Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty (40 page)

Bill is a connoisseur of proverbs and aphorisms. One he has used often is, “Before you embark on a journey of revenge, dig two graves.” But he seems to have difficulty discerning the sometimes thin line between justice and retribution. One could argue that Bill spent a lifetime digging graves.

Since boyhood, his search for the most basic tranquility often
seemed only to create more turmoil. His pursuit of his rightful place within his family nearly destroyed it. The past tumult with his brothers has driven him to work doubly hard to forge the kind of togetherness among his own family—which includes five biological children and a stepson, whose ages range from eight to twenty-seven—that eluded him during his own upbringing.

He has done this, of course, in his own grandiose, Bill Koch way.

In recent years, he’s created a series of extravagant family compounds, where one day he hopes his children and grandchildren will gather. The Western town—for which Bill bought a movie set’s wardrobe so friends and family can dress in costume when they visit—is part of this plan. In late 2012, Bill seized what he called the “chance of several lifetimes” to buy two prized properties, one belonging to the Du Pont family and the other to Bunny Mellon, in the Cape Cod enclave of Osterville, where the billionaire has owned a home since the 1980s. Bill plans to join both plots, creating a Koch family version of the Kennedys’ Hyannis Port.

These estates, he believes, will give his children “a reason, when they get older and they have their own families, for staying together.” Bill will one day pass down a vast fortune to his descendants, but what he really hopes to leave to them—family equanimity—he can’t draft into an estate plan.

Over the course of his life, in addition to building an enviable fortune, Bill has amassed an incredible collection of art, antiques, and historical artifacts, especially those of the old American West. He has given thought to whether he should divide the Picassos and Monets, the Homers and Remingtons, among his children or perhaps donate his treasures to museums. His own father’s art collection had caused strife between Bill and his brothers. “I don’t want to do that to my kids,” he reflected. Nor did he want to foist his tastes on them. Bill saw in his collection his own life story of accomplishment and adversity, pleasure and pain, serenity and
struggle. He wanted his children to experience “the thrill that I did doing my own thing; everybody has to find his or her own way in life,” he said. “… I’m much more interested in having my children being my legacy than this art collection being my monument.”

Charles also has an eye toward future generations. In the midst of the 2012 political campaign, and as Koch Industries posted record revenues of $115 billion, he became a grandfather. “My proudest accomplishment,” he said of the baby boy, born to his son, Chase. The child’s name is Charles.

The CEO has much to be proud of. The world will feel his impact long into the future. His company produces some of the most elemental ingredients of our modern society—energy, food, building and agricultural materials—and its products intersect every day with the lives of every American.

There is also the intangible, but no less pervasive, aspect of his influence. He has arguably done more than anyone else to promote free-market economics and the broader ideology surrounding it. By mainstreaming libertarianism, he helped to change the way people think. Absent his money and strategic vision, the country would be a different place. Few people can claim they changed the world, but this is undeniably true of Charles. And he’s not done.

At seventy-eight, Charles has no plans to retire—“I’m going to ride my bicycle until I fall off,” he has said. Koch Industries continues to grow and innovate under his leadership, always looking for new business opportunities, even if they take the company outside its comfort zone. In April 2013, word leaked that Koch Industries had commenced early talks to buy the Tribune newspaper chain—a prospect that stoked predictable outrage on the Left. The deal, involving turning around an ailing company and possible synergies with other Koch properties, such as papermaker Georgia-Pacific, seemed like a classic Koch transaction. But it also appeared to have an ideological component (though the company
denied this was the basis of its interest). “They always have a desire to better understand how the media works and how they can influence coverage really on economic issues,” said one ex–Koch executive. “They would not have done this if it didn’t make good business sense, but this wasn’t just business.” In the end, Koch passed on Tribune, and instead it paid $7.2 billion for electronics maker Molex, a major supplier of components to Apple.

For its enormous size, Koch Industries is a deeply personal creation that embodies the values, passions, personality, and philosophy of its CEO. Charles diffused Market-Based Management throughout every crevice of his empire so his philosophy would live on after his time.

