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  The rotation of jobs was set forth, roughly, as follows:

  Class 1. Private equity acquisitions and mergers.

  Class 2. Accounting and taxes.

  Class 3. Market-Based Management training.

  Class 4. Trading.

  One of Chase’s first assignments was to Koch’s development group, the internal committee that looked for new companies to acquire. He joined a division called Koch Equity Development, which bought shares of publicly traded firms. Chase worked in this office when Koch’s acquisition spree was at its peak, shortly after the Invista and Koch Fertilizer deals and during the $21 billion purchase of Georgia-Pacific.

  Chase assembled spreadsheets and did other analysis to figure out the best ways to value a company. This was critical to Koch Industries’ overall strategy of developing a sharper, more accurate view of the marketplace than its competitors. Koch was looking for gaps in the market, small dysfunctions that presented opportunities for Koch to seize.

  Chase also worked in a group of tax and accounting analysts. This might sound arcane and boring. Nobody grows up dreaming that they’ll become a tax analyst. But Chase would have discovered that these skills were just as critical to Koch’s success as was the company’s expertise in managing complex pipeline and refinery systems. There was virtually no terrain in the American economy that was more complex, more prone to manipulation, and more financially valuable than the American tax code.

  Managing Koch Industries’ massive tax liability—measured in the billions of dollars each year—created a deep tension between two of Charles Koch’s primary philosophical principles.

  The first principle was that government taxation was little more than state-sanctioned theft. Murray Rothbard, who cofounded the Cato Institute with Charles Koch and Ed Crane, called taxes “state robbery,” to take one of many examples. Taxation forcibly took money from a successful group of people and spent it in ways that those people couldn’t control. It seemed morally justified to avoid paying taxes however possible. But the second principle Charles Koch believed in was that of 10,000 percent compliance. Charles Koch espoused obeying the letter of every law, every day. When the law required a company to pay taxes, it must pay taxes.

  These two competing ideas led Koch to approach its tax bill in a way that became standard for large corporations in America, from Apple to General Electric. Koch used the US tax code’s own complexity as a tool to avoid paying as much in taxes as possible. The company created numerous companies, limited liability corporations (called LLCs, for short), and subsidiaries around the globe. Many of them seemed to be little more than a name on a post office box. Charles Koch, for example, is listed as an employee or director of such companies as KCM Advisors/GP, LLC; EKLP, LLC; and FHR Alaska Guarantor, LLC.

  It took massive amounts of time and effort to scatter these legal entities in a network around the globe, but the payout for doing so was enormous. By 2016, the US federal government was losing about $128.5 billion a year in tax revenue from corporations due to the use of tax havens like the Cayman Islands or the small European nation of Luxembourg. Such tax havens were only available to bigger companies that could afford to employ teams of tax analysts, attorneys, and traders to carry out the plans.

  Koch Industries, like many US companies, had an office on Grand Cayman, the biggest island in the small Caribbean nation. Koch’s office was nondescript and easy to miss. It was located at 802 West Bay Road, a palm-tree-lined street that ran down the west side of the narrow island, just a few minutes south of the Ritz-Carlton Golf Club.

  Grand Cayman is an island nation with no income tax and a permissive set of corporate laws that have only basic requirements for a company to register there. A company need only have a nameplate on a door, and perhaps an employee or two, to set up shop on Grand Cayman. The tax-free zone of the Cayman Islands drew some of the largest financial firms in the world to Grand Cayman, the largest of the islands. There was a private school system on Grand Cayman that compared in quality to those of the United States, along with high-end shopping, nightclubs, golf courses, and seemingly endless miles of beach on which to spend the weekends.

  Koch Industries had a surprisingly diverse array of holdings in the Caymans, considering that the nation had few natural resources and very little in the way of industrial infrastructure. A liberal activist group called American Bridge combed through business registries in the Caymans and found more than two hundred companies it suspected were tied to Koch, with names like Koch Minerals Cayman, Ltd., Koch NGL Cayman, Ltd., and Koch Nitrogen Shipping, Ltd.

