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Koch Industries is the second largest [PDF] privately-held...

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Koch Industries

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Koch Industries is the second largest [PDF] privately-held company in the United States with $115 billion in annual revenue. The Koch conglomerate owns a wide variety of industrial subsidiaries, including Flint Hills Resources, Georgia-Pacific, INVISTA, and Molex. Koch Industries has a presence in nearly 60 countries, conducting business operations in the fields of petroleum refining, fuel pipelines, coal supply and trading, oil and gas exploration, chemicals and polymers, fertilizer production, ranching and forestry products. The company employs 100,000 people globally, 60,000 of which are in the United States (down from 80,000 U.S. employees in recent years, despite several multi-billiondollar aquisitions and mergers).

The vast majority of Koch Industries’ assets are controlled by Charles G. and David H. Koch, two of four sons of the company’s founder, who each own 42% of the company stock.  According to 2014 Forbes rankings, the Koch brothers are tied for the 24th richest person in the world, and for fourth richest American, each worth $36 billion. Their combined wealth puts them behind only Bill Gates and Warren Buffett in U.S. richness. Bloomberg estimates each brothers wealth exceed that of Forbes, at over $52 billion each.

Evidence

Pollution:

The Political Economy Research Institute ranks Koch Industries as the fourteenth worst air polluter in the U.S. in their Toxic Release Inventory, above oil giants like BP, Shell and Chevron and large coal utilities like American Electric Power and Duke Energy.  CARMA reports that Koch releases about 200,000 tons of atmospheric carbon dioxide annually.

Koch Industries environmental crimes, violations, and contamination include:

  • Subsidiaries of Koch Carbon have accumulated massive piles of petroleum coke in U.S. cities like Detroit and Chicago, where the toxic dust has blown into peoples' homes from a 5-story-tall pile of petcoke. Petcoke is a byproduct of refining tar sands that is usually burned like coal. Petcoke, which is more carbon-intensive than coal, is typically exported and burned in other countries with little to no air or climate regulations. While Detroit's mayor ordered Koch to move its petcoke pile, Chicago regulators and politicians have not acted with the same urgency despite sustained local protests from community members, nurses, and threats of lawsuits from environmental groups. In response, Koch claims it will add protections to its unlined pile, which could take two years.
  • Facing "enormous" cleanup costs for soil and groundwater contamination and high crude oil prices, Flint Hills announced in 2014 that it would permanently close its North Pole refinery outside of Fairbanks, Alaska. Koch blames contamination on the refinery's previous owner, Williams Companies. 
  • In May 2001, Koch Industries paid $25 million to settle with the US Government over a long-standing suit brought by Bill Koch - one of the brothers bought out in 1983 - for the company's long-standing practice of illegally removing oil from federal and Indian lands.
  • In late 2000, the company was charged with covering up the illegal releases of 91 tons of the known carcinogen benzene from its refinery in Corpus Christi. Initially facing a 97-count indictment and potential fines of $350 million, Koch cut a deal with then-Attorney General John Ashcroft to drop all major charges in exchange for a guilty plea for falsifying documents, and a $20 million settlement.
  • In 2000, the EPA fined Koch Industries $30 million for its role in 300 oil spills that resulted in more than three million gallons of crude oil leaking into ponds, lakes, streams and coastal waters.
  • In 1999 a Koch subsidiary pleaded guilty to charges that it had negligently allowed aviation fuel to leak into waters near the Mississippi River from its refinery in Rosemount, Minnesota, and that it had illegally dumped a million gallons of high-ammonia wastewater onto the ground and into the Mississippi.
  • Koch's negligence toward environmental safety has led to tragic losses of life. In 1996, a rusty Koch pipeline leaked flammable butane near a Texas residential neighborhood. Warned by the smell of gas, two teenagers drove their truck toward the nearest payphone to call for help, but they never made it.  Sparks from their truck ignited the gas cloud and the two burned alive. The National Transportation Safety Board determined that "the probable cause of this accident was the failure of Koch to adequately protect its pipeline from corrosion" and the ineffectiveness of Koch's program to educate local residents about how to respond during a pipeline leak.

The inability of Koch companies to avoid pollution incidents stands in contrast with Charles Koch's "Guiding Principles" of his trademarked corporate management theory, "Market-Based Management," which states, "Strive for 10,000% compliance with all laws and regulations, which requires 100% of employees fully complying 100% of the time." This also excludes from consideration the ways in which Koch is permitted to legally pollute.

Formaldehyde, Cancer, and David Koch

While David Koch, a victim of prostate cancer, has donated millions to cancer research institutions and is a member of the National Cancer Advisory Board, Koch Industries subsidiary Georgia-Pacific is actively working to downplay the dangers of formaldehyde, a known carcinogen.

