Brothers Charles and David Koch are the names behind one of America’s largest companies, Koch Industries. They became multi-billionaires, but how did the two amass their fortune?
David and Charles Koch inherited their father’s company, which is now the multibillion dollar Koch Industries, after their father Fred died in 1967. The business went on to import Canadian Oil through Pine Bend Oil refinery, Minnesota.
Read more about how the brothers made their money, as well as the controversy that followed.
The Rise of Koch Industries
There are actually four Koch brothers, though only two are well known.
After the death of their father, Charles took control of the business. David willfully followed Charles’ lead, while eldest brother Fred decided not to be involved with the business and youngest brother Bill would not attempt to join the company for several years.
By buying control of Pine Bend oil refinery, Charles began the process of transforming the business. The company remained private, avoiding the demands of shareholders, and invested most of its profits back into the business.
Forbes ranks the business as the second largest private company in America.
In 1980, Bill, one of the previously uninvolved brothers, launched a legal battle, stating that he was owed billions of dollars from what was once his father’s business. Ultimately, after a years long dispute, it was decided that Charles and David did not owe their brother any cash.
In the 90s and early 2000s, Koch Industries was involved in several legal battles over its practices.
In 1999, the company pleaded guilty to having released aviation fuel into the waters near its Mississippi refinery. In 2000, the United States Environmental Protection Agency fined Koch Industries $30 million for the role it played in oil spills, affecting various waterways.
Political Influence
In 1980, David Koch stood as a candidate for the Libertarian Party. His bid for a political position was unsuccessful, but that was not the end of the brothers’ political influence.
Their huge fortune allowed them to make significant, although not fully disclosed, donations in support of their political views. The New York Times reports “Because so much of their network’s money was funneled through an array of nonprofits, where full disclosure of finances is not required, it is near impossible to assess the full scope of their operations.”
It is believed, however, that the sums of donated money are extensive.
Their political ideology was one of a reduced government and more lenient trade, which many believe is shaped by the benefits it could provide to their business.
Their funding, The New York Times reports, was instrumental in the Republican party’s majority win over the Senate in 2014.
The same year, Rolling Stone reported that the brothers were worth $40 billion each.
Controversy
The Koch family have become controversial figures in American media. The environmental penalties handed to Koch Industries, as well as their political involvement, have left them out of favour with many.
The business has branched out from the oil industry, and now describes itself as “A dynamic and diverse group of companies.” These companies work to transform fossil fuels into monetary goods, using practices including fracking.
According to research by the University of Massachusetts Amherst, Koch Industries is in the top 15 biggest water polluters in the US and the top 20 biggest producers of greenhouse gases.
In August 2019, David, the younger brother of Charles, died of prostate cancer. He gave up his position within Koch Industries the previous year due to his ill health.
His death was announced in a statement made by Charles, writing “It is with a heavy heart that I announce the passing of my brother David. Anyone who worked with David surely experienced his giant personality and passion for life.”
Public reaction to his death was mixed however, with the billionaire’s controversies once again coming to the forefront of attention.