Criminal Minds | Charles P. Pierce
[W]hat people should be talking about today, but won’t be, is Tim Dickinson’s report on the lush criminal history of Koch Industries. Up until recently, the Kochs have been seen as a couple of plutocrats who, aided and abetted by a pliable Supreme Court and by politicians who would take money from serial murderers as long as they were anonymous, are seeking to buy the American political system for the purposes of getting even richer and promoting the Birchite nonsense they’ve imbibed since childhood. However, the sources of their great wealth have gone largely unexamined, and, as Dickinson points out, the only real difference between the Kochs and the Gambinos is that the latter dressed a lot better.Under the nearly five-decade reign of CEO Charles Koch, the company has paid out record civil and criminal environmental penalties. And in 1999, a jury handed down to Koch’s pipeline company what was then the largest wrongful-death judgment of its type in U.S. history, resulting from the explosion of a defective pipeline that incinerated a pair of Texas teenagers. The volume of Koch Industries’ toxic output is staggering. According to the University of Massachusetts Amherst’s Political Economy Research Institute, only three companies rank among the top 30 polluters of America’s air, water and climate: ExxonMobil, American Electric Power and Koch Industries. Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation’s waterways than General Electric and International Paper combined. The company ranks 13th in the nation for toxic air pollution. Koch’s climate pollution, meanwhile, outpaces oil giants including Valero, Chevron and Shell. Across its businesses, Koch generates 24 million metric tons of greenhouse gases a year.
This, of course, should be no surprise. Behind every great fortune is a great crime, Balzac warned us, but old Honore has been misunderstood by people who low-ball his warning. It is not that the great fortune begins with the great crime. It is that behind the great fortunes are great ongoing crimes. In the case of the Kochs, in fact, the great fortune is the great crime.
Almost from the beginning, Koch Industries’ risk-taking crossed over into recklessness. The OPEC oil embargo hit the company hard. Koch had made a deal giving the company the right to buy a large share of Qatar’s export crude. At the time, Koch owned five supertankers and had chartered many others. When the embargo hit, Koch had upward of half a billion dollars in exposure to tankers and couldn’t deliver OPEC oil to the U.S. market, creating what Charles has called “large losses.” Soon, Koch Industries was caught overcharging American customers. The Ford administration in the summer of 1974 compelled Koch to pay out more than $20 million in rebates and future price reductions. Koch Industries’ manipulations were about to get more audacious. In the late 1970s, the federal government parceled out exploration tracts, using a lottery in which anyone could score a 10-year lease at just $1 an acre – a game of chance that gave wildcat prospectors the same shot as the biggest players. Koch didn’t like these odds, so it enlisted scores of frontmen to bid on its behalf. In the event they won the lottery, they would turn over their leases to the company. In 1980, Koch Industries pleaded guilty to five felonies in federal court, including conspiracy to commit fraud.
The great crime that begins the great fortune never truly goes away. The corruption that the great crime embeds in the great fortune is never excised because it cannot be. It can be glossed over, camouflaged in fancy legalisms, alibi-ed by politicians that the great fortune allows the great crime to sublet, or perfumed by charitable donations that spring from a river fouled centuries ago. But the great crime — and the corruption it spawned — is eternal in the great fortune. Nobody ever gets clean.
In late 1980, with Frederick’s backing, Bill launched an unsuccessful battle for control of Koch Industries, aiming to take the company public. Three years later, Charles and David bought out their brothers for $1.1 billion. But the speed with which Koch Industries paid off the buyout debt left Bill convinced, but never quite able to prove, he’d been defrauded. He would spend the next 18 years suing his brothers, calling them “the biggest crooks in the oil industry.” Bill also shared these concerns with the federal government. Thanks in part to his efforts, in 1989 a Senate committee investigating Koch business with Native Americans would describe Koch Oil tactics as “grand larceny.” In the late 1980s, Koch was the largest purchaser of oil from American tribes. Senate investigators suspected the company was making off with more crude from tribal oil fields than it measured and paid for. They set up a sting, sending an FBI agent to coordinate stakeouts of eight remote leases. Six of them were Koch operations, and the agents reported “oil theft” at all of them…The Senate committee concluded that over the course of three years Koch “pilfered” $31 million in Native oil; in 1988, the value of that stolen oil accounted for nearly a quarter of the company’s crude-oil profits. “I don’t know how the company could have figures like that,” the FBI agent testified, “and not have top management know that theft was going on.”
The Kochs made the great fortune, the one that’s poisoning American politics as surely as its byproducts poison the land, the water, and the sky, because they decided years ago that laws and regulations are for ordinary people, and not for them. This is how great criminals justify their great crimes. This is how great fortunes are made.
PLEASE GO TO PAGE 2 FOR THE DICKINSON REPORT ON THE KOCHS, AS PRESENTED BY ROLLING STONE