  The ways in which Koch could employ such companies to avoid tax payments was revealed in 2014, when a batch of tax documents was leaked to a watchdog group called the International Consortium of Investigative Journalists. The documents, prepared for Koch Industries by the tax consulting firm Ernst & Young, laid a roadmap for shifting money from Koch’s operations to tax havens in Europe. The arrangement, called “Project Snow,” created a complex web of obscure companies that shuttled hundreds of millions of dollars between them. Koch used its Invista division as a key component of Project Snow. It created an internal bank, called Arteva Europe Sárl, that coordinated cash flows between the various companies. The bank established a Swiss division that seemed designed to benefit from Switzerland’s low tax rates. Money was passed back and forth, shares were converted into debt, and companies were dissolved along the way. Some of the strategies seemed like financial alchemy—in one case, a loan for $736 million was shifted between companies until it eventually landed with a US subsidiary that was “both the debtor and the creditor of the same debt,” effectively cancelling the loan. The Center for Public Integrity reported that Arteva paid just $6.4 million in taxes on $269 million in profit between 2010 and 2013, and never had an annual tax rate higher than 4.15 percent. When the tax documents were leaked, Koch’s public relations team said that the company followed applicable tax laws.

  Chase Koch’s education as a tax analyst at Koch would have taught him that paying a tax bill was no simple thing. It was an arena of complex strategy and potentially immense profits. In this way, tax analysis was similar to the next set of skills that Chase Koch would acquire. After working in acquisitions and taxes, he wanted to move to the part of Koch Industries that he knew was vitally important. “I said, ‘Send me to Houston. I want to be in the pit with the traders,’ ” Chase recalled.

  * * *

  When Chase Koch was first given the chance to trade commodities, it was akin to the first time he gripped a tennis racket. He discovered an arena in which he could excel and in which he very much enjoyed spending time.

  On the tennis court, Chase didn’t have to talk or explain himself. He only had to face his opponent. On a trading desk, something similar happened. Here, the market rendered a clear-cut verdict on whether Chase had made a good or a bad decision. The market didn’t care about Chase Koch’s last name. It only cared about what he did. Chase didn’t have to worry if anyone was pulling strings for him. The market numbers were clear and inarguable.

  “That was the first time . . . my blood started to move in my body,” Chase recalled with a laugh. “You know what I mean? I got really excited about something. Because I liked that feedback of trading—the market feedback—and just the energy on the trading floor.”

  Chase got a view of the trading operations that even most traders never got to see. He spent weeks shadowing Brad Hall, the CFO of Koch Supply & Trading, who gave Chase Koch a detailed overview of Koch’s entire trading group. Hall taught Chase about the intricate accounting and tax systems that supported Koch’s trading operations and gave Chase a view into forging large energy deals with Arab princes in the Persian Gulf, executives of Asian oil refineries, and CEOs of American companies like United Airlines.

  It was clear to Hall and other leaders that Chase Koch was being groomed for a senior leadership position in the company. Chase worked like he wanted to earn it. “He was just full of questions and want
ing to understand. He was the opposite of just going through the motions,” Hall recalled.

  Chase only sat on the trading desk in Houston for about a year before he was rotated back to Wichita to work on the Koch Equity Development team. Around this time, in 2006, Chase started feeling restless. His rotation through different jobs at Koch gave him a perspective on the company that very few people could attain. But he felt that his education was wide and shallow. He hadn’t mastered anything.

  The chance to settle down and master one part of Koch’s business came when a job opened up in Koch Fertilizer. Steve Packebush was still president of Koch Fertilizer, and he offered Chase a job that put Chase in the middle rungs of the division’s hierarchy. Chase became a regional salesman, traveling around the northern central United States and selling fertilizer to farmer co-ops.

  Early in his tenure, Chase Koch tagged along with a more senior salesman on a call to a customer in Iowa. The customer was irate about an earlier deal and complained for a long time before he even noticed that Chase was in the room.

