- David Koch is dead at 79, his family announced on Friday.
- The Koch brothers were two of the richest men in the world, with net worths of $US58.7 billion each, according to Bloomberg.
- Their fortunes came from their 42% stakes in the Koch family business, Koch Industries. Some of the company’s best-known products include Dixie cups and Quilted Northern toilet paper. Koch Industries also refines crude oil and produces fertiliser.
- Charles is the company’s president and CEO; David had served as director emeritus, according to Forbes.
David Koch is dead at age 79, his family announced Friday.
Before David Koch’s death, the Koch brothers were two of the richest people on earth. With net worths of just over $US50 billion each, Charles and David Koch tied for 11th place on Forbes’ March list of wealthiest people.
They have also been two of the most controversial billionaires, 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 never stopped the Kochs from clashing with figures on the right, most notably President Donald Trump. The two brothers spoke out against Trump’s tariffs in the past.
So how did the Kochs come to amass astounding wealth and wield such great influence? 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 Co. of Wichita, Kansas, in 1925. Later that year, the firm was renamed the Winkler-Koch Engineering Co. 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 ’30s, the Winkler-Koch Engineering Co. ventured into a Europe on the verge of war, building refineries that proved crucial to the development of 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 Co.
Source: Lehman Brothers Collection
Six years later, Koch Sr.’s company bought the Rock Island refinery in Oklahoma. The firm’s name switched to the Rock Island Oil and Refining Co.
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.
Some of its best-known products include Dixie cups and Quilted Northern toilet paper. Koch Industries also refines crude oil and produces fertiliser.
David Koch followed his older brother into the family business in 1970. His twin, Bill, joined the next year, but tensions reportedly arose among 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 an $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 controversies 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 suit.
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 $US110 billion.
Bloomberg’s most recent estimates put David’s net worth at the time of his death at $US58.7 billion and Charles’ current net worth as the same. Forbes puts Charles’ net worth at $US42.5 billion as of August, and David’s at $US50.5 billion as of March. They each held a 42% stake in the family business.
David Koch was a major patron of Lincoln Centre for the Performing Arts and Memorial Sloan Kettering Cancer Centre.
“The way I look at it is, cancer research is absolutely nonpartisan,” David Koch said, according to Forbes. “Cancer is very democratic in the sense that it attacks people regardless of their race, their gender, their national background, or their political persuasions.”
But much of the Koch brothers’ philanthropy is subject to controversy. The brothers both donated extensively to libertarian and Republican causes.
Source: Dark Money
David even ran for vice president as a Libertarian in 1980. The ticket, led by Ed Clark, won 1% of the vote.
In 2018, Koch Industries gave $US1,325,115 to congressional candidates. The top recipients of the Kochs’ money were Republicans Marsha Blackburn, Orrin Hatch, Lee Zeldin, Ron Estes, and Karen Handle.
But the brothers’ political reach wasn’t just a federal affair. Politico reported in October 2017 that the Kochs were attempting to sway a number of states toward committing public funding to private and charter schools.
Closer to home, the Kochs also donated a considerable amount of money toward projects in their hometown of Wichita, Kansas. Everything from a city plaza to the basketball arena to specific halls in the nature centre bear their name.
Source: The New York Times
But while they may have worked closely together in business and politics, the brothers were worlds apart when it came to their primary residences. Charles occupies a sprawling property in Wichita.
David, however, reportedly owned a massive Park Avenue duplex in Manhattan.
Before his death, David Koch retired from Koch Industries, in July 2018, and was named director emeritus. His older brother Charles remains the CEO of at the company that transformed the duo into two of the richest men to ever live.
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