in Incheon said.

Just before departing the port of Incheon on Tuesday last week, the ship, the Sewol, reported by radio to the Korea Shipping Association that it was loaded with 3,608 tons of cargo. The maximum recommended weight of cargo for the Sewol was 987 tons, an official at Korean Register said on Wednesday.

Prosecutors have yet to identify the cause of the tragedy, said Kim Hoe-jong, a prosecutor in Incheon. The focus on Chonghaejin Marine has intensified in recent days.

The retrieval operation at the overturned ship continued on Wednesday, and the official death toll rose to 157. An additional 145 are missing. Divers recovered more bodies from the ship’s upper decks, most from a multibed economy cabin on the fourth deck, a coast guard spokesman said. He said they found no bodies in the ship’s third-deck canteen, where they had expected to find many.

In addition to investigating possible overloading, prosecutors are looking into whether the ferry was safe for operation after a redesign early last year, said Mr. Kim. Modifications included adding extra passenger cabins, raising the passenger capacity by more than 150 people, and increasing the ship’s weight by almost 240 tons, the Korean Register said.

The changes were approved and met safety standards, but prosecutors are unsure whether the ship’s owner made additional changes afterward, Mr. Kim said. It is also not clear if Chonghaejin Marine complied with a request from inspectors last year to take measures to ensure the ship remained balanced in case of tilting, an inspector from Korean Register said.

Appearing before the media on Tuesday, detained crew members said the ship had poor stability and problems with its steering.

“If the investigation proves that they have violated the laws, the ferry operator’s license will be revoked,” said a director at the Ministry of Oceans and Fisheries. “We’re reviewing such a possibility.”

Chonghaejin Marine has referred inquiries to a lawyer, Son Byoung-gi.

“We’ll announce our position after the current investigation is completed,” Mr. Son said when asked about the possibility that remodeling of the ship may have violated laws or that passenger and cargo loads were excessive.

“If there is any legal responsibility, the owners are willing to offer their wealth and assets to help compensate the victims,” he added.

Speculation about possible lax enforcement of regulations has also turned a spotlight on the Korea Shipping Association, which is responsible for routine safety inspections, including whether cargo is stowed correctly.

On Monday, President Park Geun-hye questioned whether the association’s practice of recruiting senior maritime ministry officials had contributed to lax enforcement.

The Korea Shipping Association and maritime ministry declined to comment.

Yun Jong-hwui, a professor at Korea Maritime and Ocean University, noted that key government officials sometimes take jobs with the association, creating what he said is a disincentive for the maritime ministry to enforce stringent rules on former bosses.

“South Korean law and systems aren’t undeveloped. It is a matter of upholding them” while separating the personal relationships from professional obligations, Mr. Yun said.

The chaotic last moments of the Sewol have raised questions about whether the crew were able to deal with emergencies. Prosecutors have said interviews with crew members have revealed that they hadn’t received standard safety training.

Chonghaejin’s audit report for last year showed the company spent 541,000 won ($521) on crew training, including evacuation drills, as it ran a 2013 operating loss of 785 million won. In comparison, Daea Express Shipping Co., which runs four ferries on the one hour Incheon-Deokjuk island route, spent 11.14 million won on crew training last year.

The sinking last week marks a second accident for Chonghaejin in less than a month. A smaller ferry operated by the company, the Democracy 5, collided with a small fishing boat on March 28 on its way from Incheon to the island of Baengnyong in the Yellow Sea. The Ohamana, a ferryboat that plied the same Incheon-Jeju route as the Sewol, has also had engine trouble while at sea twice in the past few years.

—Kwanwoo Jun and Min Sun Lee contributed to this article.

Write to In-Soo Nam at In-Soo.Nam@wsj.com, Min-Jeong Lee at min-jeong.lee@wsj.com and Jeyup S. Kwaak at jeyup.kwaak@wsj.com


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Poland Uses Ukraine to Push Coal

Poland Uses Ukraine to Push Coal

Analysis by Claudia Ciobanu
IPS – Inter Press Service News Agency
April 20, 2014

WARSAW, Apr 20 2014 (IPS) - A European ‘energy union’ plan proposed by Polish Prime Minister Donald Tusk as an EU response to the crisis in Ukraine could be a Trojan horse for fossil fuels.

On account of Poland’s proximity and deep historical ties to Ukraine, the country’s centre-right government led by Donald Tusk has assumed a prominent position in attempts to ease the crisis in Ukraine. Notoriously, Foreign Minister Radoslaw Sikorski helped negotiate a February deal between then Ukrainian president Viktor Yanukovych and opposition leaders of Euromaidan, the name given to the pro-EU protests in Kiev.

The Polish government’s assertiveness came with quick electoral gains. According to a poll conducted in early April by polling agency TNS Polska, Tusk’s Civic Platform for the first time in years took a lead in voters’ preferences over the conservative Peace and Justice Party of Jaroslaw Kaczynski.

“Not only is Civic Platform back in the lead, but also more Poles are ready to vote and vote for the government,” Lukasz Lipinski, an analyst at think tank Polityka Insight in Warsaw, told IPS. “All opposition parties now want to move the debate [ahead of the May 25 European elections] to domestic issues because on those it is much easier to criticise the Civic Platform after six years of government.”

Yet Tusk’s executive insists on Ukraine because of the benefits the topic can still bring. In the last weekend of March, the prime minister announced a Polish proposal for a European energy union that would make Europe resilient to crises like the Russian-Ukrainian conflict.

“The experience of the last few weeks [Russia’s invasion of Ukraine] shows that Europe must strive towards solidarity when it comes to energy,” said Tusk speaking in Tychy, a city in the southern coal-producing Silesia region.

