Light thrown on world of 'dark money' and the Kochtopus

Governor Scott Walker has the support of mega-rich tycoons David and Charles Koch. Photo / AP

Note to Scott Walker: take more care with your communications. In 2011, when Wisconsin's Republican governor was battling public service unions, with thousands protesting outside his Madison office, he received a phone call from David Koch, the ultra-conservative, mega-rich, co-owner of Koch Industries, America's second largest private company. They spoke for a while and Koch - dubbed the "Tea Party's wallet" for his generous backing of the libertarian movement - invited Walker to his mansion "once you crush those bastards".

Of course, the caller wasn't Koch and the prank went viral. Protesters launched a recall election to oust Walker. It failed and the governor was re-elected in 2012. But his connection with energy tycoons David and Charles Koch deepened and Walker is cited as a likely 2016 Republican presidential candidate, maybe running on an anti-union plank, after recent disclosures in the "Bridgegate" scandal crippled the chances of assumed frontrunner, New Jersey governor Chris Christie.

That was before the emails. Two weeks ago over 27,000 email pages, dating from 2010 and passed between Walker, then executive of Milwaukee County, and his aides were made public. Combed through by liberal groups, the emails disclosed some embarrassing racist comments.

"I can handle being a black, disabled, one-armed, drug-addicted, Jewish homosexual," said one, "but please, oh dear God, don't make me a Democrat." In an election where Republicans are struggling to get minority votes to bolster a shrinking white base, this hardly helps.

But racist comments may be the least of Walker's problems.

Emails released to an inquiry into Walker's tenure as executive revealed his staff had helped his 2010 campaign, going under the radar with private laptops and a private Wi-Fi system, while on public service time. Six aides were convicted but Walker was never charged.

That inquiry closed in 2013. But Mother Jones magazine says another secret probe is pondering possible "illegal campaign co-ordination between [name redacted], a campaign committee, and certain special interest groups."

The Milwaukee Journal Sentinel reported the redacted name is Friends of Scott Walker. The state's 4th Circuit Court of Appeals revealed nonprofit groups examined by investigators include the Wisconsin Club for Growth, which spent over US$9 million ($10.6 million) on TV "issue ads" to help Walker during the recall election. Another group, Citizens for a Strong America, funded by the Wisconsin Club for Growth, apparently distributed money to groups that made issue ads.

Which is where it becomes interesting. The president of Citizens for a Strong America is John Connors, once employed by Americans for Prosperity. That group is part of the Kochtopus, the nickname for a labyrinthine network of "social welfare" nonprofits set up by the Koch brothers to raise "dark money" from secret donors. The money is given to conservative causes and candidates - with voters oblivious - and is revolutionising US politics, where fundraising is constant.

During the 2010 and 2012 elections the Kochtopus showered money on nonprofits that helped the Kochs' ideological bedfellows, including Mitt Romney and Scott Walker, often via issue ads that could not be linked directly to the candidates.

ProPublica, the investigative journalism website, has begun to unravel this opaque system, showing how the Kochs exploited the 2010 Supreme Court "Citizens United" ruling, that allows corporations and unions to secretly donate unlimited sums of money to nonprofits.

These outside groups can buy political ads or pay for political activities - as long as social welfare remains their primary purpose and any political activities are not co-ordinated with a candidate's campaign.

"It's not like you'll find a direct link there," says ProPublica reporter Kim Barker. "If you do that would be a huge story. But you definitely can find that these outside groups will support a particular candidate."

Since 2010 a flood of hard-to-trace money has all but torpedoed transparency and accountability, hallmarks of open democracy.

Between mid-2011 and October 2012 two organisations, TC4 Trust and Freedom Partners Chamber of Commerce, "handed out almost US$264 million" to some 30 nonprofits, part of "a constellation of dark money groups", ProPublica revealed. One Koch operative, Sean Noble, divvied out some US$137 million in 2012 alone via the Centre to Protect Patient Rights, run from a Phoenix, Arizona, post box.

The Kochtopus allows politicians to stay pure while nonprofits sling mud at opponents, either directly or via issues campaigns, says Sheila Krumholz, director of the Centre for Responsive Politics. "Wisconsin is a natural target for a national network like the Koch brothers. Because it was such a rare opportunity to have a friendly politician like Scott Walker willing to take on the unions. It created a lot of excitement on the right. And it might engender a national campaign for Walker."

During the 2012 election the left proved adept at raising direct money, via street teams and the internet. The right focused on dark money, contributed anonymously. "In the 2012 election 85 per cent of the so-called dark money came from the conservative side," says Barker. "Liberals had only 15 per cent."

Ironically, while dark money helps grease the nonstop fundraising wheel, politicians risk having their agendas set by unaccountable groups, the tail wagging the dog.

Meanwhile, operatives are preparing for the November midterm elections to Congress, a contest where dark money may be pivotal.