Although
the Kochs pay lip service to values, for instance hard work and
innovation, they ignore the absolute need for accountability, for
themselves as well as others as a foundation for hum an action to
maintaining a civil society, both as a community and in business.
Business, commerce is an element Instead, they adopt a strategy to
externalize their costs of doing business, allowing them to increase
profits, which they keep for themselves. This impacts all of us and
raises questions about their corporate culture which are now being
answered from multiple directions.
It is
Charles who, without question, makes all senior decisions and creates
the corporate culture for the privately held company. His is the
intelligence which drives decisions and which built the corporate
culture existing in Koch Industries today. David, who has been
described as a 'lunk,' is an intelligent man who always agrees with
his older brother.
It is
Charles who obsesses over privacy and control and is relentless in
pursuit of his goals, in business, politics and personally. Charles
Koch is the source of the corporate culture which created the
monumental wealth he and his brother hold today.
For good
and ill, Charles is personally responsible.
Despite the
extreme secrecy the Kochs attempt to maintain, information about
these methods have seeped out. Now, those of us on the outside can
see the extreme disincentives for failing to follow Koch policy.
Violating the tenets of the Koch internal culture brings extreme
consequences. This policy is referred to by former insiders as the
‘Koch Method.’
In an
article published in the Wichita Eagle titled, Charles
Koch relentless in pursuing his goals,
by Roy Wenzl and Bill Wilson on October 11, 2012, the writer noted
Charles saying, “Americans
are drifting dangerously away from traditions of honesty,
independence and personal responsibility.”
Koch went on to state he hired for, “values
rather than talent.”
Continuing, Charles Koch said, “A
lot of companies, and we’ve been guilty of this in the past, want
to hire the smartest person, the most talented person. Well, the
worst thing we can do, as we found, is hire a very talented person
with poor values. If we’re going to hire somebody with poor values,
we want somebody who’s not very smart. ’Cause he or she will do
less damage.”
It is
impossible to square these statements which claim a history of
integrity and honesty with the record the Kochs have built in
politics and business over the last 35 years. The Koch Method,
though I did not know it by that name, was active in Koch's political
dealings at the time he entered Libertarian politics in 1977 and this
parallels what has happened in his business dealings. This great a
deviation from the truth, documented through multiple sources, would
embarrass Edward Bernays, the high priest of propaganda.
The
political issues which document this pattern are taken up in Why
the Koch Brothers and Koch Industries are at the top of our list. The
history of the Koch family in America is titled, Meet
Charles and David's Ancestors. The
series was prepared for our website, Koch
Truths.
Charles and David have been attacked for
some time now, their strategy for privacy having yielded to the
investigative attentions of the left. But because of the successful
campaigns of previous generations of corporates the left failed to
see the reoccurance of of previous applications of the Koch Method in
other venues and times.
The
Koch Method – Lie, Cheat, Steal
An
article in Bloomberg, titled, Koch
Brothers Flout Law Getting Richer With Secret Iran Sales,
written
by By Asjylyn Loder and David Evans, appearing October 3, 2011,
included several instances which illustrate the enormous divide
between what Charles, David, and other representatives of Koch say,
versus how they operate within Koch Industries.
The
article provided a statement from Phil Dubose, a Koch employee.
Dubose, who testified against the company, saying he and his
colleagues were shown by their managers
“how to steal and cheat -- using techniques they called the Koch
Method. “
The
Bloomberg article gives the sense the Koch Method was a long
understood practice, foundational to Koch's corporate culture. This
impression is reinforced by the many instances cited by an array of
individuals from within the corporation.
According
to whistleblowers, this method involves lying, cheating and stealing.
These are their words, confirmed by objective evidence in legal
proceedings.
The
full article is well worth reading. Here we cite two instances to
illustrate the point.
Sally
Barnes-Soliz, now an investigator for the State Department of Labor
and Industries in D.C., reported to a grand jury about being asked by
her bosses and a company attorney at the Koch refinery in Corpus
Christi, TX, to falsify data in a report to the state on uncontrolled
emissions of benzene, which is known to cause cancer. She refused.
Barnes-Soliz
reported the bafflement when she cited ethical reasons for refusing.