He went on to outline the six dimensions of the ‘energy union’: the creation of an effective gas solidarity mechanism in case of supply crises; financing from the European Union’s funds for infrastructure ensuring energy solidarity in particular in the east of the EU; collective energy purchasing; rehabilitation of coal as a source of energy; shale gas extraction; and radical diversification of gas supply to the EU.

“It is very disappointing to note the total absence of energy efficiency measures from this vision, even though it featured centrally in the March European Council on Crimea conclusions,” Julia Michalak, EU climate policy officer at the NGO coalition Climate Action Network (CAN) Europe, told IPS. “If the Crimea crisis did not make the government realise that energy efficiency is the easiest and cheapest way to achieve real energy security for Europe, I’m not sure what would.”

While some of the measures proposed by Tusk would indeed lead (assuming they could be implemented) to increased European solidarity in the energy sector, asking for a prominent role for coal and shale gas is mostly a Polish game.

At the moment, the EU has no common binding EU policies on shale gas – various EU countries such as France and Bulgaria even have moratoriums on exploration. And the EU’s long-term climate objectives, primarily the 2050 decarbonisation goal, make a true coal resurrection unlikely.

According to Michalak, the coal and shale gas elements of the Polish six-point plan must be understood, on the one hand, as aimed at domestic audiences who want to see their government play hard ball and, on the other, as a negotiating tool meant to draw some specific gains out of Brussels.

The Tusk government has made herculean efforts to persuade foreign companies interested in shale gas to stick to the country, including firing environment minister Marcin Korolec during the climate change talks COP19 last year for reportedly not being shale gas friendly enough. Nevertheless, in April this year, France’s TOTAL became the fourth company to announce dropping exploratory works in Poland, as shale gas here is proving more scarce than initially thought.

The Polish national consensus on coal too is starting to show minor cracks.

Nearly 90 percent of electricity used in Poland comes from coal, and the government’s long-term energy strategy envisages a core role for coal up to 2060. Tusk’s executive has been unsuccessfully trying to torpedo the EU’s adoption of decarbonisation targets, so at the moment it is unclear how authorities will reconcile EU commitments with a coal-dependent economy.

Last year, the chief executive of state energy company PGE resigned, arguing that an expansion by 1,800 MW of Opole coal plant in south-western Poland is unprofitable. The government chose to go ahead with expansion plans anyway.

Despite the generalised perception in Poland that coal is a cheap form of energy, this month saw leading newspapers (including the conservative Rzeczpospolita) discussing externalities of coal following a study by think tank Warsaw Institute for Economic Studies showing that, between 1990-2012, Polish subsidies for coal amounted to 170 bn PLN (40 billion euros).

In 2013, a series of international financial institutions, including the World Bank and the European Investment Bank, announced significant restrictions to their financing of coal – lending to Polish coal, for instance, would be impossible for these institutions under the new guidelines.

Poland also has to implement the EU’s Industrial Emissions Directive which calls for stricter pollution standards at energy producing units as of 2016 or closure of plants which do not comply. And it is potentially in this space that some of the benefits of Poland’s tough game on coal in Brussels could be seen.

In February, the European Commission allowed Poland to exempt 73 of its energy producing units from the requirements of the Directive, including two outdated units at Belchatow coal plant in central Poland, Europe’s largest thermal coal plant (5,298 MW) and biggest CO2 emitter.

Additionally, it has emerged this month that Poland intends to use regional funds meant for tackling urban air pollution from the next EU budget (2014-2020) to finance modernisation measures at the country’s biggest coal and gas producers, both private and state-owned.


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Conflict in Ukraine Could Be a Boon for Big Gas

Conflict in Ukraine Could Be a Boon for Big Gas
A slew of bills in Congress would expedite permits for liquefied natural gas exports.

BY Cole Stangler
In These Times
March 19, 2014

The mounting tensions in southeastern Ukraine may hand the American natural gas industry one of its biggest policy victories in years.

Citing the Kremlin’s nefarious energy influence over Ukraine and Europe at large—Kiev gets about 60 percent of its gas supply from Russia, the EU 30 percent—Congress is making moves that would ostensibly unleash a flood of gas overseas from America’s comparatively friendly shores. Representatives Ted Poe (R-Tex.), Cory Gardner (R-Col.) and Mike Turner (R-Ohio) each introduced bills earlier this month to supposedly fast-track liquefied natural gas exports to the regions. Mark Udall (D-Col.), meanwhile, sponsors similar legislation in the Senate.

Under existing law, companies wishing to export natural gas must apply first to the Department of Energy, then to the Federal Energy Regulatory Commission. The DOE automatically approves applications to export to countries that share free trade agreements with the United States—countries without such deals, like Ukraine, require a lengthier review process. Each of the four bills aims to speed up that part of the review.

Poe’s bill, the Fight Russian Energy Exploitation (FREE) Act, adds the EU, Ukraine and a number of Central Asian countries to the expedited approval process. Turner and Udall’s bills add the WTO countries, which include Ukraine. Gardner’s, meanwhile, adds the WTO countries and triggers the automatic approval of pending applications for which a notice has been issued in the Federal Register.

The bills’ sponsors claim the legislation will help bolster Ukraine and the rest of the EU’s energy supplies against Russian influence.

But Tyson Slocum, director of Public Citizen’s Energy Program, maintains the latest push for reforms has little to do with Crimea or Russia. Instead, he says, it’s about an industry seeking timely justification for its long-term interests. A change in permit policy today would likely pay major dividends in the future, when domestic producers are actually able to move gas abroad in large quantities.

