Sunday, February 25, 2007

PAC Man: Mike Rogers & Koch Industries

Mike Rogers loves Political Action Committees. During the 2006 election cycle, PACs tossed a cool $826,376 into Mike Rogers' campaign coffers. That's pretty good scratch, especially considering that his opponent, Jim Marcinkowski, was only able to reel in $552,157 for his entire campaign (including individual donations).

So, who are the Political Action Committees that are bankrolling Mike Rogers? Well, since there are too many to count, consider this Part 1 of an ongoing series.

Today we'll start by looking at Koch Industries, which donated $10,000 to Mike Rogers during the 2006 campaign.

So, what is Koch Industries?

Koch Industries could be the biggest oil company you have never heard of—unless, that is, you hang around the halls of government in Washington.

Koch Industries (pronounced "coke") is a huge oil conglomerate controlled by brothers Charles and David Koch, two of the country's richest men and among the biggest backers of conservative and libertarian causes. With estimated revenue of about $40 billion last year, Koch is bigger than Microsoft, Merrill Lynch and AT&T.

Since 1998, Koch is the fourth biggest campaign oil and gas industry giver, behind ChevronTexaco, El Paso Corp. and Enron Corp.

Despite its size and political largesse, Koch is able to dodge the limelight because it is privately-held, meaning that nearly all of its business dealings are known primarily only by the company and the Internal Revenue Service. In fact, it is the second largest private company in the country, trailing only food processing giant Cargill.

Koch also prefers to operate in private when it comes to politics and government.

Although it is both a top campaign contributor and spends millions on direct lobbying, Koch's chief political influence tool is a web of interconnected, right-wing think tanks and advocacy groups funded by foundations controlled and supported by the two Koch brothers.

Among those groups are some of the country's most prominent conservative and libertarian voices including the Cato Institute, the Reason Foundation, Citizens for a Sound Economy and the Federalist Society. All regularly beat the drum in official Washington for the causes the Koch's hold dear—minimal government, deregulation, and free market economics.

Let's see... two brothers own an oil company that gives heaps of money to republican candidates and conservative foundations – not exactly a first. But wait, it gets better:

In late 2000—as the Clinton Administration was preparing to leave office—Koch was hit with a 97-count indictment for covering up the discharge of more than 15 times the legal limit of benzene, a carcinogen, from a refinery in Corpus Christi, Texas.

The company faced penalties of more than $350 million. Four Koch employees were also charged individually and faced up to 35 years in prison.

Three months after the Bush administration took office—and just before the lawsuit went to trial—the Justice Department abruptly settled the case. Koch agreed to pay $20 million and plead guilty to a single count of concealment of information. In return, the Justice Department dropped all criminal charges against Koch and the four employees.

Gee, I wonder if all those campaign contributions to republicans like George Bush helped out when Koch Industries tried to settle all those legal cases.

Even if they ultimately managed to dodge more serious penalties, it's pretty obvious that this isn't the "cleanest" company in America.

It's indisputable that Koch Industries has an incredible amount of political muscle and a knack for weaseling around the law. One might even go so far as to say that Koch Industries is run like an organized crime family.

Well, it's interesting to note that such accusations were made publicly on an episode of 60 Minutes II back in August of 2001... by Bill Koch, brother of Charles and David:

Koch says that Koch Industries engaged in "(o)rganized crime. And management driven from the top down."

"It was – was my family company. I was out of it," he says. "But that’s what appalled me so much... I did not want my family, my legacy, my father’s legacy to be based upon organized crime."

Bill Koch says that his brother Charles made a fortune stealing oil. Much of it from beneath Indian reservations and federal lands - places like national forests. Oil under federal lands belongs to the public. Koch Industries was the middleman – buying oil from the government at the well - then selling it to refineries. Bill Koch says that the company took more oil than it paid for by cheating on measurements.

That may not sound like much, but Bill Koch says that it added up. "Well, that was the beauty of the scheme. Because if they’re buying oil from 50,000 different people, and they’re stealing two barrels from each person. What does that add up to? One year, their data showed they stole a million and a half barrels of oil."

Bill Koch filed a lawsuit in federal court claiming that much of the oil collected by Koch Industries was stolen from federal lands. At the trial, 50 former Koch gaugers testified against the company, some in video depositions. They said Koch employees had a name for cheating on the measurements.

"We in the company referred to it as the "Koch Method" because it was a system for cheating the producer out of oil," said one of these gaugers, Mark Wilson.

"I believe that what I was stealing oil and I don't feel good about it," said another, James Jurgens.

"You were expected to get out there and get this oil for them. And – and not be short. And the only way to not be short is to steal oil," says Phil DuBose. He should know. Before he was laid off, he had spent 27 years at Koch Industries. He rose to become the manager of all the Koch gaugers buying oil in four states.

The company used the Koch method with virtually all its customers. In the 1980's alone, Koch records show those so-called adjustments brought the company 300 million gallons of oil it never paid for. And it was pure profit.

Bill Koch says that profits from that oil were a minimum of $230 million.

You really should go read the whole 60 Minutes story. It's quite charming.

To recap, Koch Industries:
  • Was hit "with a 97-count indictment for covering up the discharge of more than 15 times the legal limit of benzene, a carcinogen."
  • Was hit "with the largest civil penalty in the history of the federal Clean Water Act: a $30 million fine."
  • "Spilled over 3 million gallons of crude oil in six states."
  • Was targeted in an EPA complaint for "more than 300 oil spills, some poisoning fisheries and drinking water."
  • Had a jury find in December 1999 "that Koch Industries did steal oil from the public and lied about its purchases – 24 thousand times."
  • Potentially stole oil worth a minimum of $230 million
  • Donated $10,000 to Mike Rogers during the 2006 campaign season, $1,000 during the 2004 cycle, and $1,000 during 2002.
Remember, folks – when Mike Rogers says he works "for you," and when he questions the science behind global warming, keep in mind that he also works for a few sleazy corporations, like Koch Industries.

Check back in the coming weeks for more updates in this continuing series.

Additional Resources: Have A Koch & A Smile, EPA complaint against Koch Industries, Major GOP Donor Receives Federal Oil Contract, Another Oily Tie That Binds


LiberalLucy said...

Wow! Truly an excellent post! Nice work, and I'm definitely excited for the rest of the series.

Pohlitics said...

Gracias. I would invite any and all of the contributors to participate in this series. Just check out the page on Rogers, and do some poking around in the PAC section. I'm sure there's plenty of material there.

Sally York said...


You can bet that Koch was one of the secret players in Cheney's
secret meetings to set the energy policy. What they always say is follow the money and with this group that is not hard. They haven't found a millionair/billionair they don't LOVE.

You are so right how much of a chance do we have that he is representing anything we say he doesn't have to pay any attention to the voter until the beginning of next year then the smucing starts in ernest.

Anonymous said...

Oh no... not those evil oil boys!! How dare they form a company and make money. We don't allow that in Michigan!!! People would actually have jobs! Mike did this without even giving them nights in the Lincoln bedroom?? How did he manage that? Usually there is a pardon for sale for that kind of money! We Dems could teach him a thing or two!!

Kelster93 said...

Anonymous, no one is saying that capitalism is bad (I'm quite fond of it, myself). There are plenty of good corporate citizens out there donating on the left and on the right. It's entirely reasonable, though, to point out bad actors.

Kinda like when Mike Rogers maxed out to Tom DeLay & Bob Ney in the 2006 cycle: nothing wrong with party loyalty, but he certainly could have picked some less skeevy colleagues. Did I mention that the second half of Rogers' max went to Ney AFTER he had been named in the Abramoff scandal?