(p 130)
The government threat intensified in May of 1989, when the Senate Select Committee on Indian Affairs held a series of daylong public hearings in Washington, DC. The hearings presented the evidence of oil theft collected by the Senate investigator Ken Ballen and FBI special agent James Elroy, who had surveilled Koch employees.
The issue of oil theft was the subject of one hearing, and that hearing focused exclusively on Koch Industries. The reasons for this were simple. Evidence in the case pointed to Koch Industries as the primary culprit in the oil theft.
(p 135)
One of the primary victims of Koch’s theft was the Osage tribe in Oklahoma...Koch sent a team of auditors to review receipts from oil leases owned by the Osage tribe...These receipts were compared against Koch’s internal figures to determine if Koch had indeed been underpaying the Osage, as alleged by the US Senate. Tillman said the tribe had little capacity to double-check Koch’s work. The tribe didn’t have an army of accountants at its disposal. The tribal members simply got checks in the mail for their oil leases and trusted the numbers....
When Koch Industries completed its audit, the company came back to Tillman with surprising news: Koch Industries had not been underpaying for oil. The company told him that it had, in fact, been overpaying the tribe. The audit showed that the tribe actually owed Koch Industries about $22,000...[This was later refuted.]
(p 137)
Charles Koch understood now that he needed a political operation in Washington...Koch Industries deepened its relationship with Kansas senator Bob Dole....Dole helped Koch delegitimize the issue of oil theft.
(p 138)
Jones and Elroy [the head lawyer and FBI agent on the case] had zeroed in on one particular set of Koch’s internal documents they felt would show how the oil theft was directed from Koch’s senior leadership.
[James and Elroy both gave up on the case for personal reasons, after working very hard for months in the face of great resistance from Koch Industries, including the destruction of evidence.]
(p 144)
...new evidence would emerge that Koch employees had indeed stolen oil, even if FBI agents in Oklahoma and Texas failed to prove it. This new evidence was revealed thanks to the efforts of Bill Koch.
After [the FBI] dropped the case in 1992, Bill Koch bankrolled a massive civil suit against Koch Industries, filed in federal court, using an obscure law that lets citizens file lawsuits on behalf of the US government. Bill Koch was essentially acting as a whistle-blower...
He had tracked down Jim Elroy [the original FBI agent on the case] and hired him to investigate Koch’s oil gathering business around the country. Elroy spent months combing small towns in rural America, visiting oil gaugers in their homes and collecting their stories. Bill Koch’s interviews were more successful than the FBI’s in digging up damning testimony.
The case went to trial in Tulsa in late 1999. The testimony was devastating for Koch Industries. During the trial, Koch officials admitted that they earned roughly $10 million in profits each year by taking oil without paying for it. Witness after witness described the Koch method of stealing oil. [This basically amounted to entering a false record of how much oil was measured when transferred from ground tanks to trucks.]...Tales of theft were told by Koch’s own employees from Kansas, Texas, Oklahoma, North Dakota, and New Mexico....
The jury found Koch Industries guilty of stealing oil between 1981 and 1985 from federal land and Indian reservations, and of falsifying roughly twenty-five thousand documents in order to underreport how much oil the company was taking. The fines for Koch could have been enormous. The judge could have levied a $214 million fine just for falsifying the oil sale receipts. But Koch’s lawyers were able to settle the case before it went to the penalty phase, paying an undisclosed amount.
No comments:
Post a Comment