Friday, April 15th, 2011

UPDATE – We Ask The New York Times to Correct David Callahan’s Op-Ed Article

To: Andrew Rosenthal, Editorial Page Editor, The New York Times
From: Mark Holden, Koch Industries
Sent: Tuesday, April 05, 2011 5:44 PM
Subject: David Callahan’s April 3, 2011 Op-ed article

Dear Mr. Rosenthal:

I bring to your attention several errors in David Callahan’s article in the Op-Ed section of The New York Times on April 3, 2011.

Overall, Mr. Callahan’s analysis conflates political activities and philanthropy, and fails to recognize the differences. But the law is clear and to be unsure about the fundamentals, upon which he proposes his remedy, especially in an article on your opinion pages, does a disservice to your readers.

First, Mr. Callahan’s description of what the United States Supreme Court’s Citizens United decision allows is completely incorrect and his entire analysis seems to rely on his erroneous understanding of this case and its effects. 501c4 groups have always been permitted to accept unlimited corporate, union, and individual contributions without publicly revealing their donors except to the Internal Revenue Service. Further, these groups could spend unlimited amounts on lobbying, grass roots activities, voter registration and other advocacy. In fact, as the Times reported at the time of the Citizens United decision in January 2010, the Supreme Court decided by an 8 to 1 majority to uphold the Federal Election Commission’s disclosure requirements for 501c4 groups like Citizens United.

Second, contrary to what Mr. Callahan suggests in his opening paragraph, donors cannot deduct their contributions to political activities. Such a fundamental error in the opening paragraph calls into question everything that follows. In fact, Mr. Callahan compounds his errors by equating philanthropy and political giving, as evidenced by his second sentence in the sixth paragraph.

Third, Mr. Callahan failed to check his facts when he declared that Charles and David Koch have contributed funds to FreedomWorks. As noted in past stories in the Washington Examiner and the Washington Post, Koch companies, the Koch foundations, Charles Koch and David Koch have no ties to and have never given money to FreedomWorks.

I request that you publish a correction to this article in a forthcoming edition of The New York Times.

Thank you for your attention to this matter.

Sincerely, Mark V. Holden
Koch Industries, Inc.
Senior Vice President and General Counsel


Having received no response or acknowledgement we reiterated our request for a correction three days later.


From: Mark Holden
To: Andrew Rosenthal
Sent: Fri Apr 08 08:35:27 2011
Subject: FW: David Callahan’s April 3, 2011 Op-ed article

Dear Mr. Rosenthal:

I am following up on my April 5, 2011 email to check when the New York Times plans to acknowledge and correct the numerous errors in David Callahan’s “Bring Donors Out of the Shadows” opinion piece that was published on April 3, 2011.

As I am sure you can appreciate, it is very important to my company and me that these errors are corrected and noted by your newspaper as soon as possible.

Thank you.

Sincerely, Mark V. Holden
Koch Industries, Inc.
Senior Vice President and General Counsel


With still no response from The New York Times Editorial Page Editor we sent the following request to Arthur Brisbane, the Public Editor at the Times.


Arthur Brisbane,
Public Editor
The New York Times

Dear Mr. Brisbane:

We have tried twice in the last week to reach the New York Times’ editorial page editor, Andrew Rosenthal, and bring to his attention three factual errors in a piece by contributor David Callahan published in your newspaper on April 3, 2011. I should also note that the piece in question also criticizes Charles and David Koch for some perceived lack of transparency. That’s ironic, obviously, in light of the Times’ apparent unwillingness to even acknowledge our letters, let alone correct the errors.

I am writing to see if I could enlist your help looking into the matter and, hopefully, set the record straight. I have attached below the two efforts we made to reach Mr. Rosenthal. I trust you agree that it is reasonable for us to ask for a candid reply from the Times and some good faith effort to fact check what appear to be rather manifest errors.

Thank you for any assistance you can lend and I welcome any thoughts you may have.

Sincerely,
Mark V. Holden
Koch Industries, Inc.
Senior Vice President and General Counsel


On April 14, the New York Times printed the following correction.