The Koch refinery unit pled guilty in 2001 to a federal felony charge
for lying to regulators. Koch paid $20 million in fines and
penalties.
One
might, sympathetically, imagine Charles flouting the law when doing so
could be construed as a victimless crime if he actually held
Libertarian or Conservative principles. But causing cancer in
uncounted people by not reporting carcinogens brings this
interpretation under examination.
It
is possible Charles divides hjmanity into 'real' people, those who he
knows personally or works with, and others, who can be viewed as disposable. Certainly Charles had treamed people as disposable
during his political activities as well as in business. Let us
simply note he is acting outside of the principle with which most
Libertarians and many Conservatives, and Liberals, would agree.
In
the same article a Bloomberg Markets investigation reported finding
Koch Industries, “ in
addition to being involved in improper payments to win business in
Africa, India
and the Middle
East
sold millions of dollars of petrochemical equipment to Iran, a
country the U.S. identifies as a sponsor of global terrorism.”
Perhaps
Charles saw himself acting in the same fashion as his father,
Frederick Chase Koch when he contracted to provide refinery
technology and plants for Stalin. But in Fred's case he later said
he knew nothing about Communism. It was a business deal, bringing to
a foreign nation the means to have energy they produced themselves.
The deal was not illegal. From what Fred has written about this time
I suspect he was apolitical.
That Koch
Industries engaged in the deal with Iran says something to us about
how Charles Koch, the head of a private corporation which is larger
and wealthier than many countries, views foreign policy dictated to
him by some other power.
Charles may
well believe he can have his own foreign policy, though I doubt he
would say this. It is also possible, along with other Americans,
Charles Koch does not view Iran as a threat. I would agree.
However, this does not change the fact he was violating the law and
also, despite the millions the Kochs spend on political change, has
not lobbied to lift the sanction on Iran, which would have made his
actions consistent.
The
Bloomberg article enumerated five instances where lying, payoffs, or
other illegal practices were used under instructions from management.
Each originated in a different part of the company. While a couple
might have gotten Charles excited about 'over regulation,' this was
not always the case. Additionally, this raises two further
questions.
If the Koch
Method was not routinely successful then its use would not have
persisted. Charles is not stupid and this would have cost him far
more than he has been forced to pay. How much of the wealth
accumulated by the Kochs has its origin in illegal deals? The second
question is what laws does Charles Koch decide to follow and which
does he believe he can disregard with impunity? What principles is
Charles following? Inquiring minds want to know.
If Charles
Koch was a libertarian or conservative he would be following the
non-aggression principle, which mandates doing no harm to others. Carcinogens should be immediately reported. Since this was not done
Charles is not following the principle.
Is he then
following the principle of taking responsibility for damage you cause
others inadvertently, making what restitution is agreed on or
mandated when the matter is heard in a court of law? The evidence
says not.
In the
instance above the $20 million was paid, but for Koch Industries this
is not even the equivilent of a parking ticket.
And then,
there is the 1996 case, when Koch Industries incinerated two
teenagers.
Danielle
Dawn Smalley and
a friend, Jason Stone, were burned to death while on their way to
report a break in a pipeline near the Smalley home on August 24 of
that year.
In the
subdivision impacted one home was destroyed, 50 people were evacuated
from the neighborhood. It is amazing more did not die.
Danielle
and Jason were both 17.
Engineers
from Koch Industries admitted the pipeline was not properly
maintained, this resulting in the largest award for personal damages
ever made to that point in time, $296 million. This is exactly the
kind of case for which punitive damages were intended. Instead of
paying up the Kochs appealed and settled for a far smaller amount.
George W. Bush, then governor of Texas, is believed to have
intervened for the Kochs. The first verdict was justice. The
'arranged' verdict was a gift which fostered the lack of
accountability which characterizes Koch operations.
Punitive
damages are exacted when otherwise the amount paid would not be
sufficiently punishing to the guilty. What was paid was chump change
to the Kochs. They would have at least noticed $296 million.
So, we know
the Kochs have a long history of acting with seeming calloused
disregard for the damage they do to others, positioning themselves
as, somehow, the damaged party. If possible, their strategy has
been to maintain silence and ignore inquiries.