His choice of successor is a secret Charles keeps even from his closest friends. He’s often asked whether he’s grooming his son, Chase, who works for Koch Industries’ fertilizer division, to take over. “We have the best leaders and the most depth of leadership we’ve ever had,” is his standard nonreply. But in 2013, thirty-six-year-old Chase joined Koch Industries’ board of directors, a quiet sign that he’s taking on a more prominent leadership role in the company. In December he was named president of Koch Fertilizer.

Chase’s older sister, Elizabeth, another heir to the Koch kingdom, has taken little interest in the affairs of the family company. She’s a thirty-eight-year-old writer who lives in Brooklyn and runs a small, boutique publishing house. “I remember declaring to my parents in about ninth grade that I was a bohemian who was never going to play sports or do anything related to math,” she once told
Town & Country
. “My father is very big on creating value. I told him I may not make the world a better place—right away.” Charles’s literary daughter is deeply conflicted—haunted even—by her family’s colossal wealth, and she has written unsparingly about her “disturbed and convoluted relationship with money.”

“Even though I was born into an obscenely wealthy family, I
do not toss money around like garden fertilizer, especially not in places where anyone is likely to see me,” she wrote in one essay. Elizabeth noted that she has “invested great amounts of creative energy into pretending” she does not come from money. “Gratitude is in me somewhere, but so buried in shame I have trouble finding it.”

Both of Charles’s children, family friends say, have their dad’s humble bearing. Like his own father, Charles tried to ensure that his kids did not grow up with a silver-spoon mentality. “Elizabeth and Chase are down to earth, and they’re just solid individuals,” said Bob Buford, president of Wichita’s Zenith Drilling. “That’s not easy when you grow up in the atmosphere they’ve grown up in.”

The way Charles’s children came up contrasts sharply with the ostentatious upbringings of their cousins, said a close family friend. “There’s no comparison to the way that David and Billy raised their children—no comparison.”

David, like his older brother, owns 40 percent of Koch Industries, and one day his three children stand to inherit a major stake in the company. His eldest son, David Jr., is fifteen. He’s a cerebral teen who’s passionate about aviation and history. “Very intellectual, very smart,” said his godfather, John Damgard. “He is a World War II history buff.” His sister, Mary Julia, thirteen, is a talented ballerina. “Drop dead beautiful,” Damgard said. “I don’t know how David is going to deal with the first guy that wants to take her out on a date.” John Mark, their youngest, is eight.

When the company eventually enters its third generation of family ownership, a new round of internal debate may well erupt over whether Koch Industries should remain private or go public. Their birthright, as Fred Koch warned their fathers, may be a blessing or a curse.

The Koch Industries of the future is likely to be a far less political place. Beyond donating to Republican candidates, Chase Koch
has had little involvement with his father’s ideological projects. And according to one Koch veteran, many at the company wish Koch Industries would simply steer clear of politics. “A huge element of the company never understood why Koch got involved with politics to begin with,” he said. “A good core leadership group there wants to run the business. They don’t want to get into politics because there is no upside to the political game.”

Charles and David hold like-minded political beliefs, but history will judge each differently. “David is a true philanthropist,” the Koch veteran said. “David’s [giving] is about making the world a better place. Charles’s is about changing the world.” It seems to matter little to Charles whether his name endures; he cares that his ideas live on. But David wants to be remembered for his benevolence, and any New Yorker can tell you that evidence of his good deeds is becoming harder and harder to miss.

On January 14, 2013, less than a week before Barack Obama was inaugurated to his second term, the Metropolitan Museum of Art celebrated David for his latest act of munificence—$65 million to finance new fountains and a facelift for the four-block stretch of Fifth Avenue between 80th and 84th Streets.

When the museum first announced his contribution the previous year, at the peak of his political vilification, the Met went out of its way to state that David’s gift would not come with naming rights—a decision it later reversed. The Met’s director, Thomas Campbell, would say only that the museum’s board “reflected on the generosity and level of commitment that David’s gift represents,” and “thought it was the right thing to do.” Donors weren’t exactly standing in line to cut $65 million checks.

