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The Koch ConnectionJanuary 29, 2015 11:06 am

The Koch Stake in Canada By Bruce Livesey 16x9

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WATCH ABOVE: An excerpt from 16×9’s “The Koch Connection”

Daniel Stuckless is a soft-spoken family man who studied biology at Memorial University in Newfoundland. Today, he works on the other side of the country as environment and regulatory manager for the Fort McKay First Nations band in Fort MacKay, Alberta, a hamlet located in northern Alberta with a population of just over 700 people.

Story continues below

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Part of his job entails negotiating with the multinationals who want to build oil sands projects on the band’s territory. “The Fort McKay First Nation is located at ground zero ofCanada’s oil sands,” explains Stuckless, sitting in the conference room of the band’s main office, looking out over the frozen Athabasca River. “It’s dead centre. Every which waythere is an open pit mine or proposed mine.”

Currently, 70 per cent of the band’s territory has been leased to oil companies. On a clear day, Stuckless can see plumes from the nearby Syncrude refinery, as well massivetailings ponds of polluted water that are the size of small lakes.

READ MORE: Crude Awakening: 37 years of oil spills in Alberta

These days Stuckless is in talks with Koch Oil Sands Operating, which wants to build a multi-billion dollar in situ project on the band’s land, designed to eventually steam 60,000barrels oil per day out of the ground.

Koch is no ordinary company. Koch Oil Sands is a Canadian subsidiary of Koch Industries, Inc., a US$115-billion multinational based in Wichita, Kansas. Given that most ofCanada’s oil sands are controlled by foreign interests, it’s not surprising Koch would have a stake there. In fact, Koch is the second-largest privately owned company in theUnited States, run by two brothers, Charles and David Koch. While Koch Industries makes everything from Dixie Cups and Lycra to Stainmaster carpets, the main source of thecompany’s business is oil. Until recently, Koch was refining as much as five per cent of all the oil burned in the U.S.

Oil has also made the brothers fabulously rich: they are both the seventh richest billionaires in the world, with holdings of US$41-billion apiece, according to Forbes magazine.

But what makes the Koch brothers controversial is how they spend their wealth. They use their money to influence the outcome of U.S. elections. In 2012, for example,Koch-affiliated organizations raised US$400-million during the U.S. election cycle. For the 2016 election, they’ve announced plans to spend nearly US$900-million through theirpolitical network – on par with each the Republicans and Democratic parties.

“The Koch brothers are arguably the most powerful force in American politics – certainly in Republican politics in the United States,” says Mike Casey.

Casey is the campaign manager of NetGen Climate Action, an American political environmental organization that’s opposed to the Kochs. “They have almost perfect alignmentwith their financial self-interest for the company and the way they spend.”


3 of 6 2015-01-30 7:48 PM

WATCH BELOW: An extended interview with Mike Casey

One thing the Kochs appear to want is the Keystone XL pipeline, which would travel from Alberta down to the Gulf of Mexico in Texas, where the Kochs own refineries (KochIndustries denies they have any investment or interest in the Keystone pipeline). “The Koch brothers are very interested in the Keystone XL pipeline going through,” says Casey.“They’ll tell you that they’re not, but the reality is that they understand that it’s a key piece of enabling infrastructure for tar sands’ development. Without a major pipeline the tarsands do not get developed.”

One reason the Kochs might be interested in Keystone is they hold the leases to at least 1.1 million acres of the oil sands – according to Divestco Inc., a Calgary-based oilexploration services company. That makes them one of the largest foreign leaseholders of Alberta’s energy riches (another estimate puts their holdings as high as two millionacres). The value of the oil locked in the oil sands they control is thought to be in the tens of billions of dollars.

Which is possibly why they spent an estimated US$290-million backing Republican candidates in the run up to last November’s midterm U.S. Congressional election – anelection that saw the Republicans take control of the Senate from the Democratic Party. That money went to buy more than 44,000 ads that began running many months beforeelection day.