Financing of climate science denial front groups: 

Koch Industries and the Koch family spend millions of dollars on lobbyists to fight climate and energy legislation, millions more on politicians, and still more millions on organizations denying climate change. Through the Charles G. Koch Charitable Foundation as well as Koch Industries and the other Koch family foundations, numerous and substantial donations go to organizations that deny, skepticize or belittle the significance of global warming. Compared to ExxonMobil, which has spent over $27.4 million on skeptic groups since 1998, foundations linked to Koch Industries have spent over $70 million in traceable contributions to the same network of organizations, with addition untraceable funding funnelled through organizations like Donors Trust. Key Koch-backed organizations include the Americans for Prosperity Foundation, which was founded and remains chaired by David Koch, the Cato Institute, which Charles Koch co-founded and David Koch remains a board member after an attempted coup, the Institute for Humane Studies, which is chaired by Charles Koch, and the Reason Foundation, of which David Koch is a trustee.

Koch Industries is a member of the American Legislative Exchange Council (ALEC) and part of ALEC's Energy, Environment and Agriculture task force. Through ALEC, Koch works with state legislators to distribute anti-environmental model bills across the country that delay policy solutions to climate change, block clean energy, prevent EPA from regulating coal pollution, fasttrack coal mining projects and other dirty energy initiatives. Koch's support for ALEC is unique; Charles Koch helped bail ALEC out during financial trouble in the late 1990s; Koch lobbyist Mike Morgan has severed on ALEC's private enterprise board for over a decade (see PR Watch references, paragraph 6).

Koch Industries was the 2011 inductee for Corporate Accountability International's Corporate Hall of Shame for "spending over $50 million to fund climate change denial and influencing the Supreme Court's decision to allow unlimited corporate dollars to flow into federal elections." Koch Industries is the sixth member of the Hall of Shame, after Monsanto, Chevron, ExxonMobil, Blackwater and Halliburton.
 

Political Expenditures:

Koch Industries is a major political contributor, spending over $22 million on federal political candidates since 1999.

Koch Industries has spent $79 million on federal lobbying since 1998, when disclosure became mandatory.

Koch Industries spent $1 million to promote California Proposition 23, intended to undermine the states clean energy and climate law, through subsidiary company Flint Hills Resources. Koch also pushed Prop 23 through one of their beneficiary front groups, the Pacific Research Institute, which published and promoted reports that made favorable economic arguments for Prop 23 using >flawed methodologies>.

Koch worked behind the scenes during the 2010 “Rally for Jobs” astroturf events, coordinated by the American Petroleum Institute in order to create political pressure against clean energy and climate legislation in the interest of the oil and gas industry.  Groups such as Americans for Prosperity and FreedomWorks, which are both heavily funded by the Koch brothers and founded by David Koch, were partner organizations in promoting the rallies.

Support for Wisconsin Governor Scott Walker

In conjunction with $43,000 in 2010 political donations from Koch Industries to Republican Wisconsin Gov. Scott Walker, Koch-founded and -financed Americans for Prosperity has coordinated support for the Governor's union busting efforts. Wisconsin's budget crisis has been inflamed by corporate tax cuts initiated by Gov. Walker, who then used the lack of income to justify taking bargaining rights from Wisconsin union workers and cutting the salaries and benefits of state employees. This process was advised by the American Legislative Exchange Council, which has received over $500,000 from Koch Industries since 1997, and over $1.4 million from ExxonMobil. Koch Industries holds numerous business operations in Wisconsin.

International bribes and trading with Iran:

Bloomberg Markets Magazine reports that Koch Industries, through a French subsidiary, sold millions of dollars of petrochemical equipment to Iran, and also appears to have bribed companies in countries like Saudi Arabia, Morocco, Algeria, India and Nigeria to solicit business contracts from 2002-2008.

Role in Keystone XL tar sands pipeline:

Koch Industries has been involved in tar sands operations for half a century. Koch refines 25% of tar sands crude oil entering the U.S. and operates a terminal at the proposed pipeline's origin in Hardisty, Alberta. Koch Industries has repeatedly denied any financial interest in TransCanada's Keystone XL pipeline. After 6 months of public insistence that Koch Industries had nothing to do with Keystone XL, news emerged that Koch's wholly-owned subsidiary Flint Hills Resources told Canada's Energy Board it has "direct and substantial interest" in a government filing. Flint Hills owns Koch's Pine Bend refinery in Rosemont, Minnesota, whichcan process 339,000 barrels of oil per day, and "is among the top processors of Canadian crude in the United States. Koch has continued to deny any financial link to TransCanada's proposed Keystone XL pipeline, although Americans for Prosperity (which was founded by the Kochs, chaired by David Koch and funded by over $5.6 million from Koch foundations) bussed pipeline supporters to testify at State Department Hearings in Nebraska.

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