His contribution predictably made waves. “Boycott the Metropolitan Museum of Art,” one New York art critic fulminated, “until it rejects the Koch cultural bribe.”

At the groundbreaking ceremony, liberal New York politicians
were placed in the awkward position of beatifying a man whose politics they repudiated. Seated to the right of the podium, then–Manhattan Borough President Scott Stringer maintained a straight face throughout the ceremony, fully aware of the irony of the spectacle he was witnessing. When the Democrat finally rose from his chair to take his turn lauding the Met’s generous benefactor, he could not contain himself from saying what many others were thinking. “I never thought I’d see in my lifetime Manhattan liberals praising David Koch. Well, it’s $65 million!”

Of the Koch brothers political duo, David emerged from the election with the most damage done to his legacy—part of this was inevitable as the wealthiest man in media-centric Manhattan. The taint of politics now intrudes on his reputation as one of America’s most prolific philanthropists, the John D. Rockefeller of the modern era. In recent years, David has doled out eight- and nine-figure gifts with barely a second thought—$100 million for the David H. Koch Center, an ambulatory care facility at New York–Presbyterian Hospital; another $100 million for the David H. Koch Institute for Integrative Cancer Research at MIT, plus $20 million to build childcare facilities for its staff; $25 million for the David H. Koch Center for Applied Research of Genitourinary Cancers at the M. D. Anderson Cancer Center (where David receives treatment for his prostate cancer); and the list goes on. But his name has also become a homing beacon for left-wing activists. Protestors even occupied the American Museum of Natural History’s David H. Koch Dinosaur Wing, which he paid $20 million to underwrite in 2006.

“While people may not agree with his politics, what he’s doing has been extraordinarily helpful for the arts and in terms of medical research,” said Rachel Moore, the CEO of the American Ballet Theatre, on whose board David has served for nearly thirty years. “It’s too bad that people decided to cast aspersions on his philanthropy just because they don’t like his politics, because they’re very separate.”

At least they used to be.

In October 2013, environmental activists picketed Boston’s WGBH, where they delivered a petition, signed by 70,000 people, calling for the public television station to oust David from its board of trustees. A major financial backer of the station’s popular science series NOVA, he had served on the board since the late 1990s without controversy, until his political activities began to attract notice. David’s critics consider his role in bankrolling groups that sow doubt about the existence of climate change particularly objectionable. And they claim that his position may allow him to influence WGBH’s programming agenda and perhaps NOVA’s treatment of global warming.

There is no evidence to suggest David has ever attempted to sway coverage, though, as a major donor, he holds a certain indirect clout. This became clear after New York’s WNET, where David also served as a trustee, aired a documentary called
Park Avenue: Money, Power and the American Dream
. The income equality–themed film, which debuted the week after the presidential election, focuses on 740 Park Avenue, the haven for New York’s ultrarich where David and his family reside. David is one of the film’s central characters, and it includes an interview with a former doorman who identified the billionaire as the 31-unit building’s stingiest resident. “We would load up his trucks—two vans, usually—every weekend, for the Hamptons… multiple guys, in and out, in and out, heavy bags. We would never get a tip from Mr. Koch. We would never get a smile from Mr. Koch. Fifty-dollar check for Christmas, too—yeah, I mean, a check! At least you could give us cash.”

The New Yorker
’s Jane Mayer reported that David was “apparently so offended” by the documentary that he decided against making a hefty contribution to WNET. Eventually, he resigned from the board outright. The fallout caused another Koch-related documentary in the PBS pipeline to get defunded. Called
Citizen Koch
,
it explores the increasing influence of money in politics, following the Supreme Court’s
Citizens United
ruling, and it centers in part on Governor Scott Walker’s battle with Wisconsin’s public employee unions. “It’s the very thing our film is about—public servants bowing to pressures, direct or indirect, from high-dollar donors,” the filmmakers told Mayer.