Koch Industries

Koch Industries, Inc. (pronounced like "coke"), based in Wichita, Kansas, is the largest privately owned company in the world by revenue, with subsidiaries involved in manufacturing, trading and investments. Koch companies are involved in core industries such as commodities trading, petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper, chemical technology equipment, ranching, securities and finance, as well as in other ventures and investments. It has an annual turnover of about States dollar|$" target="_blank" >^*80 billion. Fisher, Daniel (Mar. 13, 2006). "Mr. Big", pp. 24–26. Forbes.

Fred C. Koch, for whom Koch Industries, Inc., is named, co-founded the company in 1940 and invented an innovative crude oil refining process. Charles G. Koch, chairman of the board and chief executive officer, and David H. Koch, executive vice president, are principal owners of the company. The latter owns 40% of Koch Industries, and has stated that the company will publicly offer shares "literally over my dead body".

Acquisitions and related milestones

The following is a partial list of acquisitions and related events:

1940: Fred Koch co-founds Wood River Oil and Refining Company.
1946: The company acquires Rock Island Oil & Refining Co. in Oklahoma.
1959: The company changes name to Rock Island Oil & Refining.
1959: Fred Koch purchases 35% equity position in Great Northern Oil Company in St. Paul MN, sight-unseen.
1967: Koch's death prompts the company, now led by Charles Koch, to be named Koch Industries in honor of its co-founder.
1969: Charles Koch and J. Howard Marshall II pool equity positions to obtain majority of Great Northern Oil Company. After 100% equity was obtained, the refinery was renamed Koch Refining.
1977: Koch acquires 100% of equity in Abcor and later renamed it as Koch Membrane Systems in 1985
1981: The company acquires refinery in Corpus Christi, Texas, from Sun Oil.
1986: The company acquires the C. Reiss Coal Company.
1989: The company purchases the assets of the John Zink Company.
1992: The company acquires United Gas Pipeline.
1993: Elf Asphalt is acquired.
1997: The company acquires Delhi Group.
1998: Purina Mills is acquired.
1998: The company forms KoSa after acquiring 50 percent ownership of Hoechst's polyester division.
2000: A U.S. Bankruptcy court cancelled out all equity in Purina held by Koch, in order to maintain Purina's viability.
2001: The company partners with Entergy Corporation to form the limited partnership Entergy-Koch, which includes Koch's United Gas Pipeline subsidiary.
2004: Koch acquires the INVISTA fibers and resins business from DuPont. Entergy-Koch is sold.
2005: Koch acquires Georgia-Pacific, its largest acquisition ever, and surpasses Cargill as the largest privately owned U.S. company.

Political activity

The Koch brothers also operate the Koch Family Foundations, a major source of funding for conservative and libertarian political causes in the United States, including think tanks such as the Cato Institute. (Their father helped found the John Birch Society.) David's political activism also includes running as the vice presidential nominee of the United States Libertarian Party in 1980, when he and running mate Edward Clark finished fourth with 921,299 votes.

Koch also supports Americans for Prosperity, formed as a successor to Citizens for a Sound Economy. Rich Fink, a Koch executive vice president, is a member of the board of directors of Americans for Prosperity. Previously he served as president of Citizens for a Sound Economy.

In April of 2006, it was announced that the Fred C. and Mary R. Koch Foundation had contributed $1 million to help preserve the tallgrass prairies of the Tallgrass Prairie National Preserve in Chase County, Kansas. The donation made to the Kansas Prairie Legacy Campaign is reportedly the single largest private donation in the State's history. Currently Liz Koch is the president of the Fred C. and Mary R. Koch Foundation, and has been reported as saying that the Flint Hills of Kansas were a special place for Fred C. Koch, who died in 1967, and Mary R. Koch, who died in 1990. The Flint Hills is where their ashes were spread and their headstones placed. The $1 million donation was made as a special way to honor the love Fred and Mary had for the Kansas Prairie. Klepper, David (Apr. 05, 2006). "Campaign to preserve tallgrass prairie gets $1 million boost" Kansas City Star.

Criticism

In 1989, the US Senate Committee on Investigations stated, "Koch Oil, a subsidiary of Koch Industries, is the most dramatic example of an oil company stealing by deliberate mismeasurement and fraudulent reporting." (Palast p.150) During the Clinton administration, Koch was charged with 315 acts of pollution, especially at its Pine Bend Refinery facility in Rosemount, Minnesota. Koch Industries denied the allegations, but the cases were settled in January 2000 for $35 million in fines.

In another instance, Koch was charged with 97 counts of covering up evidence in the case of a benzene spill in Corpus Christi, Texas. The government sought fines as high as $350 million. Four of its employees were also charged with criminal offenses in the case, facing up to 35 years in prison. In 2000, the Justice Department reduced the number of counts from 97 to 11 to nine to seven. Just before the case went to trial - only three months after the Bush administration took office - the Justice Department dropped the remaining seven counts and settled the case for $20 million. Koch pled guilty to one count of concealing evidence, which they had self-reported in 1996, and the criminal charges against the employees were dropped. (Center for Public Integrity -- Williams et al., July 2004)

There is also speculation that these charges, brought against the company during the Clinton administration, were politically motivated against the then Texas governor Bush, to allegedly demonstrate his state's failure to handle big energy. The judge eventually dismissed 93 of the counts prior to going to trial due to lack of evidence, resulting in the Justice Department settling the case as noted above.

Notes and references

Other references

Palast, Greg (2002). The Best Democracy Money Can Buy.
Leslie Carbone and Ron Learned. The History of Koch Industries, Inc. And Its Management Philosophy (2006)

External links

Koch Industries
Wall Street Journal: The Weekend Interview Private Enterprise: Charles Koch applied the "science of liberty" to become one of the world's richest men.

Forbes: Mr. Big
Koch's Low Profile Belies Political Power - Part of a "Politics of Oil" report by the Center for Public Integrity.
An expose from Talking Points Memo

Companies based in Kansas | Oil companies of the United States | Privately held companies of the United States | Koch family