Success of nation’s second-largest private company helps fund brothers’ political agenda
By Nancy Benac
Associated Press
WASHINGTON (AP) — They are the outsized force in modern American politics, the best-known brand of the big money era, yet still something of a mystery to those who cash their checks.
They’re demonized by Democrats, who lack a liberal equal to counter their weight, and not entirely understood by Republicans, who benefit from their seemingly limitless donations.
These are the Koch brothers, and perhaps the first thing you need to know is that there are four of them.
The constant shorthand reference — “Koch brothers,” pronounced like the cola — that lumps them all together shortchanges the remarkable story of four very different people who rode the Koch genes and the Koch money in vastly different directions.
Charles is the steady, driven one. He’s grounded in the Kansas soil of their birth.
David is his outgoing younger brother. He’s a New Yorker now, and pronounces himself forever changed by a near-death experience.
William is David’s free-spirited twin, a self-described contrarian whose pursuits beyond business include sailing, collecting things and suing people (his brothers included).
And then there’s the oldest, Frederick, who’s as likely to turn up in Monte Carlo as at his apartment on New York’s Fifth Avenue and doesn’t have much to do with the rest of the lot.
They’re all fabulously wealthy, all donate lavishly to charity, all tall — Frederick is the shortest at 6-foot-2 — and all are prostate cancer survivors.
Two of them, Charles and David, have defined the public notion what it means to be a “Koch brother.”
In the eyes of the political establishment, it’s the willingness to freely spend their awesome wealth in the pursuit of a smaller, more limited government. Among the executive set, it’s their success at turning Koch Industries into a corporate behemoth whose reach extends into every corner of American life — toilet paper to jet fuel, fertilizer to cattle.
Among Democrats? Well, it’s the idea that success at business allowed them to advance a political agenda that is designed to benefit those businesses.
The other two brothers — known in the family as Bill and Freddie — cut their ties to the family business decades ago and don’t show the same passion as Charles and David to change the world. One of them, if you can believe it, has even given money to Hillary Rodham Clinton. (That would be Bill.)
As Bill sizes up his siblings during an interview with The Associated Press: “David and I like off-color jokes, Freddie likes more sophisticated jokes.” Charles? “Charles likes golf.”
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Let’s start with Charles and David, the two in sync on business and politics who most people think of when referring to the “Koch brothers.” To even pair these two together risks missing their differences, of both geography and style.
Charles is the white-haired alpha male at the helm of Koch Industries. Midwestern through and through, the 78-year-old still walks up four flights of stairs to work at Koch headquarters in Wichita, Kansas, each morning and eats his lunch in the company cafeteria.
After building Koch Industries into the nation’s second-largest private company, he turned his business philosophy into a book, “The Science of Success,” drawing on — take a breath here — “economics, ethics, social philosophy, psychology, sociology, biology, anthropology, management, epistemology and the philosophy of science.”
“He’s the most focused person I’ve ever met in my life,” says Koch Industries general counsel Mark Holden, who’s worked at the company since 1995. “A purpose-driven life, that’s Charles. It’s always, ‘What’s next? Let’s focus. Let’s keep moving.’”
What’s next has become the next election. After spending decades promoting his libertarian ideas through think tanks and other educational organizations, some of which he founded, Charles wrote in The Wall Street Journal this spring that in the past decade he’s seen “the need to also engage in the political process.”
And how.
Thanks to changes in the nation’s campaign finance laws, it’s not possible to know for sure how much he and David have spent to create a sprawling network of groups working to promote free-market views, eliminate government regulations, fight President Barack Obama’s health care law, oppose an increase in the minimum wage, shift control of the Senate to Republicans and oust Democratic officeholders — from Obama to folks at the local level.
Money from Charles and David got Americans for Prosperity started, empowering the tea party activists who have tugged Republicans to the right. Eyeing younger voters, they back Generation Opportunity. Older voters? The 60 Plus Association, a conservative alternative to AARP. Their political hub, Freedom Partners Chamber of Commerce, has funneled cash to a Who’s Who of conservative groups, including Concerned Veterans for America, the Republican Jewish Coalition and the National Rifle Association.
Critics trace the excesses of the tea party to the Kochs’ doorstep, and Senate Majority Leader Harry Reid, D-Nev., regularly takes to the Senate floor to denounce the brothers as greedy billionaires and “oil baron bullies” who are attempting a “hostile takeover of the American democracy.”
Says brother Bill: “I think my brothers wish they had as much power as Harry Reid says they do.”
But not the profile.
For all the money Charles is pouring into politics, he’s never out front waving a banner for their cause. He’s more comfortable behind the scenes, particularly as death threats and protests have escalated to match the brothers’ political activity.
“It’s made them stronger in their resolve,” says Holden.
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David, an executive vice president and board member at Koch Industries, is more often the public face of their politics.
He ran for vice president on the Libertarian ticket in 1980, drawing little more than 1 percent of the vote with presidential nominee Ed Clark. He is chairman of the
Americans For Prosperity Foundation, a tax-exempt corner of the brothers’ network that advances a message of low taxes and limited government.
At 74, with a distinctive bray of a laugh and an aw-shucks manner, David is literally a fixture in New York: His name is splashed across his many charitable causes.
