Crane Chronicles Part II: The Care and Feeding of Board Members

In the Crane Chronicles, Part I, Breitbart News reported on Cato President Ed Crane’s collaboration with left-wing New Yorker writer Jane Mayer to launch a smear campaign against the Koch brothers.  Crane then used Mayer’s hit piece as justification for arguing that Cato should distance itself from the Kochs.

In Part II, we focus on an episode involving Ed Crane’s interactions with Cato’s Board of Directors and its fiduciary responsibilities.

“That kind of question is not appropriate for our dinner discussion this evening—save it for the board meeting tomorrow!” Ed Crane yelled at one of Cato’s newest board members, Nancy Pfotenhauer.

“How would you ever know anything about Cato’s policy priorities?!” he barked.

According to witnesses, with Crane commanding his post from the head of the table at this special March 31, 2011 board dinner--designed in part as a welcome for Cato’s newest board members--the roughly two dozen Cato donors, board members, policy analysts, and senior managers in attendance sat in stunned silence. 

Bill Niskanen, a longtime leader at Cato, had just invited comments from these new board members.  Following up on a discussion about the future of Cato and its policy priorities, Crane had exploded as Ms. Pfotenhauer offered her question.

Pfotenhauer's question was innocent enough. Since Crane had been reporting on Cato’s recent capital fund raising drive and plans for expansion of its physical space, Pfotenhauer asked what the future vision and plans were for Cato’s policy personnel.

That’s when Crane moved to end the discussion.

“I am so sorry if my question was inappropriate,” said Pfotenhauer.  “All I wanted to do was to acknowledge the prowess of your policy team.”

Crane, his face flushing red, then rose from his seat. "Let me say something about these two new Koch operatives who have been placed on this board."

And then, pointing his finger at Kevin Gentry, another new board member who had not yet spoken, Crane bellowed, "Kevin Gentry, seated over there, has never once -- never once! -- invited me or any Cato scholar to speak at the donor conferences he organizes for Charles Koch."

Then Crane stormed out of the room, leaving the dinner he himself was hosting.

“I have never seen anyone behave with that little decorum,” says Ms. Pfotenhauer today.  “It was a shocking and juvenile display of puerile nastiness.”

At the reception prior to the dinner, Gentry and Pfotenhauer had already sensed something was off.  A senior Cato associate approached Mr. Gentry and said bluntly, “As a Christian, this must be uncomfortable for you—what with having to be around all these atheists.” 

For his part, Crane has previously described his version of events to Slate reporter David Weigel as follows:

I guess it became contentious at a board dinner we had. Nancy Pfotenhauer -- they'd put her and Kevin Gentry on our board. Both of them were Republican activists, and social conservatives. Never been to a Cato event, never given a dime to Cato. Nice people, but didn't have the stature to be on our board. At this dinner, she starts lecturing us on how Cato's spending too much on physical capital and not enough on human capital. She has no clue! So I tell her, this is a proper thing to bring up at a board meeting. But this is a dinner. She kept talking! So I got up and maybe yelled at her a little, stomped out, and that's the excuse they've been using to say I'm not civil.

Crane’s description of Pfotenhauer and Gentry as lacking “the stature” to be on Cato’s board is dubious at best.

Pfotenhauer was trained in Austrian economics at George Mason University and has worked as a communications consultant for over 25 years. She was an effective spokesperson for the McCain-Palin campaign in 2008, and was the director for Koch Industries’ Washington DC office from 1996-2001. “I love Cato. I frequently cite Cato. I have friends at Cato, many of whom have been friends for decades, and at least one of whom I’d given their first policy job,” says Ms. Pfotenhauer. 

A battle-tested Washington hand who has helped run communication strategy through some of the conservative movement’s most contentious fights (including the defeat of Hillarycare in the 1990s), Pfotenhauer had once been appointed by George W. Bush’s first Attorney General, John Ashcroft, to serve on the Violence Against Women Act advisory committee. The organization Pfotenhauer then ran, the Independent Women’s Forum, was opposed to the Act and launched a nationwide effort to keep her off the committee. Despite clear and opposing views, however, once on the committee, Pfotenhauer managed the tensions; she recalls that discussions were substantive and respectful.  Still, she says her opponents then “were a pillar of civility compared to my first reception and dinner at Cato.”

Gentry’s bona fides are also well-established.  He is a former vice president of both the free-market Mercatus Center and the libertarian Institute for Human Studies at George Mason University.  Widely considered one of the freedom movement's most successful fundraisers, Gentry has helped raise more than $500 million for free-market and conservative causes since the early 1990s.

Most tellingly, in December 2010, Pfotenhauer and Gentry had both been unanimously elected to Cato’s board and received Crane’s vote (as well as the Chairman's).  Moreover, in the fall of 2002,  Crane invited Gentry to come to Cato to lead its development efforts—an opportunity that Gentry declined politely.

Given their standing and reputations, the addition of Pfotenhauer and Gentry to Cato’s board had been viewed by all as a positive development.  But soon, Crane came to see them as a Koch-backed threat that stood to disrupt his total control over Cato’s board of directors.

So why would Crane treat members of his own board of directors—individuals who hold fiduciary responsibilities for which they are legally accountable—in such a hostile way?

According to sources closely involved, Crane had cultivated a powerful inner circle made up of a handful of directors close to him whose job it was to hand down decisions that other board members were expected to rubber-stamp obediently. Crane quickly came to understand that the experienced and independent-minded Pfotenhauer and Gentry would not allow him to exert total control over Cato’s board.

A senior head of a major institution with knowledge of these matters confirms that, once Crane had confessed he was the unnamed source in Mayer’s New Yorker hit piece against the Kochs, he said: “The price I have to pay for my quote about the Kochs to Jane Mayer is to have Nancy [Pfotenhauer] and Kevin [Gentry] on the Cato board.”

Gentry says that, even though Crane’s reputation for berating Cato’s staff is well-known inside the Beltway, he was still shocked.

“What CEO of a major institution--be it of a non-profit organization or a for-profit company--behaves that way?” said Gentry.  “And what kind of board would tolerate it?  Board members have a fiduciary responsibility for the long-term interests of the institution. No board can accept that sort of immature, unprofessional behavior.”

Asked whether Crane has ever apologized for the incident, both Pfotenhauer and Gentry confirm that he has not.

Coming next... Crane Chronicles III: The Cult of Personality


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