“This has nothing to do with national security,” Slocum says, “It has nothing to do with benefitting consumers. … It has everything to do with increasing the financial returns and profits of entities directly involved in domestic fracking.”

Fracking’s next frontier

Exports are a logical step for oil and gas producers intent on accessing new markets.

Over the last decade, the combination of horizontal drilling and fracking in American shale formations—such as the Bakken and Marcellus—has driven soaring production and lower natural gas prices across the country. But the boom has been restricted to domestic markets, which now wrestle with overproduction and oversupply. So in recent years, producers have set their sights on foreign soil, where American-drilled gas could fetch far higher prices than it does at home. In Asia, for example, LNG is about five times as expensive as it is in the United States.

“Producers, particularly in the Marcellus shale but elsewhere as well, have limited opportunities to move their cask to meet global demand,” says Slocum. “So this is all about [trying] to globalize natural gas prices, because price differences are vast between Europe and Asia and North America because of isolation of the market. If you’re able to globalize that, you’re able to sell your fracked gas for far more [and] earn more profits.”

To that end, American oil and gas producers are aggressively trying to liberalize export policy. The industry’s leading lobbying organizations, the Independent Petroleum Association of America (IPAA) and America’s Natural Gas Alliance (ANGA), have publicly backed expediting LNG permits and boosting exports since well before the situation in Crimea garnered international attention. In February of this year, a group of mostly Gulf Coast-based companies unveiled a new coalition designed to win support on the Hill for export reform—“Our Energy Moment.” (That group, too, is now publicly tying the issue of gas exports to Ukraine.)

And though the flare-up in the Black Sea supposedly inspired the recent push, many of the members of Congress supportive of the four new bills have backed similar legislation in the past. Last June, for instance, Rep. Poe introduced a bill that would remove the Department of Energy from the LNG export permitting process entirely. Just a few months after that, he authored legislation that would put a 60-day limit on the DOE’s review of export applications—the failure to issue a decision would trigger automatic approval. Rep. Turner also introduced a similar version of his 2014 bill in February 2013.

The same story goes for Sen. John Barrasso (R-Wyo.), who last Wednesday tried to attach an amendment to a congressional aid package for Ukraine that would expedite the LNG permitting process. (Foreign Relations Committee Chairman Bob Menendez ruled the move out of order). It’s a familiar subject for the Cowboy State’s junior senator: Last year, Barrasso introduced legislation to streamline export permits to NATO countries and Japan.

The disingenuousness of the whole affair has Raúl Grijalva (D-Ariz.), co-chair of the Congressional Progressive Caucus, crying foul. He calls the crisis in Crimea a “convenient excuse” for pro-LNG members of Congress.

“It’s insulting in that the appeal is so base,” Grijalva says. “And the XL [pipeline] is essential in helping Ukraine too,” he says sarcastically—a reference, perhaps, to recent comments from Paul Ryan that linked U.S. influence in Ukraine to construction of the Keystone.

Natural gas to the rescue? Not quite

While they’re broadly supportive of these efforts, representatives of the gas producers themselves are still quick to acknowledge that changing existing rules would have no immediate impact in terms of foreign aid.

“You cannot just turn on the spigot and begin sending natural gas to Ukraine,” says Dan Whitten, spokesperson for America’s Natural Gas Alliance (ANGA). “It will take some time to build the terminals, get the contracts in place to have that done. We hope that the pace of progress will speed up, but we’re not of the view that you can just decide to start exporting and then begin doing it tomorrow.”

That’s because the industry lacks the capacity do so. As of today, there’s not a single facility in the United States that’s shipping liquefied natural gas abroad.

The nation’s first LNG export terminal, Cheniere Energy’s Sabine Pass on the border between Texas and Louisiana, isn’t scheduled to start shipping gas until late 2015. And according to Energy Secretary Ernest Moniz, any other facilities aren’t likely to export before 2017 or 2018.

Still, according to some in the industry, the bills are necessary to prevent future crises from taking place. “You have to start somewhere,” says Julia Bell, spokesperson for the IPAA. “And if we had started this a few years ago then we probably wouldn’t be in the position that we are right now, with Russia exerting its energy influence the way it is.”

The gas producers’ major players won’t officially back any of the particular proposals, though, until they see how things shake out in the House and Senate.

“We’re just waiting to see which one Congress rallies behinds,” says Bell.  “And we’re going to support that.” ANGA maintains a similar stance.

And the fate of the bills themselves remains equally uncertain. Any of the four pieces of legislation would likely pass the Republican-dominated House, which has proven more than loyal to the fossil fuel industry. Things would be more complicated in the Senate, where many Democrats take their cues from the administration.

Energy Secretary Moniz has acknowledged that speeding up permits would do little to help Ukraine in the short-term, but said he “welcome[s] consultation” with Congress on reforming the export approval process.

The biggest wild card is Mary Landrieu (D-La.), the new chair of the Senate Energy Committee and longtime champion of oil and gas interests. Public Citizen’s Slocum worries that a yes vote in the House on any one of the bills could provide impetus for Landrieu to move along similar legislation in her committee.

Landrieu has publicly pressured the DOE to approve two export facilities in Louisiana, which has enough pending applications to make it a major transport hub. She’s also very supportive of gas exports in general.

And as the senator faces a tough re-election campaign—polls give her GOP opponent a slight edge—it’s probably in her best interest to stay on industry’s good side. Only two senators, both Republicans facing Tea Party challengers, have taken more money from energy companies than Landrieu has this election cycle—Minority Leader Mitch McConnell (R-Ky.) and John Cornyn (R-Texas).