Among them: the David H. Koch Theater at Lincoln Center ($100 million), the forthcoming David H. Koch Plaza at the Metropolitan Museum of Art ($65 million), the forthcoming David H. Koch Center for ambulatory care at New York-Presbyterian Hospital ($100 million).
David’s money follows his passions — the arts, medical research, education, less-is-more government — and he frequently lands on the Chronicle of Philanthropy’s annual list of the country’s top 50 most generous donors.
His giving escalated after two searing experiences: his survival of a 1991 plane crash that killed 34 people, and a subsequent diagnosis of prostate cancer that left him believing he didn’t have long to live. (His brothers all began regular testing, and caught their cancers much earlier.)
“When you’re the only one who survived in the front of the plane and everyone else died — yeah, you think, ‘My God, the good Lord spared me for some greater purpose,’” David said in a 2008 interview with Upstart Business Journal.
Dr. Peter Scardino, chairman of the surgery department at New York’s Memorial Sloan Kettering Cancer Center, to which Koch has donated more than $66 million, said Koch meets with the center’s top cancer researchers each year and asks “provocative and interesting and challenging questions.”
Scardino said he always warns newcomers who are scheduled to speak before Koch, “Only plan to present your work for 10 minutes because he’s going to ask questions and extend it to 30 to 40 minutes.”
David is equally passionate about his politics, once telling a reporter for the liberal blog ThinkProgress, when asked if he was proud of Americans for Prosperity, “You bet I am, man oh man.” As for the tea party, David said, “There are some extremists there, but the rank and file are just normal people like us. I admire them. It’s
probably the best grassroots uprising since 1776.”
It’s the extraordinary success of Koch Industries that has allowed Charles and David to spend so freely. The two are tied for fourth on Forbes’ list of the richest Americans, with fortunes of $41 billion each. Since 1961, when their father persuaded Charles to come back to Kansas and work for him, the value of Koch Industries has grown more than 2,400-fold.
The company that was founded by the brother’s father in 1940 got its start building oil refineries. It now has 100,000 employees worldwide in a range of businesses that include refining, consumer products, chemicals and electronic components. That red and blue carpeting on Obama’s 2008 inaugural podium? Made with fiber from INVISTA, a Koch operation.
Like Charles, David rarely gives interviews; both declined requests to talk for this story.
But David hasn’t always been so reticent. In a 2010 interview with New York magazine, he chatted about everything from how hormone therapy for his cancer had affected his sex life to the reason for his knee replacements, joking that “If you spent as many years as I did begging girls for favors, you’d have bad knees too.”
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And what of Bill and Freddie — the other Koch brother and the other other Koch brother?
Bill worked for Koch Industries in the 1970s, but he grew frustrated over time about what he saw as Charles’ autocratic management style, how much money was being plowed back into the company rather than distributed to shareholders and how much corporate cash Charles was diverting to the Libertarian Party.
“Charles was giving as much to the Libertarians as he was paying out in dividends,” Bill once told The New York Times. “Pretty soon we would get the reputation that the company and the Kochs were crazy.”
What came next played out over two decades:
Bill enlisted Freddie in a 1980 plan to oust Charles as chief executive. Charles and David derailed it. Bill got fired. Charles and David bought out Fred and Bill for a combined $800 million. Bill had second thoughts and sued for more. In 2000, Charles and David won.
“Financially, we probably made a bad deal,” Bill says, then quickly adds: “In my life, I’m happier than I ever have been when I was working at Koch Industries. I’m my own person. I do things that I love. I take chances.”
Today, the 74-year-old Bill runs his own energy company, Oxbow Carbon LLC, ranks 122nd on Forbes’ richest-people list, and has stopped collecting artwork because he’s “run out of wall-space.” But he’s still suing people, spending more than $25 million on lawsuits against a “hit list” of dealers he’s accused of selling fake wine.
He’s reconciled with his 19-minutes-older twin, David, whom he considers “an extremely good friend.” He describes a “peaceful coexistence” with Charles, but makes mention of a 2012 Forbes article in which Charles would refer to Bill only as “the brother of the twin.”
Over the past two decades, Bill has donated more than $1.5 million to various candidates, party committees and causes across the country — both Republican and Democratic — but nothing on the scale of the political activity of Charles and David. (Bill contributed to Clinton back in 1999 when she ran for the Senate. He also gave
to Al Gore’s presidential campaign in 2000.)
Bill knows a thing or two about winning. He spent more than $60 million to claim the America’s Cup in 1992.
He gives mixed reviews to Charles’ and David’s political pursuits. He says he’s glad they’re “fighting the socialistic trends in this country,” but worries that Charles’ politics sometimes are a “bit extreme.”
He thinks about the shadow that his brothers’ political activities casts on him, referring in passing to an IRS audit and wondering if it came about “because my last name is spelled K-O-C-H.”
What about Freddie? The oldest brother, who turns 81 on Tuesday, he loves restoring castles and historical houses. His whereabouts at any given time are unknown.
“I think he’s a resident of Monaco,” says Bill, “but he has a place in New York, he has a place in London, he has a place in Austria — he bought Archduke Ferdinand’s hunting castle —he has a place in Monaco and then he has a place in Butler, Pennsylvania.”
