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Koch, Inc.

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Koch, Inc.
File:Koch Industries logo.png
Company typePrivate
IndustryConglomerate
Founded1940
HeadquartersWichita, Kansas, USA
Area servedWorldwide
Key peopleCharles G. Koch (Chairman, CEO, & 42% owner)
David H. Koch (Executive VP, & 42% owner)
ProductsPetroleum
Chemicals
Energy
Asphalt
Natural gas
Plastics
Fibers
Minerals
Fertilizers
Ranching
Pulp and paper
Finance
Commodities trading
RevenueIncreaseUS$98 billion (2009)
Number of employees70,000 (2009)
WebsiteKochind.com

Koch Industries, Inc. (pronounced /ˈkoʊk/) is an American private conglomerate based in Wichita, Kansas, with subsidiaries involved in manufacturing, trading and investments. Koch also owns Invista and Georgia-Pacific

Koch companies are involved in core industries such as manufacturing, refining and distribution of petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper, chemical technology equipment, ranching, finance, commodities trading, as well as other ventures and investments. In 2008, Forbes called it the second largest privately held company in the United States (after Cargill) with an annual revenue of about $98 billion. If it were a public company in 2007, it would rank about sixteenth in the Fortune 500.

Fred C. Koch, for whom Koch Industries, Inc. is named, co-founded the company in 1940 and developed an innovative crude oil refining process. His sons, Charles G. Koch, chairman of the board and chief executive officer, and David H. Koch, executive vice president, are principal owners of the company. Charles and David Koch each own 42% of Koch Industries, and Charles has stated that the company will publicly offer shares "literally over my dead body".

Koch Industries with its focus on heavy industry, also is well known for its long-time sponsorship of free-market foundations and causes.

Corporate history

Predecessor companies

In 1925, Fred C. Koch joined an MIT classmate at an engineering firm in Wichita, Kansas, which was renamed the Winkler-Koch Engineering Company. In 1927 he developed a more efficient thermal cracking process for turning crude oil into gasoline. This process threatened the competitive advantage of established oil companies, which sued for patent infringement. Temporarily forced out of business in the United States, Koch turned to other markets, including the Soviet Union, where Winkler-Koch built 15 cracking units between 1929 and 1932. During this time, Koch came to despise communism and Josef Stalin's regime. In his 1960 book, A Business Man Looks at Communism, Koch wrote that he found the Soviet Union to be "a land of hunger, misery, and terror." According to Charles Koch, "Virtually every engineer he worked with was purged."

In 1940, Koch joined new partners to create a new firm, the Wood River Oil and Refining Company, which is today known as Koch Industries. In 1946 the firm acquired the Rock Island refinery and crude oil gathering system near Duncan, Oklahoma. Wood River was later renamed the Rock Island Oil & Refining Company. Charles Koch joined Rock Island in 1961, having started his career at the management consulting firm Arthur D. Little. He became president in 1966 and chairman at age 32, upon his father's death the following year.

Koch Industries

The company was renamed Koch Industries in honor of Fred Koch, the year after his death. At that time, it was primarily an engineering firm with part interest in a Minnesota refinery, a crude oil-gathering system in Oklahoma, and some cattle ranches. In 1968 and 1969, Charles tried to buy Union Oil's share of the Great Northern Oil Company and its Pine Bend Refinery, but Union Oil was unwilling to sell. When J. Howard Marshall II threw his lot in with Koch, they together acquired a majority interest in the company. Ownership of Pine Bend refinery led to several new businesses and capabilities, including chemicals, fibers, polymers, asphalt and other commodities such as petroleum coke and sulfur. These were followed by global commodity trading, gas liquids processing, real estate, pulp and paper, risk management and finance.

In 1970, Charles was joined at the family firm by his brother David Koch. Having started as a technical services manager, David became president of Koch Engineering in 1979.

Environmental and safety record

Six Koch companies sites have been accepted into the U.S. Environmental Protection Agency's National Environmental Performance Track program for continuous improvement in protecting the environment. Koch companies recycle process water and collect storm water to be used again in the production process. Flint Hills Resources' Minnesota refinery earned the Waste Water Operator Award from the Minnesota Pollution Control Agency for its water use program. And Koch Industries' headquarters in Wichita earned the U.S. Environmental Protection Agency's Energy Star award, the national symbol for superior energy efficiency and environmental protection. It is the only Wichita office building to earn the honor and one of only five Energy Star-rated buildings in Kansas.

In March 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 River.

In January 2000, Koch Industries subsidiary, Koch Pipeline, agreed to a $35 million settlement with the U.S. Justice Department and the State of Texas. This settlement, including a $30 million civil fine, was incurred for the firm's multiple oil spills in Texas and five other states going back to 1990. The oil spills resulted in more than three million gallons of crude oil leaking into ponds, lakes, streams and coastal waters.

In September 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, Texas. Koch reached a $20 million settlement in exchange for a guilty plea for falsifying documents.

In 2001, Koch Industries paid $25 million to the US Government to settle a federal lawsuit that found the company had improperly taken more oil than it had paid for from federal and Indian land. The suit was initiated by William Koch, one of the Koch brothers, who said that the company engaged in "organized crime," and had made more than $230 million in profit from the stolen oil.

In 2009, the U.S. Justice Department and U.S. Environmental Protection Agency announced that Koch Industries' Invista subsidiary would pay a $1.7 million penalty and spend $500 million to fix environmental violations at its facilities in seven states.

Koch companies have won numerous safety awards and rank third in the nation for total number of STAR sites in OSHA's Voluntary Protection Programs, with more than 100.