If it is
deemed necessary their PR department kicks in and begins issuing news
releases which, depending on the circumstances, deny responsibility,
claim they are being unfairly attacked, or assert they have noticed
their deficiencies, if there were any, these usually blamed on the
size and complexity of their business interests. Now, the PR
department announces, they have changed their ways.
No comments
on, perhaps, shrinking their operation to a size which makes it
possible for them to manage all this complexity is ever broached,
either by the Kochs or the authorities.
All
will be different in the future. But the future never arrives.
People who
lie routinely, says our attorney, should not be believed, having
proven they are unreliable. The court is obligated to note this.
So, how
reliable are the protestations by Charles Koch, and his employees,
when they claim these methods, long accepted and practiced, have
actually been abandoned? Given the lack of guilt or shame shown an
alternative explanation should be considered.
What if the
instances which lead to exposure, in these and other cases, were
closely studied and the 'Koch Method' simply modified to evade future
exposure? If this is the case how often has this rethinking taken
place and the Koch Method modified and improved?
What if
Charles Koch, wealthy all of his life, believes his methods are
justifiable because he has not achieved the kind of freedom he thinks
is due him?
Perhaps
Charles should remember that the regulatory infrastructure grew in
response to corporations which ignored the damage done to others, the
overwhelming majority of these folks lacking the options which could
have given them justice?
A better
system would exist if, instead of buying decisions with money or
political pull, every person was treated equally when harmed and
ensured a real justice instead of being buried in lawyers.
Our
founders lived with a system where most people were capable of using
the court system without recourse to paid representation. That was
the system intended and that was the system with which they were
familiar. They also knew, and accepted, a local government, which
held most of the power, and was directly in the hands of the people.
People were accustomed to solving their own problems in their own
communities.
Charles
lives in a world where is spent most of his life not being confronted
by the contradictions in his 'ideology.' Ed Crane might have
snickered behind Charles' back to his cronies, but he knew when to
nod and look serious. Also, the Koch Method likely received some
tuning up from its use by Ed in his ongoing attempts to take over
the Libertarian Party and then the larger movement.
There is a
nice irony in Ed's removal from his love-child, birthed between the
two of them.
And for
Charles, now in his mid-70s, he is finally hearing the opinions he
evaded knowing. Charles Koch has lived a life of affluence in a
tightly controlled environment which denied him a real understanding
of the world in which the rest of us can't easily avoid.
You can't
enforce freedom from outside. It is built from within the
individual, by the individual. The manipulations of Charles Koch
send shock waves of despair into activists who struggle to empower
themselves in their own communities.
The
business applications of the Koch Method, cited in the Bloomberg
article, and elsewhere, took place in parallel with the Koch attempts
to achieve their political agenda using the same covert and illegal
methods. Sound familiar? The Koch Method appears to be the same in
each case and we know because of recent events these methods have not
been abandoned politically.
Friends,
and his wife, Liz Koch, say the relentlessness in his character comes
from his determination to win, no matter what. But what does winning
mean when it results in deaths and the destruction of communities,
jobs, and people's health, impacted by toxic waste? In all things,
those in positions of power need to balance the full costs against
what is to be gained – and by whom.
While
externalizing the costs of fracking and tar sands benefits Koch
Industries in the short term it exacts enormous costs from
individuals, who are vulnerable and effectively unprotected by the
very regulatory system they support through taxes. Individuals are
unable to muster the resources needed to litigate successfully in our
present system. They can no longer represent themselves and would be
stone-walled by the consistent refusal of corporations, such as Koch
Industries, to make information available which is essential to
proving the case.
If Charles
Koch was the man he pretends to be he would never let people suffer
and die so he could increase his bottom line. A man who lived the
values Charles Koch speaks would not have to be sued to do the right
thing.
We
understand both Charles and David, along with their brothers
Frederick, Jr., and William were produced by parents who could spare
little time for them, witness their own statements. Born to a
multi-millionaire father, they know nothing about what the rest of us
have to give up to pursue put time and effort into enacting change
and they take every possible advantage of the situations they,
themselves, produce.
This is why
Charles Koch, and little brother David, need to be sued. Seriously.
Personal injury and fraud causes are thick upon the ground.
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