- The Koch brothers are two of the richest men in the world.
- Charles and David Koch each have a net worth of $US53.7 billion, according to Forbes.
- Their fortunes come from their 42% stakes in the Koch family business: Koch Industries.
- Charles is currently the company’s president and CEO, while David just announced that he was retiring from the firm.
The Koch brothers are two of the richest people on planet earth.
Charles and David Koch tied for eighth on Forbes’ 2018 list of the wealthiest billionaires in the world.
And they’re also two of the most controversial billionaires out there, at least when it comes to their political contributions. Jane Mayer’s 2015 book “Dark Money” outlined how the two Kansas natives reportedly used their fortunes to forge a formidable web of political influence, with the intent of promoting their libertarian values.
Still, that hasn’t stopped the Kochs from clashing with figures on the right, mostly notably US president Donald Trump. The two brothers have spoken out against Trump’s tariffs.
So how did the Kochs come to amass so much wealth and wield such influence in the first place? The answer lies within the history of their family business: Koch Industries.
Here’s a look at how the brothers became billionaires in the first place.
The groundwork for the duo’s wealth was laid by their father, Texas native and MIT graduate Fred C. Koch.
The family patriarch joined the Keith-Winkler Engineering Company of Wichita, Kansas in 1925. Later that year, the firm was renamed the Winkler-Koch Engineering Company. A groundbreaking gasoline refinement technique bolstered the young company.
But lawsuits from established competitors forced Koch Sr.’s firm to look abroad for work. In the 1920s and 1930s, the Winkler-Koch Engineering Company ventured into a Europe on the verge of war, building refineries that proved crucial to the development of both the Soviet Union under Joseph Stalin and Nazi Germany.
In 1940, having already established himself in the industry, Koch Sr. struck out on his own and founded the Wood River Oil and Refining Company.
Source: Lehman Brothers Collection
Six years later, Koch Sr.’s company bought the Rock Island refinery in Oklahoma. The firm’s named switched to the Rock Island Oil and Refining Company.
Source: Lehman Brothers Collection
Fred Koch Sr. went on to have four sons with Wichita native Mary Robinson: Fred Jr., Charles, and twins David and Bill. Reportedly, the Koch patriarch’s namesake showed little interest in the family business, which was worth $US80 million in 1960. Fred Jr. went on to become a patron of the arts.
But Charles displayed a keen interest in the firm. In 1961, the 26-year-old second son joined his father’s company. Five years later, he became its president. Fred Sr. died in 1967, leaving Charles as the chairman.
Source: The New York Times
After the death of Fred Sr., Charles discovered a letter that his father had written to his sons back in 1936 that contained financial advice: “If you choose to let this money destroy your initiative and independence, then it will be a curse to you and my action in giving it to you will have been a mistake.”
When Charles took over the private company in 1967, it was worth $US250 million. The following year, the new president renamed the firm Koch Industries, to honour his late father.
David Koch followed his older brother into the family business in 1970. His twin Bill joined the next year, but tensions reportedly arose between the three brothers.
In 1980, Bill Koch launched a coup to take over the company’s board. His brothers thwarted the plan, and Bill was fired from the company with a $US400,000 severance payment — but the battle wasn’t over.
Bill still owned company shares, as did Fred Jr. Contentious negotiations began between the four brothers, in a struggle that pitted Charles and David against Bill and Fred Jr. A settlement was reached in 1983. Koch Industries reportedly shelled out $US620 million for Bill’s 21% company stake, while Fred netted $US400 million for his shares, according to The New York Times.
Two years later, Bill and Fred Jr. were back in court, filing suit against their brothers. They alleged their shares had been significantly undervalued in the initial settlement. Bill also charged the company with stealing oil from federal and tribal lands. The case ultimately reached a $US25 million settlement.
In 1998, Koch Industries shelled out a $US6.9 million settlement over oil spills in Minnesota, and pleaded guilty to a subsequent federal criminal charge, resulting in a $US8 million fine.
It wouldn’t be the last time Koch Industries ran into trouble. In 2002, the company paid a $US28.5 million fine after one of its subsidiaries was charged with price-fixing.
One of the company’s biggest controversy came in 1998, when an explosion sparked by a Koch subsidiary’s corroded pipeline killed two teenagers. The victims’ families received $US296 million in a wrongful death lawsuit.
In 2000, the company paid a civil environmental fine of $US30 million relating to 1995 charges over 300 plus oil spills, which the EPA attributed to Koch Industries failing to inspect its pipelines.
But the series of litigations and settlements didn’t stop Koch Industries, which has since branched into mining, real estate, and even ranching.
Today, Koch Industries rakes in an annual revenue of $US100 billion.
Source: Koch Industries
And, as of August 2018, both brothers are worth $US53.7 billion. Both Charles and David still own a 42% stake in the firm each.
David Koch is a major patron of Lincoln Center for the Performing Arts and Memorial-Sloan Kettering Cancer Center.
But much of the Koch brothers’ philanthropy is subject to controversy. The brothers both donate extensively to libertarian and Republican causes. CNBC reported that they are due to spend up to $US400 million in the upcoming midterm election cycle.
In 2018, Koch Industries gave $US1,325,115 to federal congressional candidates. This year, top congressional recipients of the Kochs’ money are Republicans Marsha Blackburn, Orrin Hatch, Lee Zeldin, Ron Estes, and Karen Handle.
But the brothers’ political reach isn’t just a national affair. Politico reported that the Kochs are currently attempting to sway a number of states toward committing public funding toward private and charter schools.
Closer to home, the Kochs have also donated a considerable amount of money toward projects in their hometown of Wichita, Kansas. Everything from a city plaza to the local basketball arena to specific halls in the nature center bear their name.
Source: The New York Times
But, while they may have worked closely together in business and politics, the brothers are worlds apart when it comes to their primary residences. Charles occupies a sprawling property in Wichita, while David reportedly owns a massive Park Avenue duplex in Manhattan.
Going forward, however, Koch Industries will only have one of the Koch brothers on hand on a daily basis. David announced that he was retiring from the business this year. His older brother Charles, however, will remain on at the company that transformed the duo into two of the richest men alive.
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