  “Finally he looks at me, and he’s like, ‘And who are you?’ I was like, ‘Well, my name is Chase,’ ” Chase recalled.

  “And he goes, ‘You don’t know shit about fertilizer!’ ” Chase said.

  Chase replied“You’re right, sir. But I’m hoping you can help me with that.”

  * * *

  Chase grinded it out as a salesman and learned about the nitrogen fertilizer business in an up-close and granular way. Then he shifted to the part of the business that he loved the most: he joined the small group that traded fertilizer for Koch and was given a small portfolio to trade a nitrogen-based product called UAN fertilizer.II His trading record was successful enough that he was given a larger and larger portfolio. He estimated that he was eventually trading roughly half of the entire trading book.

  This was a time when Chase’s career accelerated, based solely on the money he was earning in the markets. No one could accuse him of getting ahead on his name alone, and coworkers said that Chase seemed happy.

  Wes Osbourn, who traded oil in Koch’s Wichita office, arrived at work early. But he never seemed to arrive early enough to beat Chase Koch in the door. No matter how early Osbourn arrived, Chase Koch’s car was always already parked in the lot.

  One evening, when a group of traders went out to dinner, they invited Chase Koch to come alone. Osbourn thought this was a mistake. He didn’t want to hang out with the CEO’s son.

  “I was like, ‘Ugh. I don’t want to go to dinner with this guy because he’s going to be so arrogant. I’m not going to be able to take it,’ ” Osbourn said. As it happened, Chase Koch arrived at Osbourn’s house early, and the two of them sat around talking before dinner. Osbourn was shocked. Chase Koch was actually a nice guy, and he seemed genuine. Over the course of the evening, the façade never cracked. It seemed like he wasn’t faking it.

  “If I hadn’t have known any better, I wouldn’t have known who he was,” Osbourn said. “I remember at the end of dinner, we’re sitting there having a cocktail, and I remember telling him how much I was not looking forward to that night. And I couldn’t believe how down to earth he was. And [Chase] was like, ‘Well, I appreciate that very much,’ ” Osbourn recalled.

  The compliment was genuine, and Chase Koch must have appreciated it. But the compliment was also a sharp reminder. No matter how he acted or what he accomplished, he was still Chase Koch. The boss’s son.

  * * *

  Chase Koch’s sister, Elizabeth, followed in the footsteps of her uncle Freddie. She left Wichita, moved to New York, and appears to have had no significant operational role with the family company. Elizabeth became a writer, producing essays, short stories, a book review, and other works of fiction that she published under a pseudonym.

  Elizabeth founded a publishing company in Brooklyn, called Catapult Press, that specialized in experimental fiction and other niche books. She retained a seat on the board of the Charles G. Koch Foundation and sometimes attended the foundation’s meetings in Washington, DC. One Koch lobbyist recalled Elizabeth’s visit to the public affairs office. She arrived hours early, and the lobbyist was given the job of entertaining her. They sat in his office and made small talk. She commented approvingly on the office’s feng shui, and the lobbyist found her to be pleasant company.

  It seems that Elizabeth’s contact with Charles Koch was both limited and strained. In 2008, she wrote an essay for the literary magazine Guernica that was a first-person account of a woman having an unpleasant reunion with her father after not seeing him in years.

  Elizabeth wrote:

  Last week my father came into town. I hadn’t seen him in six years. I got drunk. He watched me eat dinner, his eyes wide, mouth open. My boyfriend said the chicken bone cracked between my teeth like a candy cane.

  The next morning, my father said good-bye. He kissed my cheek. “You have a considerable hunger.”

  “You don’t say,” my boyfriend replied.

  As a child, Elizabeth had been an eager pupil of Market-Based Management. As an adult, she left the burden of working at Koch Industries to her brother.

  * * *

  After his successes on the fertilizer trading desk, Chase Koch got a promotion. Steve Packebush moved Chase into a new role in international development. Chase began traveling the world, helping Koch Fertilizer expand its reach. During this time, Koch Fertilizer built a network of terminals in Brazil, Mexico, Australia, the United Kingdom, and France.