Ultimately, environmentalists can only hope that reason triumphs in the end over corporate interest. Sadly, that’s never a given when legislators tackle energy policy.

“We’re physically unable to make [exports] happen,” says Slocum. “But that doesn’t matter in terms of their campaign, as long as they can make people believe there’s a connection.”

Cole Stangler is an In These Times staff writer and Schumann Fellow based in Washington D.C., covering labor, trade, foreign policy and environmental issues. His reporting has appeared in The Huffington Post and The American Prospect, and has been cited in The New York Times. He can be reached at cole[at]inthesetimes.com. Follow him on Twitter @colestangler.


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Beyond Neoliberal Miseducation

Beyond Neoliberal Miseducation

By Henry A Giroux
March 19, 2014

This article draws from a number of ideas in Henry A. Giroux’s newest book, Neoliberalism’s War on Higher Education.

As universities turn toward corporate management models, they increasingly use and exploit cheap faculty labor while expanding the ranks of their managerial class. Modeled after a savage neoliberal value system in which wealth and power are redistributed upward, a market-oriented class of managers largely has taken over the governing structures of most institutions of higher education in the United States. As Debra Leigh Scott points out, “administrators now outnumber faculty on every campus across the country.”1 There is more at stake here than metrics. Benjamin Ginsberg views this shift in governance as the rise of what he calls ominously the “the all administrative university,” noting that it does not bode well for any notion of higher education as a democratic public sphere.2

A number of colleges and universities are drawing more and more upon adjunct and nontenured faculty – whose ranks now constitute 1 million out of 1.5 million faculty – many of whom occupy the status of indentured servants who are overworked, lack benefits, receive little or no administrative support and are paid salaries that increasingly qualify them for food stamps.3 Many students increasingly fare no better in sharing the status of a subaltern class beholden to neoliberal policies and values, and largely treated as consumers for whom education has become little more than a service. Too many students are buried under huge debts that have become a major source of celebration by the collection industry because it allows them to cash in on the misfortune and hardships of an army of indebted students. Under the regime of neoliberal education, misery breeds a combination of contempt and source of profits for the banks and other financial industries. Jerry Aston, a member of that industry, wrote in a column after witnessing a protest rally by students criticizing their mounting debt that he “couldn’t believe the accumulated wealth they represent – for our industry.”4 And, of course, this type of economic injustice is taking place in an economy in which rich plutocrats such as the infamous union-busting Koch brothers each saw “their investments grow by $6 billion in one year, which amounts to three million dollars per hour based on a 40-hour ‘work’ week.”5 One astounding figure of greed and concentrated power is revealed in the fact that in 2012, the Koch brothers “made enough money in one second to feed one homeless woman for an entire year.”6 Workers, students, youths and the poor are all considered expendable this neoliberal global economy. Yet the one institution, education, that offers the opportunities for students to challenge these anti-democratic tendencies is under attack in ways that are unparalleled, at least in terms of the scope and intensity of the assault by the corporate elite and other economic fundamentalists.

Casino capitalism does more than infuse market values into every aspect of higher education; it also wages a full-fledged assault on public goods, democratic public spheres, and the role of education in creating an informed and enlightened citizenry. When former presidential candidate Sen. Rick Santorum argued that intellectuals were not wanted in the Republican Party, he was articulating what has become common sense in a society wedded to narrow instrumentalist values, ignorance as a political tool, and a deep-seated fear of civic literacy and a broad-based endorsement of the commons. Critical thinking and a literate public have become dangerous to those who want to celebrate orthodoxy over dialogue, emotion over reason and ideological certainty over thoughtfulness.7 Hannah Arendt’s warning that “it was not stupidity but a curious, quite authentic inability to think”8 at the heart of authoritarian regimes is now embraced as a fundamental tenet of right-wing politicians and pundits and increasingly has become a matter of common sense for the entertainment industry and the dominant media, all primary modes of an education industry that produces consumers, smothers the country in the empty fog of celebrity culture and denounces democracy as tantamount to the enemy of free-market fundamentalism. How else to explain the willingness of so many people today to give up every vestige of privacy to the social media, the government and anyone else interested in collecting data for the most despicable and anti-democratic purposes. Self-interest does more than embrace a new culture of narcissism; it empties out any viable notion of the social, compassion, and the ethical imagination.

Right-wing appeals to austerity provide the rationale for slash-and-burn policies intended to deprive government-financed social and educational programs of the funds needed to enable them to work, if not survive. Along with health care, public transportation, Medicare, food stamp programs for low-income children, and a host of other social protections, higher education is being defunded as part of a larger scheme to dismantle and privatize all public services, goods and spheres. The passion for public values has given way to the ruthless quest for profits and the elevation of self-interests over the common good. The educational goal of expanding the capacity for critical thought and the outer limits of the imagination have given way to the instrumental desert of a mind-deadening audit culture. But there is more at work here than the march toward privatization and the never-ending search for profits at any cost; there is also the issue of wasteful spending on a bloated war machine, the refusal to tax fairly the rich and corporations, the draining of public funds for the US military presence in Iraq and Afghanistan, and the ongoing consolidation of class power in the hands of the 1 percent.

The deficit argument and the austerity policies advocated in its name is a form of class warfare designed largely for the state to be able to redirect revenue in support of the commanding institutions of the corporate- military-industrial complex and away from funding higher education and other crucial public services. The extent of the budget reduction assault is such that in 2012 “states reduced their education budgets by $12.7 billion.”9 Liberals and conservatives justify such cuts by pointing to declining revenues brought in by the state but what is missing from this argument is that one major reason for the decline is because of right-wing policies and legislation that lowers the taxes of the rich and major corporations. Of course, the burden of such reductions falls upon poor minority and other low-income students, who will not be able to afford the tuition increases that will compensate for the loss of state funding. As the political state is replaced by the corporate state, tuition rises, the ranks of the poor expand, more social problems are criminalized and the punishing state blooms as a default register for potential dissent.

