Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (5 page)

It wasn’t until 1940, the year the twins were born, when Freddie was seven and Charles five, that back in Wichita the German governess finally left the Koch family, apparently at her own initiative. Her reason for giving notice was that she was so overcome with joy when Hitler invaded France she felt she had to go back to the fatherland in order to join the führer in celebration. What if any effect this early experience with authority had on Charles is impossible to know, but it’s interesting that his lifetime preoccupation would become crusading against authoritarianism while running a business over which he exerted absolute control.

Fred Koch was himself a tough and demanding disciplinarian. John Damgard, David’s childhood friend, who became president of the Futures Industry Association, recalled that he was “
a real John Wayne type.”
Koch emphasized rugged pursuits, taking his sons big-game hunting in Africa and filling the basement billiard room with what one cousin remembered as a frightening collection of exotic stuffed animal heads, including lions and bears and others with horns and tusks, glinting glassy-eyed from the walls. In the summer, the boys could hear their friends splashing in the pool at the country club across the street, but instead of allowing the boys to join them, their father required them to dig up dandelions by the time they were five, and later to dig ditches and shovel manure at the family ranch. Fred Koch cared about his boys but was determined to keep them from becoming what he called “country-club bums,” like some of the other offspring of the oil moguls with whom he was acquainted. “
By instilling a work ethic in me at an early age, my father did me a big favor, although it didn’t seem like a favor back then,” Charles has written. “By the time I was eight, he made sure work occupied most of my spare time.”

All four sons later professed admiration and affection for their father, but their fond recollections gloss over a dark streak. Fred Koch’s rule was absolute, and his idea of punishment was corporal. He did not just spank the boys for their transgressions. Sometimes he hit them with a belt or worse. One family member remembers seeing him take a tree branch, strip it down, and “whip the twins like dogs.” They had marred the stone patio in some way that enraged him. “He was a hard man to love,” adds the family member, who declines to be identified. A second family member too remembers the belt beatings. Fred Koch “wasn’t around much,” he said, but when his sons misbehaved, they “really got it.”

S
ibling rivalry in the family, which reached epic levels in adulthood, was always intense. Family photographs and films show the brothers fenced in outdoor playpens, grabbing each other’s toys, making each other cry, and boxing at early ages with gloves almost as big as their heads. Before long, Charles, the second born, emerged as the domineering leader of the pack. Fiercely competitive, driven, and self-confident, he appeared a paragon of handsome, blond athleticism. One family member recalls that Charles’s favorite game was king of the hill. “It hasn’t changed,” another family member said.

Charles rarely lost, but when he did, he took it badly. When his younger brother Bill defeated him once in a boxing match, according to family lore, Charles refused to ever box again.

It became clear early that Freddie was different from the others, and not of his rough-hewn father’s type. He was bookish and oriented toward his artistic mother, preferring to disappear into his room to read while the twins played ball with Charles, who liked to give commands. (Freddie did, however, hold his own against Charles on at least one occasion, punching him so hard in the face he broke his brother’s nose.) Charles later told
Fame
magazine, “
Father wanted to make all his boys into men and Freddie couldn’t relate to that regime.” Charles added, “Dad didn’t understand and so he was hard on Freddie. He didn’t understand that Freddie wasn’t a lazy kid—he was just different.”

The father was hard on the other boys too. David liked reading and became obsessed for a while with the Wizard of Oz books, which of course are set in Kansas, but his father preferred that he do chores. Increasingly, David attached himself to his elder brother Charles, becoming his sidekick and accomplice, willing to drop everything at his brother’s command. “I was closer to David because he was better at everything [than the others],” Charles told
Fame
, bluntly.

Mary Koch recalled that as a result, “Billy always felt that Charles and David were leaving him out.” She said that he “had no confidence or self-esteem.” The only redhead among the pack, Bill had an explosive temper that resulted in memorable tantrums, including one in which he picked up a priceless antique vase and hurled it to the floor, shattering it. Fred Koch’s response was more spanking.

