Dark Money

by Jane Mayer

  Joyce stepped down from Bradley in 2001 amid rumors of alcoholism and erratic and self-destructive behavior. “Demons were rumored,” recalls a friend. According to one well-informed source, Joyce’s drinking, which had escalated from three-beer lunches to complete benders, reached a crisis when he presided as the master of ceremonies at a formal Washington event in a state of scandalous, public inebriation. Afterward, the Bradley Foundation’s board gave Joyce the choice of going into a rehab program or resigning. Realizing he had lost the board’s respect, he resigned. After that, the few remaining years of his life were a lonely, powerless downward spiral.

  Nonetheless, Joyce’s achievements transcended his personal problems. When he retired, Joyce was showered with accolades from the Right. National Review described him as “the chief operating officer of the conservative movement.” It added, “Wherever you looked in the battle of ideas, a light dusting would have turned up his fingerprints.” The tribute concluded, “Over the period of his Bradley service, it’s difficult to recall a single, serious thrust against incumbent liberalism that did not begin or end with Mike Joyce.”

  What received no attention, however, was that the small-government conservatism that the Bradley Foundation promoted was fueled by federal funds. The Bradley Foundation very deliberately cast itself as a foe of big government. In 1999, Joyce wrote a confidential memo to the foundation’s board arguing that to win, conservatives needed to “package for public consumption…dramatic stories” depicting citizens as “plucky Davids fighting gallantly against the massive, statist, bureaucratic Goliath.” But the foundation owed much of its existence to that Goliath—in the form of taxpayer-funded defense spending.

  The event that multiplied the Bradley Foundation’s assets by a factor of twenty almost overnight, transforming it into a major political force, was the 1985 business takeover in which Rockwell International, then America’s largest defense contractor, bought the Allen-Bradley company, a Milwaukee electronics manufacturer, for $1.65 billion in cash. The deal created an instant windfall for the Bradley family’s private foundation, which held a stake in the company. Its assets leaped from $14 million to some $290 million.

  When it bought the Allen-Bradley company, two-thirds of Rockwell’s revenues, and half of its profits, came from U.S. government contracts. Rockwell had become, in fact, a poster child for wasteful government spending. The Los Angeles Times called it a “symbol of a military industrial complex gone berserk.” Rockwell’s coffers were bulging with cash, but its reputation had taken a hit from its role as the main contractor producing the B-1 bomber, an aircraft so maligned it earned the nickname the Flying Edsel. President Carter had canceled the program as a waste of money, but after Rockwell waged a strenuous lobbying campaign, President Reagan had brought it back to life. As part of his administration’s huge defense buildup, Reagan also authorized the manufacture of the MX missile system, another multibillion-dollar defense program that was widely criticized as unnecessary, for which Rockwell was the largest contractor. Thus, by 1984, thanks to profligate government spending, Rockwell had one of the strongest balance sheets in the business, with $1.3 billion in cash piling up on its ledgers. Business analysts warned that the company needed to diversify in order to become less reliant on federal contracts. It was this dubious set of circumstances that sent the company on the shopping spree that ended in its purchase of Allen-Bradley and the phenomenal enrichment of the Bradley Foundation.

  In its early days especially, Allen-Bradley had relied heavily on government defense contracts, too, to pull it through. Founded in 1903 by two enterprising high school dropouts, brothers Lynde and Harry Bradley, along with investor Stanton Allen, it grew from making rheostats to many other kinds of industrial controls, particularly for the radio, machine tool, and auto industries. The business had “teetered on the edge of solvency” until the United States entered World War I, according to a history by the Milwaukee historian John Gurda that was commissioned and published by the Bradley Foundation. But thanks to government defense contracts, which accounted for 70 percent of the company’s business, orders increased tenfold over six years, and the company was, according to Gurda, “launched.” World War II proved even more of a boon. Gurda describes its impact on the company as “staggering.” By 1944, government war work accounted for nearly 80 percent of the company’s orders. Its business volume more than tripled during World War II.

  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.

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  The 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.”

  CHAPTER FOUR

  The Koch Method: Free-Market Mayhem

  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.”

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  Carlson’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.”