What has become clear in light of such assaults is that many universities and colleges have become unapologetic accomplices to corporate, interests, values and power, and in doing so increasingly regard social problems as either irrelevant or make them invisible.10 The transformation of higher education in the United States and abroad is evident in a number of registers. These include decreased support for programs of study that are not business-oriented; reduced funds for research that does not increase profit; the replacement of shared forms of governance with rigid business management models; the lessening of financial support for academic fields that promote critical thinking rather than an entrepreneurial culture; the ongoing exploitation of faculty labor; and the use of purchasing power as the vital measure of a student’s identity, worth and access to higher education.11 In addition, many universities are now occupied by security forces whose central message is that dissent and protest, however peaceful, will be squelched through violence. Leftover weapons from the battlefields of Iraq and Afghanistan have found a home on many college campuses that increasingly look as if they have become potential war zones. These weapons stand as a grim reminder that they could be used against all those students who question authority, imagine a more democratic role for the university, and connect learning to social change. Universities are increasingly becoming dead zones of the imagination, managed by a class of swelling bureaucrats, inhabited by faculty who constitute a new class of indentured, if not sometime willing, technicians, and students who are demeaned as customers and saddled with crippling debts. Not all faculty and students fit into this description. Some raise their voices in protests, others enjoy the benefits of being accomplices to power, and others get lost in the orbits of privatized interests or academic specialization. The university is a site of struggle and beset by many contradictions, but I don’t believe it is an exaggeration to say that higher education since the late 1970s has been hijacked by a mix of political and economic fundamentalist forces that have worked hard to empty it of what it means to truly educate young people to be knowledgeable, critical, thoughtful and sensitive to the plight of others and the larger society. Most importantly, higher education too often informs a deadening dystopian vision of corporate America and old-style authoritarian regimes that impose pedagogies of repression and disciplined conformity associated with societies that have lost any sense of ethical responsibility and respect for equality, public values and justice. The democratic imagination has been transformed into a data machine that marshals its inhabitants into the neoliberal dream world of babbling consumers and armies of exploitative labor whose ultimate goal is to accumulate capital and initiate faculty and students into the brave new surveillance/punishing state that merges Orwell’s Big Brother with Huxley’s mind-altering soma.

One consequence of this ongoing disinvestment in higher education is the expansion of a punishing state that increasingly criminalizes a range of social behaviors, wages war on the poor instead of poverty, militarizes local police forces, harasses poor minority youths and spends more on prisons than on higher education. The punishing state produces fear and sustains itself on moral panics. Dissent gives way to widespread insecurity and uncertainty and an obsession with personal safety.12 Precarity has become an organizing principle of a social order so as to legitimate and expand the ranks of those considered disposable while destroying those public sites that give voice to the narratives of those marginalized by race, class, gender, sexuality and ideology. Public places are now militarized, and those spaces once designed for dialogue, critique, informed exchange and dissent are occupied by the police and other security forces who have become the most visible register of the surveillance-security state.

Political, moral and social indifference is the result, in part, of a public that is increasingly constituted within an educational landscape that reduces thinking to a burden and celebrates civic illiteracy as foundational for negotiating a society in which moral disengagement and political corruption go hand in hand.13 The assault on the university is symptomatic of the deep educational, economic and political crisis facing the United States. It is but one lens through which to recognize that the future of democracy depends on achieving the educational and ethical standards of the society we inhabit.14

This lapse of the US public into a political and moral coma is also induced, in part, by an ever-expanding, mass-mediated celebrity culture that trades in hype and sensation. It is also accentuated by a governmental apparatus that sanctions modes of training that undermine any viable notion of critical schooling and public pedagogy. While there is much being written about how unfair the left is to the Obama administration, what is often forgotten by these liberal critics is that Obama has aligned himself with educational practices and policies as instrumentalist and anti-intellectual as they are politically reactionary, and therein lies one viable reason for not supporting his initiatives and administration.15 What liberals refuse to entertain is that the left is correct in attacking Obama for his cowardly retreat from a number of progressive issues and his dastardly undermining of civil liberties. In fact, they do not go far enough in their criticisms.

Often even progressives miss that Obama’s views on what type of formative educational culture that is necessary to create critically engaged and socially responsible citizens are utterly reactionary and provide no space for the nurturance of a radically democratic imagination. Hence, while liberals point to some of Obama’s progressive policies – often in a New Age discourse that betrays their own supine moralism – they fail to acknowledge that Obama’s educational policies do nothing to contest, and are in fact aligned with, his weak-willed compromises and authoritarian policies. In other words, Obama’s educational commitments undermine the creation of a formative culture capable of questioning authoritarian ideas, modes of governance and reactionary policies. The question is not whether Obama’s policies are slightly less repugnant than his right-wing detractors. On the contrary, it is about how educators and others should engage politics in a more robust and democratic way by imagining what it would mean to work collectively and with “slow impatience” for a new political order outside of the current moderate and extreme right-wing politics and the debased, uncritical educational apparatus that supports it.16