Clayton Coppin, a former associate professor and research historian based at George Mason University, was one of the rare outsiders to the Koch family with firsthand knowledge of its inner workings. In 1993, Koch Industries commissioned him to write a confidential corporate history. For the next six years, Coppin had nearly unlimited access to the private archives in the company’s headquarters in Wichita, along with the private papers of Fred and Mary Koch. He also had carte blanche to interview their business associates. After he completed the history in 1999, the company laid Coppin off. Subsequently, in 2002, Bill Koch hired him for a second confidential research project, this time on his brother Charles’s political activities. In interviews, Coppin described what he learned about the family while researching the first report and shared a copy of the second report, a lengthy three-part 2003 study titled “Stealth: The History of Charles Koch’s Political Activities.”

According to Coppin, who read many of Fred Koch’s private letters, in 1946, when Freddie was thirteen, his father confided to a family friend that there was a child-rearing crisis at home with which he needed help. Freddie had undergone some kind of emotional turmoil while being forced to labor at the family ranch that summer. The family friend recommended a consultation with
Portia Hamilton, a clinical psychologist in New York who specialized in child development, with whom Fred began to correspond. Hamilton met with the family and wrote up an evaluation. The psychologist recommended that the boys be separated and that Mary Koch, who was already busy with social life and travel, further distance herself from them in order to make them more “manly.” Psychological theories during that period attributed homosexuality to “over mothering.”

As a result, Freddie was sent to Hackley, a prep school in Tarrytown, New York, where he could follow his cultural interests, attending the opera in Manhattan and acting in school productions. Later, he came to feel that Hackley rescued him.

In order to keep him from picking on his brothers, the Kochs sent Charles away to school as well, in his case, at the age of eleven. The school they chose for him was the Southern Arizona School for Boys, renowned for its strictness.
His mother made clear that it was done for his younger brother Billy’s sake, which only heightened resentments between the boys.

“
I pleaded with them not to send me away,” Charles told
Fortune
in 1997. Charles did poorly at the boarding school, but instead of yielding to his pleas to come home, the Kochs sent him to an even more rigid boarding school, the Fountain Valley School in Colorado. “
I hated all that,” Charles recalled. At one point, his parents finally “took pity” on him, he said, and let him attend public high school in Wichita, which he loved, but “I got into trouble,” he recalled, so they packed him off to the Culver Military Academy in Indiana, which also emphasized discipline. There, Charles did better academically but repeatedly got into trouble.
Eventually, Culver expelled him for drinking on a train (although he was eventually readmitted, enabling him to earn his diploma). “I have a little bit of a rebel, and free spirit in me,” Charles later acknowledged.
As punishment, Charles’s father banished him to live with his relatives in Texas. “
Father put the fear of God in him,” David later recalled. “He said, ‘If you don’t make it, you’ll be worthless. You’ve disappointed me.’ Father was a severe taskmaster.”

In his confidential report for Bill Koch, Coppin wrote, “
Charles spent little of the next fifteen years at home, only coming there for an occasional holiday.” After he was exiled by the family, “the first thing Charles did when he came home on vacation was to beat up” his younger brother Bill.

Young Bill grew alarmingly depressed. He was socially withdrawn and preoccupied with his sense of inferiority to his twin, David, and his older brother Charles. Soon the twins too were sent to boarding school. Bill, interestingly, chose to follow Charles’s footsteps to Culver Military Academy, while David chose the eastern prep school Deerfield Academy. “
There was a lot of strife between the boys. Charles was in constant rebellion against authority. It was a miserable childhood,” Coppin said in an interview.

Yet later, as a parent, Charles partially repeated the pattern. When his own son, Chase, then thirteen, played a halfhearted tennis match, Charles had an employee pick him up and deliver him to a baking, reeking feedlot on one of the family ranches where he was forced to work seven days a week, twelve hours a day. Charles proudly recounted the story with a grin, telling
The Wichita Eagle
, “
I think he thought he’d have a job here in Wichita and could go out with his friends at night.” Chase became an exceptionally good tennis player but later had another, more serious problem. While driving as a high school student in Wichita, he ran a red light and fatally injured a twelve-year-old boy. He pleaded guilty to a misdemeanor charge of vehicular manslaughter and was sentenced to eighteen months of probation and a hundred hours of community service and was required to pay for the boy’s funeral. After college, Chase, like his father, joined the family company.

