Archive for Sunday, November 16, 1997

KOCH INDUSTRIES A GLOBAL ECONOMIC EMPIRE

November 16, 1997

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Revenues for Koch Industries, a privately held corporation, have grown from $250 million a year to $30 billion annually.

The glass-and-granite headquarters of Koch Industries in Wichita makes a statement about the corporation's status in Kansas.

Koch Industries, the second-largest privately held corporation in the United States, is run from an office complex with 1 million square feet near downtown Wichita.

The building is home to an economic gusher of oil trading, fuel refineries, gas pipelines, chemical companies, cattle ranches and financial services with annual revenues of $30 billion.

There are 13,000 employees, including 3,000 in Kansas. They work for dozens of Koch businesses that underpin industrial society.

Here's a snapshot:

  • Koch refineries in Corpus Christi, Tex., and near Minneapolis process more than 500,000 barrels of crude a day. Koch's pipeline system is long enough to circle the earth.
  • High octane fuels manufactured by Koch are used to power U.S. cruise missiles.
  • Koch is among the top 10 cattle producers in the country and operates the ninth-largest U.S. ranch operation. Worth magazine says Koch is the nation's 34th-largest land owner.
  • One billion pounds of paraxylene is made annually by Koch to manufacture pop bottles, VCR tape and computer disks. Koch makes the country's highest purity sulfuric acid for production of advanced integrated circuits.
  • Koch is the country's largest buyer and seller of asphalt. It churns enough asphalt annually to resurface 65,000 miles of road.

The empire is led by Charles Koch, chairman and chief executive officer of Koch Industries. He was 32 years old when he took over Koch Industries in 1967, following the death of his father, Fred Koch.

The company had little management depth, shaky finances and a modest collection of oil pipeline assets.

Over a 30-year period, Charles Koch reshaped the corporation and its management philosophy. Annual revenues climbed from $250 million to $30 billion.

Charles Koch's net worth was recently projected at $2.2 billion by Forbes magazine. A resident of Wichita, that makes him the richest man in Kansas.

He's a significant contributor to KU and philanthropic programs in Wichita.

Charles Koch's partner, brother David Koch of New York, is executive vice president of the conglomerate. David Koch also had his net worth pegged at $2.2 billion. The siblings are tied for 65th on the Forbes list of richest Americans.

A monumental family feud has consumed family energy for more than a decade.

Bill Koch of Palm Beach, Fla., joined with brother Frederick to file a lawsuit 12 years ago against Charles and David Koch. Bill and Frederick allege Koch officials defrauded them in 1983 by concealing the true value of Koch Industries' stock. Bill and Frederick Koch sold their interest in Koch for nearly $800 million.

Basically, they feel Charles and David Koch ripped them off for $1 billion.

A trial on the lawsuit is set for April in U.S. District Court in Topeka.

Bill Koch also made headlines for winning sailing's prestigious America's Cup in 1992. He donated at least $8 million to the private, nonprofit Koch Crime Commission to launch a campaign to deal with crime in Kansas.

Bill Koch is not involved in his brother Charles' or Koch Industries-related political contributions to Kansas lawmakers. Koch family members don't welcome publicity about their political activism.

"Contributors are not all that excited about being identified," said Allan Cigler, KU professor of political science.

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