The transformation of higher education into a an adjunct of corporate control conjures up the image of a sorcerer’s apprentice, of an institution that has become delusional in its infatuation with neoliberal ideology, values and modes of instrumental pedagogy. Universities now claim that they are providing a service and in doing so not only demean any substantive notion of governance, research and teaching, but also abstract education from any sense of civic responsibility. Higher education reneged on enlightenment ideals and lost its sense of democratic mission, but it also increasingly offers no defense to the “totalitarianism that haunts the modern ideal of political emancipation.”17 Driven by an audit culture and increasingly oblivious to the demands of a democracy for an informed and critical citizenry, it now devours its children, disregards its faculty, and resembles an institution governed by myopic accountants who should be ashamed of what they are proud of. The university needs to be reclaimed as a crucial public sphere where administrators, faculty and students can imagine what a free and substantive democracy might look like and what it means to make education relevant to such a crucial pedagogical and political task. This could be a first step in taking back higher education as a precondition for developing a broad-based social movement for the defense of public goods, one capable of both challenging the regime of casino capitalism and re-imagining a society in which democracy lives up to its promises and ideals.


1 Debra Leigh Scott, “How Higher Education in the US Was Destroyed in 5 Basic Steps,” Alternet, (October 16, 2012).

2 Benjamin Ginsberg, The Fall of The Faculty: The Rise of the All-Administrative University and Why It Matters (New York: Oxford University Press, 2011).

3 Hart Research Associates, American Academics: Survey of Part Time and Adjunct Higher Education Faculty (Washington, D.C.: AFT, 2011). Steve Street, Maria Maisto, Esther Merves, and Gary Rhoades, Who Is Professor “Staff” and How Can This Person Teach So Many Classes? (Los Angeles: Center for the Future of Higher Education, 2012).

4 Andrew Martin and Andrew W. Lehren, “A Generation Hobbled by the Soaring Cost of College,” The New York Times (May 12, 2012), Page A1.

5 Paul Buchheit, “Five Ugly Extremes of Inequality in America – The Contrasts Will Drop Your Chin to the Floor,” Alternet, (March 24, 2013).

6 Paul Buchheit, “4 ways the Koch brothers’ wealth is incomprehensible,” Salon (November 27, 2013).

7 For an excellent defense of critical thinking not merely as a skill but as a crucial foundation for any democratic society, see Robert Jensen, Arguing for Our Lives (San Francisco, City Lights Books, 2013).

8 Cited in Richard J. Bernstein, The Abuse of Evil: The Corruption of Politics and Religion since 9/11 (London: Polity Press, 2005), Pages 7-8.

9 Paul Buchheit, “Now We Know Our ABCs And Charter Schools Get an F,” CommonDreams.org (September 24, 2012).

10 See, Henry A. Giroux, The University In Chains: Confronting the Military-Industrial-Academic Complex (Boulder: Paradigm, 2007).

11 See, for instance, Robert B. Reich, “Slashed Funding for Public Universities Is Pushing the Middle Class Toward Extinction,” AlterNet, (March 5, 2012). For a brilliant argument regarding the political and economic reasons behind the defunding and attack on higher education, see Christopher Newfield, Unmaking the Public University: The Forty-Year Assault on the Middle Class (Cambridge, Massachusetts: Harvard University Press, 2008).

12 Les Leopold, “Crazy Country: 6 Reasons America Spends More on Prisons Than On Higher Education,” Alternet (August 27, 2012). On this issue, see also the classic work by Angela Y. Davis, Are Prisons Obsolete? (New York: Open Media, 2003); and Michelle Alexander, The New Jim Crow: Mass Incarceration in the Age of Colorblindness (New York: New Press, 2012).

 13 Leopold, “Crazy Country

14 Zygmunt Bauman, The Individualized Society (London: Polity, 2001), Page 4.

15 See, for instance, Rebecca Solnit, “Rain on Our Parade: A Letter to the Dismal Left,” TomDispatch.com (September 27, 2012). TomDispatch refers to this article as a call for hope over despair. It should be labeled as a call for accommodation over the need for a radical democratic politics. For an alternative to this politics of accommodation, see the work of Stanley Aronowitz, Chris Hedges, Henry Giroux, Noam Chomsky and others.

16 This term comes from Daniel Bainsaid. See Sebastian Budgen, “The Red Hussar: Daniel Bensaïd, 1946-2010,” International Socialism 127 (June 25, 2010).

17 Michael Halberstam, “Introduction,” Totalitarianism and the Modern Conception of Politics, (Yale University Press, 1999), Page 1.


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Who Controls the Kochs’ Political Network?

Who Controls the Kochs’ Political Network?

Obscure limited liability companies have ultimate say over the Koch network’s nonprofits, which spend hundreds of millions of dollars to advance conservative causes.

by Kim Barker and Theodoric Meyer
March 17, 2014

Libertarian billionaire brothers Charles and David Koch were among the first to grasp the political potential of social welfare groups and trade associations — nonprofits that can spend money to influence elections but don’t have to name their donors.

The Kochs and their allies have built up a complex network of such organizations, which spent more than $383 million in the run-up to the 2012 election alone.

Documents released in recent months show the Kochs have added wrinkles to their network that even experts well versed in tax law and campaign finance say they’ve never seen before — wrinkles that could make it harder to discern who controls each nonprofit in the web and how it disperses its money.

A review of 2012 tax returns filed by Koch network groups shows that most have been set up as nonprofit trusts rather than not-for-profit corporations, an unusual step that reduces their public reporting requirements.

It sounds complicated and arcane because it is. Some of the nation’s top nonprofit experts said they could only speculate on the reasons for the network’s increasingly elaborate setup.

“My guess is that we’re looking at various forms of disguise — to disguise control, to disguise the flow of funds from one entity to another,” said Gregory Colvin, a tax lawyer and campaign-finance specialist in San Francisco who reviewed all the documents for ProPublica.

