We all know the brand Tripp Lite with its product line of power strips, UPS and other IT peripherals.
If you don’t know the brand made popular at PC retail chains and residential installers, you may know Tripp Lite as a leading supplier of “power quality” products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors and enclosures for data center, industrial, medical and communications markets.
In 2021, Eaton bought Tripp Lite for $1.65 billion and said, “The acquisition of Tripp Lite will enhance the breadth of our edge computing and distributed IT product portfolio and expand our single-phase UPS business.”
Eaton also hoped the acquisition would further its access to the consumer market where Tripp Lite has a strong position. While Eaton might be happy with its 2021 purchase, the company is probably unhappy with the sudden spotlight that Tripp Lite brought in 2022.
The story started when someone made a $1.6 billion donation to a political activist firm but structured this major financial transaction for privacy as well as tax benefits. Reporters chasing the source of this gift, dubbed “the largest political advocacy donation in U.S. history,” stumbled across Tripp Lite as the missing puzzle piece.
Tripp Lite had often previously appeared in the industry trade press (or consumer product reviews), but that was in the business pages — never before in the political columns.
Let’s back up.
Cash, in modern-day American politics, can come from undisclosed donors and is not subject to ordinary contribution limits or reporting requirements. It’s called “dark money” because the donors stay in the shadows. However, it’s also dark because it’s a bipartisan scandal where both political parties are too desperate for cash to stop the rich from playing footloose with donations.
In 2010, the United States Supreme Court ruled against 40 years of restricting dark money, where politically active groups (funds, foundations, political action, non-profits etc.) had to disclose donations over a certain amount. This decision threw out years of court rulings that once declared that voters deserve to know who is bankrolling a candidate; transparency in funding helps prevent corruption, and transparency makes it easier to enforce other rules like a ban on donations from foreign nationals.
A court decision changed the American political landscape and created an opportunity for Barre Seid, a 90-year-old man who ran Chicago’s largest privately-held company. He made his fortune in surge protectors and other computer equipment — yes, with Tripp Lite!
Seid saved about $400 million in taxes by gifting his company shares (100% of Tripp Lite) to a new political group controlled by Leonard A. Leo. (You know the Law of Unintended Consequences: a rich businessman wanted to stay in the background, to be kept out of the press. And instead, he ends up with more notoriety.)
Maybe there should also be a Law of Intended Consequences? Leo was the Federalist Society political activist who helped engineer the conservative dominance of the Supreme Court (as well as financing battles over abortion rights, voting rules and climate change policy).
Leo still serves as the co-chairman of the organization’s board of directors but now runs Marble Freedom Trust, which hopes to give conservatives an advantage — a type of difficult-to-trace spending (often by donations to other activist firms or groups who then donate to candidates or causes) that can shape elections and win political fights. (Both parties can legally do this now — and both parties engage in leveraging dark money.)
Leo’s Marble Freedom Trust had no interest in running Tripp Lite. The Trust would add no value and give no advice to the brand. It simply flipped the shares to Eaton in a big sale.
This type of gift is difficult to trace through public records because Tripp Lite was a private company. On its tax filing, Marble Freedom Trust was not required to mention Tripp Lite — it instead reported the $1.6 billion came from the “sale of gifted company and subsidiaries,” but indicated it withheld identifying information “to protect donor confidentiality.”
Eaton, the publicly traded “Irish” company that bought Tripp Lite, does not refer to Marble in statements related to the sale. Let’s again stress that nothing illegal is happening here, but New York Times reporters were able to figure out where the $1.6 billion came from. Eaton had paid 12x Tripp Lite’s EBITDA for Tripp Lite.
Unlike Tripp Lite, Eaton has been in the news on the political pages before: Two American presidents have pointed to Eaton as an example of an American company that has relocated its international HQ to Ireland to avoid U.S. taxes (legally).