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The Billionaire's Party

The Koch Family  

Fred Koch, a native of North Texas and son of a Dutch immigrant, liked to say that he didn’t want his sons “to turn into country-club bums.” Fred graduated from M.I.T. in 1922 with a degree in chemical engineering and, like David, excelled in sports, in Fred’s case as a boxer. Fred moved to Wichita, where he became a partner in an engineering company called Winkler-Koch, made a fortune building oil refineries around the world, and bought a 160-acre horse farm outside of town, across the street from the Wichita Country Club.

Early on, Fred’s company was nearly destroyed by litigious competitors. He and his partners had developed a new method for thermal cracking, a process that helps convert oil into gasoline; major oil companies tried to block him in court for years. Koch developed a fierce independent streak, and advised his sons never to sue: “The lawyers get a third, the government gets a third, and you get your business destroyed,” he told them.

Between 1929 and 1931, Fred Koch built fifteen oil plants in the Soviet Union, where he bore witness to the lead-up to Stalin’s Great Purge. Thirty years later, Koch published a pamphlet called A Business Man Looks at Communism. His list of “potential methods of communist take-over in U.S.A. by internal subversion” begins: “Infiltration of high offices of government and political parties until the President of the U.S. is a Communist, unknown to the rest of us of course, when as Commander-in-Chief of the Army and Navy he could control us. Even the Vice Presidency would do as it could be easily arranged for the President to commit suicide.” Koch became a founding member of the John Birch Society. “Father was paranoid about communism, let’s put it that way,” says David.

David and William Koch were born on May 3, 1940, the third and fourth sons of Fred Koch and the former Mary Robinson, the daughter of a prominent Kansas City physician. The twins and their brothers—Charles, five years older, and Frederick, seven years older—reported for duty to a retired Marine whom their father had hired as a groundskeeper. “Father always wanted me to have less money than my friends so I would appreciate it,” David says. “If I wanted to go to the movies, I’d have to ask him for the 25 cents.” One summer, David’s father put him to work digging ditches for a pipeline system in southwestern Oklahoma. “It was brutally hot and dry,” David says. “You couldn’t even get a spade in the ground.” By instilling a work ethic in him, “my father did me a big favor, although it didn’t seem like a big favor back then,” Charles has written. According to a 1997 Fortune article, Frederick had a nervous breakdown one summer working on one of his father’s ranches.

As boys, Charles and David got along well, but Frederick and William had a more difficult upbringing. William felt that their mother favored the other boys. William says he loved his parents, “but my father was never around, and my mother had other interests besides her kids—her friends, her social life, her golf.” David’s feelings toward his mother are warmer. “I love people, just like Mother did,” he says, pointing up to the painting of her that hangs in his office. “I’m just like her, this beautiful woman you see right here.” William also says his older brothers bred animosity between him and his twin, “trying to pit us against one another.”

It was assumed that the Koch boys would go to M.I.T., but Frederick rebelled and went to Harvard, then Yale to study law and later drama. He was disowned and partially disinherited by his father. He’s now something of a recluse who maintains little contact with the family. Frederick busies himself, William says, “buying castles,” like the Schloss Bluhnbach in Austria, the former hunting lodge of Archduke Franz Ferdinand.

At M.I.T., William and David joined the same fraternity and played together on the basketball team. But William seemed to live in his brother’s shadow. “I sat on the bench behind David,” William says. “He’d say, ‘Bill, you and I’ll get along well, but compete with me, and I’ll always win.’ ” (David says it was his brother’s time on the bench for M.I.T. that drove William, an amateur sailor, to spend some $65 million on the 1992 America’s Cup, which he won.)

After college, Charles went to work for a Boston consulting firm. But his father wanted him in Wichita and threatened to sell the family business if he didn’t move home to work for him. “I hope your first deal’s a loser, otherwise you’ll think you’re a lot smarter than you are,” were Fred’s first words to Charles when he returned in 1961 to run Koch Engineering (Fred had left Winkler-Koch in 1940 to join a new company, and now ran several businesses of his own). After William finished college, he went on to get a Ph.D. in chemical engineering at M.I.T. David, meanwhile, earned a master’s in chemical engineering at M.I.T., worked for two Cambridge engineering firms, then moved to New York in 1967 to work for the Scientific Design Company. In New York, he developed a reputation as a playboy. Three dates in a day was not unusual for him. He was famous for his parties; Miss USA contestants often came to his New York penthouse. It was also in New York that he began indulging his lifelong love of ballet. “It has beautiful women, fantastic music, great athleticism, and great scenery,” David says. “What’s not to like?”