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Archive for Saturday, May 26, 2001

Kochs announce end to legal battles

May 26, 2001

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— The wealthy sons of the founder of Koch Industries declared peace Friday after two decades of fighting and vowed never to pit their companies against each other in court again.

A federal judge's approval this week in Tulsa of a settlement in an oil-buying case is intended to end all litigation "past, present and future" between Bill Koch and Koch Industries, said Jay Rosser, spokesman for the Wichita, Kan.-based company.

"We fully expect that both parties will abide by this agreement and that it will result in permanent and long-lasting peace for all concerned," Rosser said.

Bill Koch successfully sued Koch Industries in federal court in northern Oklahoma in 1999, accusing the energy company of stealing oil from federal and Indian lands.

Bill Koch's brother, Charles, is chairman of the company and brother David is executive vice president. A fourth Koch brother, Frederick, was not a party to the Tulsa case but had teamed with Bill Koch in another dispute.

The parties agreed not to disclose the terms of the settlement, which was approved by U.S. District Judge Terry Kern.

"The litigation of the past two decades has been a painful experience for the employees of both companies," Koch Industries and Bill Koch's Oxbow Corp. said in a joint statement. "We are pleased that everyone can now focus on growing our respective businesses free from these legal distractions."

A spokesman for Bill Koch said the 61-year-old also holds the truce as the end to all litigation.

"We're elated," Brad Goldstein said. "I think all the parties are happy."

Neither Rosser nor Goldstein would comment on whether the agreement signaled the end of the personal strife between the brothers. Neither Koch was available for comment.

"The past 20 years of litigation between Oxbow and Koch Industries has benefitted no one," Rosser said. "It's clearly been a distraction to our businesses and our company's employees. There's a sense of satisfaction here that at long last we might be able to devote our complete attention to business."

The brothers met face-to-face for some of the negotiations, Goldstein said.

Bill Koch sued his older brother's company on behalf of the government under the federal False Claims Act, a move requiring the U.S. Justice Department to sign off on a settlement.

A Tulsa jury found that Koch Industries underreported the amount and quality of oil purchased between 1985 and 1989 from federal and Indian leases.

Jurors recommended the company pay the government $553,504 in compensation, but that figure could have been tripled under federal statute. Kern also could have considered as much as $214 million in penalties on 24,587 claims jurors deemed to be false.

Bill and Frederick Koch also took Charles and David to court in 1998. They argued during an 11-week trial in Topeka that the brothers had shortchanged them in the sale of their father's company in 1983.

Their late father, Fred C. Koch, founded the company in 1940.

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