Political activity

The Koch brothers operate the Koch Family Foundations, a major source of funding for libertarian and sometimes conservative political causes in the United States, including think tanks such as the Cato Institute.

From 2005 to 2008, Koch industries donated $5.7 million on political campaigns and $37 million on direct lobbying to support fossil fuel industries. Between 1997 and 2008, Koch Industries donated a total of nearly $48 million to climate opposition groups. According to Greenpeace, Koch Industries is the major source of funds of what they call "climate denial." Koch Industries and its subsidiaries spent more than $20 million on lobbying in 2008 and $5.6 million in 2009, according to the Center for Responsive Politics, a nonpartisan research group.

Koch Industries founded Americans for Prosperity, formed as a successor to Citizens for a Sound Economy. Fred Koch co-founded the John Birch Society, though neither of his sons is a member or supporter of the organization. His sons, Charles and David, did not follow in their father's arch-conservative views but instead converted to libertarianism under the influence of Robert LeFevre. In the mid-1970s the Kochs started to fund a network of libertarian organizations including the United States Libertarian Party, for which David ran as the vice presidential nominee in 1980. The Kochs withdrew their financial support of the Libertarian Party after an acrimonious 1983 convention, but continue to support libertarian institutions independent of the party such as the Cato Institute, and in more recent years some groups with an orientation toward the Republican Party.

Rich Fink, a Koch executive vice president, is a member of the board of directors of Americans for Prosperity. Previously he served as president of Citizens for a Sound Economy. Rich Fink also founded the Mercatus Center.

References

  1. ^
  2. http://www.kochind.com/IndustryAreas/default.asp
  3. ^ Fisher, Daniel (Mar. 13, 2006). "Mr. Big", pp. 24–26. Forbes. Online summary for calendar year 2005 at .
  4. Forbes - America's Largest Private Companies
  5. http://www.forbes.com/2009/10/28/largest-private-companies-business-private-companies-09_land.html Forbes rankings for 2009
  6. "The Principled Entrepreneur". The American. July–August 2007. Retrieved 23 February 2010.{{cite news}}: CS1 maint: date format (link)
  7. "Summary of Koch Industries History". sec.gov. U.S. Securities and Exchange Commission. 14 November 2005. Retrieved 18 February 2010.
  8. "Advancing Market-Based Public Policy". kochind.com. Koch Industries. Retrieved 18 February 2010.
  9. ^ Koch, Charles C. (2007). The Science of Success: How Market-Based Management Built the World's Largest Private Company. John Wiley & Sons, Inc. p. 6. ISBN 978-0-470-13988-2. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  10. ^ Daniel Fisher (13 March 2006). "Mr. Big". Forbes.
  11. Koch, Fred C. (1960). A Business Man Looks at Communism. Wichita, Kansas. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)CS1 maint: location missing publisher (link)
  12. ^ J. Howard, Marshall II (1994). Done in Oil: An Autobiography. College Station: Texas A&M University Press. ISBN 0890965331. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  13. Bruce Upbin; Brandon Copple (14 December 1998). "Creative destruction 101". Forbes.
  14. "Summary of Koch Industries History". sec.gov. U.S. Securities and Exchange Commission. 14 November 2005. Retrieved 18 February 2010.
  15. John, Lincoln (1989). Rich Grass and Sweet Water. College Station: Texas A&M University Press. ISBN 0-89096-387-8.
  16. http://www.kochind.com/EHS/Environment.aspx
  17. http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/eae2020401d0bf098525689d00713ea5!OpenDocument
  18. http://www.safetyonline.com/article.mvc/Koch-Agrees-to-35-million-Settlement-in-Two-E-0001?VNETCOOKIE=NO “Koch Agrees to $35 Million Settlement,” SafetyOnline.com, Jan 17 2000
  19. http://yosemite.epa.gov/opa/admpress.nsf/016bcfb1deb9fecd85256aca005d74df/981d17e5ab07246f8525686500621079
  20. http://www.justice.gov/opa/pr/2000/September/573enrd.htm
  21. http://www.cbsnews.com/stories/2000/11/27/60II/main252545.shtml CBS News “60 Minutes”, “Blood and Oil: An Environmental Negligence, Nov 27 2000
  22. http://wichita.bizjournals.com/wichita/stories/2009/04/13/daily13.html "Invista to Correct EPA Violations," Wichita Busienss Journal, April 13, 2009
  23. http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/1e9d18f061b4da818525759700632926!OpenDocument US EPA Press Release, April 13, 2009
  24. http://www.guardian.co.uk/environment/2010/mar/30/us-oil-donated-millions-climate-sceptics
  25. "Secretly Funding the Climate Denial Machine". Global Warming. Washington: Greenpeace. 2010-03-29. Retrieved 2010-04-01.
  26. DeMelle, Brendan (2010-03-30). "Greenpeace Unmasks Koch Industries' Funding of Climate Denial Industry". Los Angeles: Huffington Post.
  27. Grandia, Kevin (2009-07-30). "Koch Industries Funding Anti-Climate Agenda". DeSmogBlog. Hoggan & Associates. Retrieved 2010-03-30.
  28. http://www.opensecrets.org/lobby/clientsum.php?year=2008&lname=Koch+Industries&id= Center For Responsive Politics, www.opensecrets.org
  29. http://www.opensecrets.org/lobby/clientsum.php?year=2009&lname=Koch+Industries&id= Center For Responsive Politics, www.opensecrets.org
  30. Paul, Mark. "Seducing the Left: The Third Party That Wants YOU". Mother Jones, May 1980.
  31. Doherty, Brian. Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement, pp. 316, 407-410. PublicAffairs, 2007.
  32. Doherty, p. 421

External links

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