Four other leading nonprofit experts and three conservative operatives with knowledge of the Koch network said the most likely reason that the Kochs and their inner circle are using this arrangement was to exert control over the groups without saying publicly who was in charge. In particular, they said, the Kochs likely wanted to prevent any of the groups that they help fund from going against their wishes — as happened with the Cato Institute, the libertarian think tank the Kochs had long supported before they got into a dispute with its president, Ed Crane.

After a top Cato official ridiculed Charles Koch in a 2010 New Yorker article, the brothers pushed to put allies on the think tank’s board. The following year, they pressed Cato to provide “intellectual ammunition” for their oldest politically active nonprofit, Americans for Prosperity, Cato officials later alleged. The dispute was settled in 2012, with the departure of Crane and the installation of a traditional board. (Cato previously was controlled by four private shareholders, including the Kochs, an unusual setup for a nonprofit.)

Robert Levy, Cato’s board chairman, told ProPublica that while he didn’t disagree with the Kochs’ aims, Cato’s leaders were uncomfortable with serving as advocates for their political agenda.

“The Kochs had their notions about what they wanted to focus on, and those tended to focus on intellectual ammunition for what their political ambitions were,” Levy said in an interview last fall. “We didn’t disagree with that, but we didn’t want to operate at the direction of the Kochs. We’re not involved in electoral politics. We are strictly nonpartisan.”

The Kochs have disputed the allegation that they tried to force Cato to do their political bidding.

In this story, we define the Koch network as including 12 nonprofits active in 2012 — 11 social welfare nonprofits and one trade association. These nonprofits all shared the same attributes: They used LLCs, installed Koch allies at the helm and hired the same set of lawyers. (We did not include think tanks, foundations or other charities, nor the like-minded groups that are funded by the Kochs.)

Officials with Koch Industries and groups in the Koch network did not respond to calls or written questions from ProPublica.

When asked about his involvement with Americans for Prosperity in a rare interview with the Wichita Business Journal last month, Charles Koch downplayed his political activity, saying he and his brother did not have day-to-day involvement with the group.

“Listen, if I could do everything that’s attributed to me, I would be a very busy boy,” he told the Journal.

Here’s what we know so far about how the Koch network uses trusts and LLCs, as well as the advantages they may offer.

Disregarded Entities

As of 2012,all 12 Koch network groups had offshoots known as “disregarded entities” — LLCs that are “owned” by their parent nonprofits and are considered part of them for tax purposes.

The first such LLC sprang up in February 2010, when Sean Noble, the head of a Koch network nonprofit called the Center to Protect Patient Rights, formed SDN LLC, using the initials of his own name. (ProPublica wrote a story last month about Noble, the Koch network’s money man in 2010 and 2012.)

Koch network groups came to have a total of 19 disregarded entities, tax records show; Freedom Partners Chamber of Commerce, a trade association that distributed almost $236 million to other nonprofits in the year before the 2012 election, led the way with five.

Nonprofit Trust? Disregarded Entity Disregarded Entity’s Income LLCs with the Power to Fire Trustees
Americans for Prosperity No PRDIST $48,365,000 -
Center for Shared Services Trust Yes RION $1,898,000 CESS
Center to Protect Patient Rights No Meridian Edition - -
Center to Protect Patient Rights No Corner Table $114,678,025 -
Concerned Veterans for America Yes TOHE $1,968,500 PFRS
EvangChr4 Trust Yes ORRA $1,980,000 ASMI
Freedom Partners Chamber of Commerce No American Entrepreneur Fund - -
Freedom Partners Chamber of Commerce No American Strategic Innovation - -
Freedom Partners Chamber of Commerce No American Strategies Group - -
Freedom Partners Chamber of Commerce No American Enterprise Group - -
Freedom Partners Chamber of Commerce No The MIC - -
Generation Opportunity Yes TRGN - -
Public Engagement Group Trust Yes SLAH $2,743,000 -
Public Notice (SG C4 Trust) Yes POFN $4,527,250 PRPN
TC4 Trust Yes RGSN - GVN Trust
The LIBRE Initiative Trust Yes TDNA $2,145,000 THGI
Themis Trust Yes DAS MGR $3,125,000 TMPR
Themis Trust Yes WS Sponsor - TMPR
Themis Trust Yes STN $1,781,000 TMPR

The 12 nonprofits in the Koch network in 2012 formed a total of 19 disregarded entities, as well as at least six separate LLCs with the power to remove the trustees of some of the nonprofits. (Several nonprofits, such as Generation Opportunity, received other grants through their disregarded entities that aren’t included in the table.)

Unlike corporations, LLCs set up in Delaware are not required to disclose who runs them. The only documentation available is the name of the person who creates them. In the Koch network, 11 of the disregarded entities were formed by the same Chicago trust lawyer, Jonathan Graber. Most had nonsensical strings of letters for names, like SLAH, ORRA or DAS MGR. All were set up in Delaware.

Charities typically use disregarded entities to protect themselves from liability. For instance, they’ll hold property in a disregarded entity to shield the nonprofit from lawsuits over anything from environmental pollution to slip-and-falls.

But these LLCs appear to serve different purposes for the Koch network, experts said.

Before the 2012 election, two groups sat at the top of the Koch money spigot. TC4 Trust, which has since folded, and Freedom Partners, which remains on top of the Koch pyramid, shelled out more than $204 million to the network’s 10 other nonprofits. But instead of giving the money directly to the nonprofits, TC4 and Freedom Partners gave those millions to the groups’ disregarded entities.

