Koch brothers

Hart Williams has put together a large and enlightening bunch of links to information on the Koch twins (did you know Koch Industries is the second largest private company in the U.S.? Neither did I).

I was especially intrigued by this one:

(CBS) This is the story of a blood feud, a battle between brothers. As we told you when we first reported this story last November, the Koch family of Wichita, Kansas is among the richest in the United States, worth billions of dollars. Their oil company, Koch Industries, is bigger than Intel, Dupont or Prudential Insurance, and they own it lock stock and barrel. The trouble is a former employee says the brother who controls the company grew rich through fraud and theft, stealing from the taxpayers of the United States.

Unfortunately, for Koch Industries, that disgruntled former employee was Bill Koch, one of the Koch brothers. Blood and oil has destroyed more than one American family. The question is: Was Bill Koch a renegade out to ruin his brother, or did Koch industries really operate the way he says? Scott Pelley reports.

Koch says that Koch Industries engaged in “(o)rganized crime. And management driven from the top down.”

“It was – was my family company. I was out of it,” he says. “But that’s what appalled me so much… I did not want my family, my legacy, my father’s legacy to be based upon organized crime.”

When Bill Koch’s father, Fred Koch, died in 1967, he passed to his sons both the oil company he created and a bit of wisdom – stand up for each other. They took the company – not the advice.

For the Koch family, the fight began in 1980. Bill tried to take control of the company, he failed and was forced out by his older brother, Charles – Koch’s Chief Executive Officer. Koch Industries told 60 Minutes II that Bill “has clearly decided to destroy what he cannot control.” There is no doubt Bill Koch is a man driven by obsessions. In 1992, with little experience in sailing, he simply decided to win America’s Cup. He spent millions and did. He’s used the same determination in suing his brothers for nearly 20 years.

“I’ll tell you what I’m out to get,” says Bill. “It’s not to get Charles. He’s going to get himself. The old saying is you’re not punished for your sins but by your sins.”

One might think this is just another wealthy American family torn apart by greed and jealousy. But there’s more. Bill Koch set out to prove his father’s company amassed enormous wealth through fraud.

Bill Koch says that his brother Charles made a fortune stealing oil. Much of it from beneath Indian reservations and federal lands – places like national forests. Oil under federal lands belongs to the public. Koch Industries was the middleman – buying oil from the government at the well – then selling it to refineries. Bill Koch says that the company took more oil than it paid for by cheating on measurements.

A gauger measures the volume and the quality of the oil that his company is buying. The buyer leaves his measurements behind on what’s called a “run ticket.” It’s an IOU to the well owner.

“What Koch was doing was taking all these measurements and then falsifying them on the run sheets,” says Bill Koch. “If the dipstick measured five feet 10 inches and one half inch, they would write down five feet nine and one half inches.”

That may not sound like much, but Bill Koch says that it added up. “Well, that was the beauty of the scheme. Because if they’re buying oil from 50,000 different people, and they’re stealing two barrels from each person. What does that add up to? One year, their data showed they stole a million and a half barrels of oil.”