Major GOP Donor Receives Federal Oil Contract

July 7, 2008 - 8:20 PM

(CNSNews.com) - The U.S. Department of Energy's selection of Koch Supply & Trading, LP, to supply oil to the nation's Strategic Petroleum Reserve (SPR), is drawing fire from groups who accuse the administration of rewarding one of the Republican Party's largest donors with a plum government contract.

Koch Industries and one of the company's senior officers have made hundreds of thousands of dollars in political contributions since 1999 and before, with federal election records showing the bulk of those contributions going to Republicans.

But a defender of the administration's choice for the SPR believes critics would be unhappy regardless of which oil company was selected. "You could throw in any other oil company's name and [critics] would probably say the same thing ... what is relevant to them is that it's oil and they hate oil," said George Landrith of the free-market advocacy group Frontiers of Freedom.

Koch Supply & Trading, LP was selected Aug. 8 by Secretary of Energy Spencer Abraham to "provide approximately eight million barrels of crude oil to the SPR."

Koch Supply & Trading is part of the Kansas based Koch Industries, a conglomerate of oil and gas holdings that bills itself as the largest privately held companies in the U.S., with annual revenues of $25 billion.

According to Abraham, "The SPR provides the nation with an energy resource that can be used as directed by the president to protect Americans against future supply disruptions." Koch is scheduled to deliver oil between October 2002 and April 2003.

Quid Pro Quo?

According to Federal Election Commission data compiled by The Center for Responsive Politics, the Koch Industry PAC gave $436,774 to congressional candidates during the 2000 election cycle with 76 percent going to Republicans and 24 percent going to Democratic candidates.

David Hamilton Koch, executive vice president and Koch Industries board member, made personal contributions of $250,000 to the Republican National Committee between 1999 and 2002.

The PAC also gave $5,000 to President Bush's 2000 campaign, and David Koch gave $1,000 to the Bush campaign.

In addition, FEC records show Abraham received $8,500 dollars from Koch Industries for his failed Michigan Senate 2000 re-election campaign and another $5,000 in 1996. Abraham received another $1,000 for his 2000 campaign from David Koch.

Sheila Krumholz from the Center for Responsive Politics pointed to Koch's pattern of political campaign contributions and claimed it loomed large in the company being selected by the Energy Department.

"It does not surprise me in the least given their history with the current Bush administration," Krumholz told CNSNews.com.

Krumholz explained that when you combine the Koch Industry PAC with individual Koch family donations and other Koch subsidiaries, it reveals that Koch entities gave 88 percent of their total donations to the GOP and conservative causes and 12 percent to Democratic candidates and causes in the 2000 election.

"History has shown pretty consistently that having a relationship with key politicians pays off in spades when you need it," Krumholz said.

John Coequyt, an analyst with the Environmental Working Group, agreed that Koch's pattern of campaign donations might have played a role. "I am sure it doesn't hurt," Coequyt said. "Now they are given a very large contract with the U.S. government. Of course as an environmentalist, I am offended by that," Coequyt added.

'Best Value'

A Depart of Energy spokesman, speaking on background, told CNSNews.com, "I can emphatically say that the [SPR] bid was selected based on content. It was the best value to the government."

The DOE spokesman said Koch "submitted the best bid for all eight million barrels." The spokesman noted that the contracts are determined not by who gives the most barrels of oil for a set price, but who can give the best quality of oil. Quality is defined as more oil that is the most refined from its crude state.

Koch Industries did not respond to repeated requests for comment.

President Bush has announced his intention of filling up the SPR to its 700 million barrel capacity for the first time in U.S. history by 2005. Koch was selected as "part of the administration's 'royalty in kind' exchange program in which crude oil from federal leases in the Gulf of Mexico is exchanged for oil to be stored in the SPR for emergency protection against future supply disruptions."

According to DOE, the SPR oil storage sites are located in Texas and Louisiana in undisclosed underground salt mines.

George Landrith, president of the Frontiers of Freedom, a free-market energy advocacy group, said the attacks by the environmentalists and anti-corporate groups on the administration were a "pretty obvious play."

"Their line no matter what is going to be 'See Bush is paying off his friends" - because they like to act like Bush is just big oil," Landrith said.

The real reason the green movement and anti-corporate groups are upset, according to Landrith, is because "they view energy as a bad thing."

"They really loath energy because of what it has done for man, because it makes us so we don't have to be an agrarian society living in grass huts," Landrith added.

Koch's Political Donations

Koch has given to numerous political causes including the libertarian CATO Institute and the free market Competitive Enterprise Institute.

Paul Weyrich, president of the conservative Free Congress Foundation wrote during the 2000 election campaign that Koch was being unfairly singled out by the Clinton administration for environmental penalties because of its support for GOP and conservative causes.

"Here is [the Clinton] administration which disputes that there is ever any conspiracy with a) Whitewater, b) Waco, c) Ruby Ridge, d) Vince Foster ... the president's attempt to get Monica Lewinsky a job ... but a company which discloses its problems and corrects them is guilty of conspiracy. Right," Weyrich wrote.

Landrith agreed with Weyrich's assessment that Koch's donations to the GOP and conservative causes may have resulted in the Clinton administration targeting the oil conglomerate for environmental fines.

"The Clinton administration was fairly political in who they chose to go after. They definitely cut political enemies' lists," Landrith said.

E-mail a news tip to Marc Morano.

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