Rich In Cash, Poor In Family Love

Oil Barons Feud For 20 Years

The oil barons of the Koch family are rich in cash but downright poor when it comes to family harmony. A 20-year feud between Koch brothers Charles and Bill takes a turn when Bill tells 60 Minutes II Correspondent Scott Pelley that some of Koch Industries' profits come from fraudulent management tactics.

The squabble began when Bill lost a boardroom battle for control of Koch Industries to his older brother, Charles. Since then, Bill has filed a number of lawsuits, including one that alleges the company, founded by his father but run by his brother since 1967, has amassed enormous wealth, much of it through fraud.

"…It was obvious to me that this was organized crime and management driven from the top down," says Bill of charges the company took more oil than it paid for by under-reporting measurements from suppliers' wells. He charges that the company improperly profited by doing this to thousands of suppliers over many years.

In a lawsuit brought by Bill Koch against Koch Industries, a jury found that the company took more oil than it paid for on thousands of occasions. Koch Industries declined requests for interviews with 60 Minutes II and, in a written statement, said Bill Koch was a "disgruntled family member" who is waging a "personal vendetta."

Koch Industries faces trouble beyond the family feud, however. The company has been accused of sometimes ignoring safety and environmental regulations. Danny Smalley lost his daughter, Danielle, in a Koch Industries pipeline explosion.

A jury awarded him $300 million and found Koch Industries guilty of negligence and malice in Danielle's death following the explosion of a corroded butane gas pipeline. Smalley tells Pelley he thinks profits are king to Koch Industries. "It was the buck that counted for them."

Bill Koch echoes Smalley’s claim, "Koch Industries has a philosophy that profits are above everything else."

EPA administrator Carol Browner imposed the largest civil penalty in the history of the federal Clean Water Act against Koch Industries for spilling three million gallons of oil in six states. Browner says Koch Industries "simply didn’t think the law applied to them," and could have prevented its spills through proper operations and maintenance of their pipelines.

Pelley’s report on Koch Industries will be broadcast on 60 Minutes II Tuesday, Nov. 28 (9:00-10:00 PM, ET/PT) on CBS.