Moreover, as soon as the results were in, the Republicans’ first item on their agenda was a vote on Keystone XL, which was narrowly defeated. The issue returned to the Senatethis month, where it began discussions to approve it (U.S. President Barack Obama has said he will veto the bill). “I would say (the Kochs) played big in at least two of the lastthree elections and they won pretty big in two of them,” says Robert Maguire, an investigator with the Center for Responsive Politics, a Washington, DC-based non-partisanorganization that tracks political spending. “They came off phenomenal losses in 2012 to win pretty big in 2014, just as they had done in 2010.”

In fact, through a maze of various front groups and foundations (that some critics have dubbed the Kochtopus), the Kochs spread their money far and wide, supporting a vast arrayof organizations that champion their conservative, pro-free market politics. Some of that money has gone to groups and scientists who deny global warming is a problem, or iseven occurring. Greenpeace has tracked how Koch money has funded such groups – dubbing it the “climate change denial machine”.

“One of the things that we’ve pinned on them is the funding of institutions that have been taking a very strong stance, challenging the scientific basis for climate change,”explains Kert Davies, who led the Greenpeace research into the Kochs, and who now runs the Climate Investigations Center in Washington, DC.

“With climate change, the science is the engine that pulls the policy train along. And for many years, in many different forms, the (oil) industry has attacked the science. And sothe Kochs were funding some of the most preeminent institutions carrying on this denial campaign. They were giving tens of millions dollars to these organizations.”

Consequently, due to their political spending and stance on climate change, the Kochs have become targets of protests, political attacks and magazine and newspaper exposés.

What’s become obscured in the controversy is the Kochs long history in Canada’s oil patch. Back in the 1960s their father, Fred, bought a stake in the Pine Bend refinery inMinnesota, which has the capacity to refine sour Canadian crude. After their father’s death in 1967, the brothers bought a controlling interest in the refinery, which currently canproduce 320,000 barrels a day – most of it Canadian crude. Some researchers believe much of the Koch brothers’ original fortune was derived from refining Canadian oil.

The Kochs also began buying up leases in the oil sands, which leaves them in an ideal position to profit from the third-largest reserve of oil in the world. They own an oil terminalin the town of Hardisty, Alberta, with the capacity of 675,000 barrels – a major oil sands export hub and the town where the Keystone XL pipeline would begin if it’s built. In thepast couple of years they’ve applied to drill dozens of exploration holes in the oil sands. And then there is the 60,000 barrel-a-day in situ project on the Fort McKay band’s land,which could begin production in the next couple of years.

The Kochs have political ties to Canada, too. The Vancouver Observer, an online newspaper, dug up tax filings that show Koch money has been financing the Fraser Institute, oneof Canada’s oldest conservative think tanks – a total of $765,000 since 2007. “Multiple generations of Fraser Institute staffers and donors and board members have had links tothe federal Conservative Party,” says Rick Smith, executive director of the Broadbent Institute, a liberal think tank. “And you know there’s no doubt that the Fraser Institute’saggressive denial of climate change, the Fraser Institute’s views on tax policy and on immigration – you can see resonating in Harper government policy.”

Yet the Kochs don’t seem to need to spend much money in Canada: after all, the policies of the Harper government on energy, pipelines, climate change and the oil sands dovetailwith their own. In fact, the Harper government has taken measures against the environmental movement that benefit the Kochs directly or indirectly.

The Kochs rarely give media interviews, and the company turned down a Global News request, and even refused to answer a list of detailed questions.

But whether the Keystone XL pipeline goes ahead or not, the Koch brothers will continue to make great sums in Canada. “What we do know is that they have 1.1 million acres oftar sands holdings,” says Mike Casey.

“And you can say a lot of things about the Koch brothers, but what you cannot say is that they’re stupid business people. They play for the long-term.”

“For Canadians the thing to understand about the Koch brothers is wherever their economic interests go, so goes the political spending,” says Casey. “So if they have come intothe Canadian economy to this extent, the odds that they’ll stay out of the Canadian political system is almost zero.”

16×9’s “The Koch Connection” airs this Saturday at 7pm.

© Shaw Media, 2015

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