An Op-Ed article on April 4, about disclosure rules for nonprofit groups that engage in political advocacy, imprecisely described contributions by the billionaire brothers Charles and David Koch to such groups. While they contributed to a predecessor of the conservative group FreedomWorks, they say they have not contributed to FreedomWorks itself.


Believing this to be an unsatisfactory response, we sent the following letter to the Public Editor, Arthur Brisbane.


Dear Mr. Brisbane:

I appreciate your help in getting the attention of the editorial page editor but the April 14, 2011 correction seems to fall short of the New York Times’ own standards and several good-faith questions about other errors have been ignored.

In the original April 3, 2011 article, contributor David Callahan wrote that FreedomWorks “has received significant amounts of money from the Koch brothers.” But the published correction states that Mr. Callahan “imprecisely” described contributions by Charles and David Koch, and qualifies that “they say they have not contributed to FreedomWorks itself.” Obviously that’s a contortion that only misleads readers further.

The fact is, Charles and David Koch have never contributed to FreedomWorks. It is not merely our word against Mr. Callahan’s, as the correction infers, it is a matter of public record and easily fact-checked. In an August 2010 Washington Post online interview, Brendan Steinhauser, a FreedomWorks Director, stated plainly, “[t]he Koch brothers do not give money to FreedomWorks.” Is it too much to ask for that fact to be candidly acknowledged?

The second error we broached remains unanswered. Specifically, prior to Citizens United, 501c4 groups did not have to disclose their donors. The Supreme Court’s decision did not change that fact.

Finally, Mr. Callahan’s suggestion that donors can deduct contributions to political activities remains a published falsehood. These are not subjective interpretations — they are either true or they are not. If the New York Times differs on this issue, then I would appreciate understanding exactly why.

I recognize that my company may differ with the editorial board at the Times on issues of public policy. But that should not give license to abandon the Times’ own standards on accuracy, sourcing, and fact-checking.

The reality is that we were the subject of a sharply critical op-ed piece that was flat-out mistaken in its core premise. The editor of that page did not provide us the basic, professional courtesy of a reply when we pointed out those errors. Instead, you had to cajole him into a half-hearted and inaccurate correction.

Readers would be right to ask whether the Times is serious about its promises of accuracy or if those vaunted standards are simply optional.

I respectfully request a forthright response to the concerns presented and I am asking again for an explanation of the failure to meet the Times’ journalistic standards that has happened here.

Sincerely,

Mark V. Holden
Koch Industries, Inc.
Senior Vice President and General Counsel

cc: Andrew Rosenthal


Mr. Brisbane responded several days later


Mr. Holden:

thanks for your patience. I have had a chance to review your concerns and discuss them with the Editorial department. With regard to your objection to the correction that has already run, I don’t see a basis for further action there. The correction has been published; the Editorial department says that the Koch brothers contributed to a predecessor of FreedomWorks. There is room for continuing disagreement about this, I recognize, but it doesn’t rise to the need for a fresh correction, in my view.

Concerning a second error, you noted, “Specifically, prior to Citizens United, 501c4 groups did not have to disclose their donors. The Supreme Court’s decision did not change that.”

I identified the following paragraph as the source of your concern:

And, thanks to the Supreme Court decision in the Citizens United<http://www.law.cornell.edu/supct/html/08-205.ZS.html> case, things are getting even worse. That decision now allows organizations that can engage in overt partisan work, called 501(c)4 groups, to take unlimited corporate money – again, without revealing their donors.

The Editorial department tell me that when Callahan used the phrase, “again, without revealing their donors,” he did not intend to imply that Citizens created a new standard permitting c4s to conceal donor identities. Rather, he intended to say that “all this activity still takes place without transparency, just as is the case with c3s,” Editorial told me.

Indeed, Callahan’s paragraph immediately preceding states:

True, individuals must disclose on their tax returns the details of large gifts to charitable organizations, known as 501(c)3 groups from the section of the tax code governing them. But this information is kept private by the Internal Revenue Service. While gifts given directly through foundations must be made public, the wealthy can give without leaving fingerprints by routing money through “donor-advised funds” sponsored by 501(c)3 groups – which don’t have to publicly name their donors.

