was expanding. The same tactics were used by virtually all major US oil refiners, Shawley said.
The grandfathering clause built a protective wall around a group of companies that were lucky enough to be doing business in 1970. The clause froze the oil industry in midplay, leaving the existing players to have the game board to themselves by making it prohibitively expensive for new players to enter the market and compete. The last large-capacity US oil refinery was built in 1977.
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Koch Industries didn’t just benefit from political dysfunction. The company used its newly expanded political operations to shape the government in new and innovative ways, using many of the same techniques it honed in Oklahoma.
After the Watergate scandal of the early 1970s, Congress enacted a strict and complicated set of rules around campaign donations. Individuals and companies were capped in how much they could give to any candidate in an election cycle. Donations had to be disclosed publicly, potentially embarrassing both the donor and the politician. Koch Industries circumvented this system in ways that would become widely imitated.
In 1996, Koch Industries created a nonprofit group called the Economic Education Trust. The group did not need to disclose its donors because it was not ostensibly a lobbying or campaign finance organization. Koch funneled money through the Economic Education Trust to state and federal campaigns in Kansas and other states where it did business. In October of 1996, the Economic Education Trust gave $1.79 million to a company in suburban Washington, DC, called Triad Management Services Inc. Triad was supposedly a political consulting firm, but it had a strange business model: it offered its services for free, to Republican candidates. A US Senate report in 1998 concluded that Triad was “a corporate shell funded by a few wealthy conservative Republican activists.”
Triad laundered political contributions in a way that was extremely difficult to discern from the outside. The Senate report laid out a basic picture of the money trail: (1) Koch Industries supported the Economic Education Trust; (2) that trust gave cash to Triad; (3) Triad gave the cash to campaign groups like Citizens for Reform, which, in turn, (4) pumped money into elections to defeat Koch Industries’ opponents. (Koch Industries also gave at least $2,000 directly to Triad.)
Triad was a new kind of campaign finance machine. It acted as a third party that didn’t directly donate money to politicians. Triad hired consultants who created attack ads for Republicans in tight races. Triad was careful in its language. It never used words like “vote for,” “support,” or “defeat” that might have triggered oversight from campaign regulators like the Federal Election Commission.
Triad was particularly active in Koch’s home state of Kansas. The company spent money on four of six federal races in Kansas in 1996, supporting candidates such as Congressmen Sam Brownback and Todd Tiahrt. Republicans won all four of the races in which Triad intervened. One of Triad’s consultants, Dick Dresner, said that the campaign company was designed specifically to shield the wealthy donors who supported it. “They use three or four or five or six different ways so they aren’t discovered,” he said. “Even if their names came up once or twice, the extent of their activities is underestimated.”
The Senate report about Triad’s activities was a document of frustration. It conceded that the financial shell game behind Triad was so complex that investigators could not make sense of it even two years after the election. The report was clear in its condemnation of Triad’s activities, however, and it sent a public warning:
“Most disturbing, Triad is poised to become a model for future elections.”
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Koch Industries’ political operations only continued to expand, but Charles Koch focused most of his efforts inside the company. In 1992, Koch Industries built the largest office tower in Wichita. The structure was located on the north side of Koch’s campus and was constructed with dark granite and black windows. The building was the perfect symbol of Koch Industries. The stone gleamed in an enticing way but was dark and inscrutable. People soon referred to the new building simply as “the Tower.”
The Tower was a testament to Koch’s growth and an expression of its desire to grow even faster. Koch Industries moved two thousand employees into the building. That was more than triple the number of employees who’d been there when Charles Koch took over the company, and it represented just a fraction of the thirteen thousand employees who worked for the company worldwide. But even 2,000