said none of those things as he looked over the figures.
“Have you ever seen any of these documents?” Ballen asked.
“Yes, I typically see the quarterly—”
“All right,” Ballen interrupted.
“—figures,” Koch finished.
Charles Koch said he didn’t review monthly figures that showed whether the firm was long or short on the oil it bought. But he didn’t dispute the authenticity of the numbers.
Ballen pushed further. Referring to one of the documents, he asked, “And then what is indicated in the first quarter ’86? What do those numbers show?”
“Well, Louisiana was about two thousand barrels long.”
“And that would be long?”
“That would be long.”
For a prosecuting attorney like Ballen, Charles Koch had just done two important things: he had confirmed that Ballen’s evidence was authentic—that the numbers on oil sales Ballen obtained through the subpoena were correct—and Koch had also confirmed that he had been aware of those numbers, that he had known that Koch was long on its oil sales.
Ballen’s line of questioning then sought to establish that Charles Koch knew what long really meant. That way, there would be no ambiguity about the case. Charles Koch didn’t seem interested, however, in helping Ballen establish that fact. Charles Koch parsed the definition of long and seemed to indicate that Ballen didn’t understand it. The two men went back and forth over the definition until Ballen finally asked, “So, in other words, if you purchase oil and then sell oil, if there is more oil in the inventory than sold, then you are long. Is that correct?”
“I am not sure—”
“Is that correct?”
“I am not sure I understood that.”
“All right. Why don’t you explain it again? What do you mean by being ‘over,’ or ‘long,’ on oil?”
“I am not sure I can do any better than I just did,” Koch replied.
Around they went.
Ballen tried a different route: “If Koch purchases crude oil, purchases a hundred barrels, the actual inventory shows a hundred ten barrels, would Koch be over in that example by ten barrels?” Ballen asked.
“Did we sell any?”
“Well, why don’t you try the question first,” Ballen said. “Is that an accurate—”
“Well, it is an incomplete equation. I mean it is—there is no answer. You got two unknowns.”
“Suppose you sold a hundred ten,” Ballen pressed.
“Okay. You bought—”
“One hundred.”
“And you sold a hundred ten?”
“Right.”
“I am going to need my slide rule in a minute,” Koch joked.
It went on like this for a long time, with the two men discussing barrels of oil, inventory levels, and even hypothetical inventory levels. The other attorneys in the room begin to interject and add their own observations and questions about hypothetical inventories.
Finally, Ballen’s assistant, Wick Sollers, dove in and started asking questions. Eventually, he pushed Charles Koch into a corner, eliciting a very elegant description of just what it means to be long.
“I don’t think there is such a thing as an exactly accurate measurement,” Charles Koch said. “But if you just look in dollar terms, yes, we got more money than we paid for oil.”
There it was: “We got more money than we paid for oil,” Koch had said.
But there was something else in his statement; the idea that there was no such thing as a perfectly accurate measurement. Earlier in the interview, Charles Koch had interrupted Ballen to press this point and to make it sound as if unsophisticated oil gaugers were making mistakes out in the field that might account for the company’s annual overages.
“I mean, in the oil field, as I understand it, it is—you got a lot of small tanks, you got a lot of changing conditions, and it is a very uncertain art,” Charles Koch had said. “And you have people who aren’t rocket scientists, necessarily,” he continued. “I mean, good people. I don’t mean to imply—good people, trying to do a good job, and they are always not fully trained, either.”
This defense contradicted everything that Agent Elroy had been hearing in his field interviews with the Koch gaugers. Those gaugers told him that they faced constant pressure from above to be “long.” They knew that if they were not long, then the consequences would be dire. They weren’t making mistakes, the gaugers said; they were following orders. And these orders were apparently conveyed in meetings where Koch managers discussed the company’s policy of continuous improvement. It was on this point that Ballen began to press.
Just what was continuous improvement, exactly? Ballen asked.
“How much time do you have?” Koch replied.
“How much time do you have?” Ballen replied.
“Continuous improvement philosophy is a philosophy developed by a