That made the money more difficult to follow.

Consider the case of the LLC with the inscrutable name of TOHE. (No, that’s not a typo.) Records for TC4 Trust show that it gave a $1,968,500 grant to TOHE between July 2011 and June 2012.

So what’s a TOHE?

You would think you could go to the Internal Revenue Service web site, punch in the magic letters, and get an answer. But that’s not how it works.

Disregarded entities cannot be searched by name because their tax returns are filed as part of their parent nonprofit, which of course is exactly what you don’t know.

To solve the mystery, we searched IRS databases of recognized nonprofits by the names of lawyers known to work for the Koch network. We found one, Vets for Economic Freedom Trust, that seemed like a possible match for TOHE. Then we requested the group’s application from the IRS, which showed a leader, Wayne Gable, who had deep ties to the Koch brothers, earlier serving as a managing director at Koch Industries. But still, the application didn’t mention TOHE.

We had to wait for the group’s tax return, filed in August 2013, to become public, which took a couple of months. The return showed that Vets for Economic Freedom Trust was using a different name: Concerned Veterans for America. And it showed the group’s disregarded entity: TOHE. Concerned Veterans spent most of its money on ads criticizing the government for not doing more to help veterans vote and for the rising national debt.

A more recent tax filing by Freedom Partners gave the names of the disregarded entities and their parent nonprofits when listing grants, dispelling some of the confusion.

The Center for Responsive Politics and The Washington Post have also written about how the Koch network has used disregarded entities to hide the money trail. But disregarded entities offer other advantages.

Donors to social welfare groups and trade associations have only become public in a handful of cases, but some corporate and individual donors still worry about scrutiny from stockholders or the IRS. One operative told ProPublica he’d heard a Koch network official suggest that a donor with such concerns write checks to disregarded entities rather than to better-known nonprofits.

“You don’t want to just create one layer of anonymity, because that layer could be breached, maybe just by accident — you know, the memo that’s left lying around kind of situation,” said Lloyd Hitoshi Mayer, a law professor and associate dean at the University of Notre Dame who specializes in nonprofits and campaign finance and who reviewed the groups’ available documents for ProPublica.

Further, while nonprofits are required to disclose their top administrators and boards in tax filings, disregarded entities can have separate managers who are not identified anywhere, said Ellen Aprill, a professor at Loyola Law School in Los Angeles who has studied politically active nonprofits. Such a manager would be able to control how the money received by the LLC was spent.

Seven disregarded entities in the Koch network took in more than three-quarters of the money received by their parent nonprofits. POFN, the disregarded entity of a nonprofit called Public Notice, for instance, brought in more than 75 percent of its parent’s $6 million in revenue from May 2011 through April 2012. POFN’s manager — whoever that may be — would control how that money was spent, nonprofit experts said.

So far, the Koch network’s use of disregarded entities has been unique. ProPublica reviewed tax returns filed by more than 100 liberal and conservative nonprofits that reported spending money on elections in 2010 and 2012. No group unaffiliated with the Kochs had such offshoots.

Their use might be catching on: In July 2012, the American Future Fund, a dark money behemoth that received most of its money through the Koch network but is not part of it, formed its own disregarded entity, Franklin Squared.


Social welfare nonprofits are typically formed as not-for-profit corporations, with boards that set their policies.

But nine of the 12 nonprofits in the Koch network were formed as trusts — an approach several tax experts said they had rarely, if ever, encountered. The first was TC4 Trust, which was established in August 2009 and folded in 2012. Eight more Koch-affiliated groups were set up as trusts in 2010 and 2011.

Trusts are subject to little outside oversight. They don’t have to file incorporation papers or annual reports to the state. Any documents filed with the IRS take effort and time to get. “It keeps it out of the public eye a little longer,” said Lawrence Katzenstein, a lawyer in St. Louis who has formed charitable trusts.

Trust agreements rarely have to be filed publicly, but since most of the Koch-connected trusts have been recognized by the IRS as social welfare nonprofits, their trust agreements are available from the agency. ProPublica examined six trust agreements for groups that are still active.

The trust agreements are all “irrevocable,” meaning the trustee cannot change them, except for changing the trust’s name or anything necessary to maintain the group’s tax-exempt status. Two of the trustees are longtime Koch insiders; a third used to be a lawyer for the Charles G. Koch Charitable Foundation. Two other trustees are relatively new to the Koch fold but have long conservative pedigrees.

Despite those credentials, the trustees can be axed at any time. Each trust agreement gives an LLC — not a disregarded entity, but a different one with a similarly nonsensical string of four letters for a name — power to remove the trustee for any reason. For instance, Daniel Garza, the trustee for the LIBRE Initiative Trust, can be removed by an LLC called THGI.

Tax experts say that this means that someone behind that LLC can actually control the nonprofit. “It’s someone having control, and it’s that someone going to great lengths to avoid being known,” said lawyer Marcus Owens, who used to run the Exempt Organizations division of the IRS.

Little else is known about these LLCs except that they, too, were formed by Graber in 2010 and 2011 in Delaware, a state that requires virtually no disclosure.

Giving someone the power to remove the trustee is increasingly common, said Charles Durante, a Delaware lawyer who does work with trusts, nonprofits and LLCs. But it’s typically a named individual, he said, not an anonymous LLC.

“That is not customarily how people structure their trusts,” he said.

One employee of a nonprofit with ties to the Kochs, who spoke on condition of anonymity because he feared retribution, said the LLC arrangement fit in with the brothers’ desire to keep a tight grip on their organizations.

“Their level of degree to which they insist on control is truly spectacular,” he said.


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