Meanwhile, in an online blog, Charles’s other child, Elizabeth, a Princeton graduate, described her own efforts to prove herself to her father. Of a visit home, she wrote, “
As soon as we arrived I felt an overwhelming urge to prostrate myself on the floor and eat dirt in order to illustrate how grateful I am for everything they’ve done for me, that I’m not the spoiled monster they warned me I’d become if I wasn’t careful.” She described “chasing” her father around the house, trying to impress him with her interest in economics, and “
staring down that dark well of nothing you do will ever be good enough you privileged waste of flesh.”

A generation before, stern admonitions against becoming spoiled had emanated from Fred Koch to his offspring as well. Even as he laid plans to leave huge inheritances to his sons, he wrote a prophetic letter to them in 1936. In it, he warned,

When you are 21, you will receive what now seems like a large sum of money. It will be yours to do what you will. It may be a blessing or a curse. You can use it as a valuable tool for accomplishment or you can squander it foolishly. If you choose to let this money destroy your initiative and independence, then it will be a curse to you and my action in giving it to you will have been a mistake. I should regret very much to have you miss the glorious feeling of accomplishment and I know you are not going to let me down. Remember that often adversity is a blessing in disguise and certainly the greatest character builder. Be kind and generous to one another and to your mother.

Charles Koch keeps a framed copy of this letter in his office, but as
Fortune
observed, given the brothers’ future protracted legal fights against each other, “
Never did such good advice fall on such deaf ears.”

D
avid Koch recalled that his father tried to indoctrinate the boys politically, too. “He was constantly speaking to us children about what was wrong with government,” he told Brian Doherty, an editor of the Koch-funded libertarian magazine
Reason
and the author of
Radicals for Capitalism
, a 2007 history of the libertarian movement with which the Kochs cooperated. “It’s something I grew up with—a fundamental point of view that big government was bad, and imposition of government controls on our lives and economic fortunes was not good.”

Fred Koch’s political views were apparently shaped by his traumatic exposure to the Soviet Union. Over time, Stalin brutally purged several of Koch’s Soviet acquaintances, giving him a firsthand glimpse into the murderous nature of the Communist regime. Koch was also apparently shaken by a steely government minder assigned to him while he worked in the Soviet Union, who threatened that the Communists would soon conquer the United States. Koch was deeply affected by the experience and later, after his business deals were completed, said he regretted his collaboration. He kept photographs in the company headquarters in Wichita aimed at documenting how the refineries he had built had later been destroyed. “As the Soviets became a stronger military power, Fred felt a certain amount of guilt at having helped build them up. I think it bothered him a lot,” suggests Gus diZerega, a Wichita acquaintance of the family’s.

In 1958, Fred Koch became one of eleven original members of the John Birch Society, the archconservative group best known for spreading far-fetched conspiracy theories about secret Communist plots to subvert America. He attended the founding meeting held by the candy manufacturer Robert Welch in Indianapolis. The organization drew like-minded businessmen from all over the country, including Harry Bradley, the chairman of the Allen-Bradley company in Milwaukee, who later financed the right-wing Bradley Foundation. Members considered many prominent Americans, including President Dwight D. Eisenhower, Communist agents. (The conservative historian Russell Kirk, part of an effort to purge the lunatic fringe from the movement, famously retorted, “Ike isn’t a Communist; he’s a golfer.”)

In a 1960 self-published broadside,
A Business Man Looks at Communism
, Koch claimed that “the Communists have infiltrated both the Democrat [
sic
] and Republican Parties.” Protestant churches, public schools, universities, labor unions, the armed services, the State Department, the World Bank, the United Nations, and modern art, in his view, were all Communist tools. He wrote admiringly of Benito Mussolini’s suppression of Communists in Italy and disparagingly of the American civil rights movement. The Birchers agitated to impeach Chief Justice Earl Warren after the Supreme Court voted to desegregate the public schools in the case
Brown v. Board of Education
, which had originated in Topeka, in the Kochs’ home state of Kansas. “The colored man looms large in the Communist plan to take over America,” Fred Koch claimed in his pamphlet. Welfare in his view was a secret plot to attract rural blacks to cities, where he predicted that they would foment “a vicious race war.” In a 1963 speech, Koch claimed that Communists would “infiltrate the highest offices of government in the U.S. until the President is a Communist, unknown to the rest of us.”