  Pleased with these results, Packebush promoted Chase Koch again, in 2012, to lead a division that made specialty products, called Koch Agronomic Services. This job put Chase into contact with venture capitalists, inventors, and the heads of start-up companies. They made high-end chemicals that were designed to counteract nitrogen fertilizer’s extravagant inefficiency. Most nitrogen fertilizer leached straight into the air and local streams after farmers sprayed it on their soil. Nitrogen runoff from midwestern farms coursed into the Mississippi River and down into the Gulf of Mexico, where the high nitrogen levels stoked algae growth that sucked oxygen out of the water and created enormous “dead zones” that decimated aquatic ecosystems. Koch bought a company called Agrotain that made additives to slow the process and keep nitrogen in the soil.

  Chase loved his work at Koch Agronomic Services as much as he loved trading. It was thrilling to meet with inventors and get pitched on their new products. Chase was more than just Charles Koch’s son now. He had a track record of his own in the fertilizer business. He had done sales calls in Iowa. He had traded UAN supplies from Wichita. He’d helped build terminals around the world. He knew what he was talking about.

  Packebush called Chase Koch into his office one day and offered Chase the biggest break of his career. Koch Fertilizer was going to spin off its energy business, which bought natural gas, and create a stand-alone fertilizer unit. Packebush wanted Chase to become president of the new Koch fertilizer division.

  “Packebush said, ‘You’re ready to take the keys to the beast,’ ” Chase recalled.

  Chase became CEO of his own company with three thousand employees and operations around the world that earned several billion in revenue each year. The business owned multibillion-dollar fertilizer plants that required around-the-clock supervision and vigilance to prevent lethal accidents. It was easily one of the most important divisions of Koch Industries, ranking in size only behind Georgia-Pacific and Flint Hills Resources.

  Packebush was offering control over all of this to Chase Koch, if he wanted the job.

  “What I was thinking at the time,” Chase recalled, “was, Oh, shit.”

  * * *

  For the first time, Chase would be the public face of Koch Industries. The occasion was a groundbreaking ceremony in October of 2013 at the company’s fertilizer plant in Enid, Oklahoma. The company erected a small tent outside the plant for the event, and Chase arrived in a suit and tie, a level of formality that was rare for senior Koch execu
tives. This was one of the first big public speeches of his career.

  Koch Fertilizer was investing $1.3 billion in the Enid plant to expand its footprint and ramp up production. There was a gold rush in the fertilizer business at this time, thanks to the crash in natural gas prices, which boosted profits. Koch was pressing its advantage, expanding its plant before competitors could enter the field and steal its market share. This was the kind of announcement that companies liked to publicize with ribbon cuttings and other ceremonies that drew local civic leaders. Under the small tent, the folding chairs were filled by Enid’s civic leaders, plant employees, and local law enforcement officers.

  It was an awful day to make a speech. Strong, gusting winds forced everyone to cling to their papers, and Chase’s hair was blowing into a mess when he stepped onto the small wooden stage and walked to the podium. He delivered his remarks gamely, however, speaking over the wind, and then turned to watch the earth mover perform its ceremonial role. Chase also delivered remarks to a ballroom filled with more of Enid’s business leaders. This time the sound was better. Chase read from a script, which had the oratorical verve of a press release:

  “Going forward, we are very, very excited about the future of Koch Fertilizer,” Chase said. “We see positive trends in global demand as the population grows from seven billion to nine billion over the next thirty to forty years, driving the need for more efficient products, more services, and more innovation as we keep up with this trend.”

  Chase Koch didn’t come across as trying to impress anybody. He acted like the same guy whom so many people had encountered over the years: quiet, low-key, and humble. As he took over Koch Fertilizer, Chase revealed his leadership style, one that was developed over decades of hard work, often in solitary spaces like the tennis court or trading desks—he was quiet, focused on the matter at hand, and driven. If he came across as subdued, he also seemed like someone who was increasingly comfortable in his own skin. He could never escape the Koch name, but he was starting to wear it with a sense of ease.