Oil Firm Named in Probe of Unpaid Indian Royalties

Investigators implicated a Kansas-based oil company Tuesday in testimony before a Senate panel that is checking allegations of millions of dollars in oil and royalties being stolen from Indians.

The investigators told a special unit of the Senate Select Committee on Indian Affairs that Koch Industries, which does a large amount of business on Indian oil fields, over the last three years consistently took hundreds of thousands more barrels of crude oil than it paid for.

But Donald L. Cordes, Koch Industries vice president for legal and corporate affairs, said the Senate panel did not reveal that the so-called overages were a small percentage of the total oil that the company buys and resells.

A certain amount of inaccurate measuring is normal in the industry, but not to the degree shown in documents subpoenaed from Koch, witnesses told committee members.

The documents indicated that Koch ended 1986 with 803,874 more barrels of oil than it paid for; 1987 with 671,144 more barrels, and 1988 with 474,281 more barrels. The value of the extra oil for the three years was estimated at $12.2 million, $11.9 million and $7.1 million.

“Most companies try to be as accurate as possible,” said Chris Tucker, an oil expert who investigated Koch. “If there are large overages, the company should figure out why this is happening.”

A Senate panel spokesman said a brother of Koch Industries’ chairman, Charles G. Koch, hired Tucker to investigate the company. The two brothers had quarreled, the spokesman indicated.

“It’s very easy to steal from Indian lands,” Tucker said. “There are no checks and balances.”

He and other witnesses said the fields are in remote areas and are not generally watched.

Chuck Norman, an investigator for the committee, said other oil firms also were being probed. He said information about them would be turned over to authorities.