I conclude that while your interpretation of Callahan’s statement is reasonable, another reasonable interpretation is that the hanging phrase- “again, without revealing their donors” – refers, as Editorial says it does, to Callahan’s previous paragraph’s comments about c3s.

You noted a third error: “Mr. Callahan’s suggestion that donors can deduct contributions to political activities remains a published falsehood.”

Here again, I believe a lack of clarity is at work. I identify the key paragraphs as these:

Beyond requiring more transparency, the law also needs to make finer distinctions among nonprofits. The Koch brothers rightly note that their activist giving is just a small part of their overall philanthropy; David Koch, for example, has given extensively to the New York City Ballet. But the tax rules treat the brothers’ giving to medical research or modern art museums exactly the same as their gifts to ideologically driven organizations like the Cato Institute. All are classified as “charity.”

This is an unfair use of public tax subsidies. The Internal Revenue Service doesn’t allow tax filers to write off their donations to politicians or parties, because that would mean Republicans would be subsidizing Democratic political efforts, and vice versa. So why should gifts that often seek the same outcomes through nonprofit organizations be treated differently?

In response, the Internal Revenue Service should create a new category for nonprofits engaged in policy advocacy. Such groups would have to disclose all their donors, while traditional 501(c)3′s – museums and universities, for example – could continue to receive anonymous gifts.

The I.R.S. should also set a ceiling on the deductibility of such gifts to limit the extent to which all taxpayers subsidize de facto political giving by the wealthy. The treatment of small gifts would remain unchanged to encourage ordinary Americans to engage in civic life.

These reforms won’t be easy. It would be difficult to define which groups belong in the new advocacy category and such decisions must be made in a careful, nonpartisan manner. But the result would make sense: the public has a right to know how tax-exempt donations are being used, and by whom, as well as a right not to foot the full bill for political activism by the superwealthy.

Editorial has told me that this section refers to ideologically-oriented organizations like the Cato Institute, to which one can make a tax-deductible donation. Cato, according to Editorial, has both c3 and c4 arms and is “precisely the kind of organization that Callahan proposes to reform: he thinks it’s outrageous that Cato (the c3) gets exactly same tax treatment as your local soup kitchen or ballet company.”

To conclude, the Callahan Op-Ed piece deals with a very complex subject, c3s and c4s in the context of political finance, in the relatively short space allotted for such pieces in the print edition of The Times. The result is less specificity than one might wish for. I understand your concern about the factual issues you cite but I think ultimately these points are matters of interpretation and do not qualify as errors.

Thanks for your patience as I assembled this response.

Sincerely,

Art Brisbane
Public Editor


Our response to Mr. Brisbane the next day


Dear Mr. Brisbane,

Many thanks for your diligent attention to our concerns and I am glad we agree that Mr. Callahan’s April 3, 2011 op-ed suffers from “lack of clarity [and] specificity.” Indeed, that is all the more reason that the editors should be more rigorous in fact-checking, especially when someone is being singled out for some supposedly nefarious conduct.

The editorial department’s representations to you, as cited in your letter, also remain troubling. One centerpiece assertion – that Cato “has both c3 and c4 arms” is simply false – as a search of publicly-available databases like Guidestar will confirm. In addition, the editorial department’s refusal to acknowledge the undisputed fact that the Kochs never contributed to FreedomWorks demonstrates a lack of objectivity and fairness.

What’s more, their parsing of what Mr. Callahan “meant to say” is just another kind of obfuscation. The article as published is open to multiple “reasonable interpretations” as you rightly point out.

The article also appears to reveal a significant fault in the Times’ editorial process. If there was not enough room to deal with the complexity of campaign finance law “with the specificity one would wish,” then it would seem to make sense to either grant the writer more room or instead decide not run the article. What is the purpose of publishing an admittedly confusing piece?

This is the third separate time in just the last few weeks that we have been obliged to seek correction from the editorial page on inaccurate assertions that disparaged us.

Taken as a whole it certainly appears as though the Times is playing an active role in the ideological campaign against our organization with accuracy merely optional.

Again, thank you for following up on these issues.

Sincerely,

Mark V. Holden
Koch Industries, Inc.
Senior Vice President and General Counsel