man called J. Edward Deming, who is a statistician,” Koch said.II “So he set up a philosophy based on statistics, how companies can improve their competitive position by improving the quality for the customer and your own productivity.”
Koch went on for a long time, talking about this guy named Deming, whom Koch seemed to truly admire. Deming’s ideas seemed to revolve around coming up with mathematical models for how to improve a business, and then continually driving workers to make those improvements and hold true to the plan.
“This is a long-term program,” Koch said. “As [Deming] puts it: ‘You never get out of this hospital.’ You are going to be working at this forever.”
The digressions about Deming and statistics didn’t matter much to the case that Ballen was building. Charles Koch had already laid out what continuous improvement might mean for gaugers.
“What our policy is, is to be as accurate as possible and not have a loss; try to avoid losses within that,” Koch had said. He denied that the company had a stated policy of stealing oil, but he supported the notion that gaugers would face pressure to be long.
When the interview was over, Charles Koch stood up and left the room, walking down the corridor. He eventually went back to the company’s executive suite and his office, a large room with a wide-open view of the Kansas prairie.
Ballen kept working through the day in the building’s interior. He and Sollers interviewed nearly a dozen more Koch Industries executives, slowly building a case that the investigators would soon present before the Senate, slowly gathering evidence that they would hand over to the US Department of Justice.
At the end of the long day, Ballen and Sollers packed up their papers and left. They caught a flight back to Washington and continued their work up on the ninth floor of the Hart Senate Office Building.
But even after all the time they’d spent at Koch headquarters, even after all the time they’d spent digging through boxes of Koch Industries’ confidential documents, and even after all the time they’d spent interviewing Charles Koch himself, Ken Ballen and Wick Sollers were no closer to answering one of the most perplexing questions at the center of their case. It was a question that would be asked later, by Senator DeConcini himself, as the Senate panel held public hearings on Koch’s alleged oil theft.
At one point during the hearings, DeConcini was questioning Agent Elroy. DeConcini stopped, as if perplexed, and asked the FBI man the most important question of them all:
“Who is Charles Koch? Can you explain that?”
* * *
I. Some gaugers and Koch managers used an interchangeable set of terms, saying “under” rather than “short,” and “over” rather than “long.”
II. Charles Koch appears to have misspoken here. The statistician’s name is W. Edwards Deming, and his influence on Koch Industries is discussed at length in Chapter 6.
CHAPTER 2
* * *
The Age of Volatility Begins
(1967–1972)
It was a Friday in mid-November, just one week before Thanksgiving 1967. A multimillionaire named Fred Koch sat in a duck blind watching the sky, his gun at the ready.
Fred Koch was a large man, and he had a forceful personality to match his physical presence. He was one of those people whom midwesterners call “larger than life,” meaning that he filled a room when he entered it; one of those very rare breed of people who are unquestionably the masters of their own realm. He was an engineer, an entrepreneur, and a self-described patriot. At the age of sixty-seven, Fred Koch had built a small business empire, and as the master of this empire, Koch was the hub of so many spinning wheels: He was chairman of the board for his growing company. He was a cofounder of a right-wing political group called the John Birch Society. He was a self-published author who sold anti-Communist pamphlets through the mail for 25 cents a copy. He was also the father of four rowdy and brilliant boys, boys in whom he’d worked to instill the values that mattered most to him: intelligence, a hard work ethic, integrity, and drive.
If Fred Koch’s life was a noisy one, then the duck blind where he sat that Friday in November was pristinely silent. Maybe that’s why he traveled to the place, which was about a thousand miles from his home in Wichita. The duck blind was near the Bear River, just outside the small town of Ogden, Utah. The natural beauty of the place was overwhelming.