Koch finds second version of financial document

The oil-theft trial against Koch Industries<br>came to a near standstill Thursday with talk of a possible mistrial and perjurious testimony after a second version of a company budget<br>was discovered.<br>

Thursday, October 28th 1999, 12:00 am

By: News On 6

The oil-theft trial against Koch Industries
came to a near standstill Thursday with talk of a possible mistrial and perjurious testimony after a second version of a company budget
was discovered.

Both sides questioned what to do with the new information before U.S. District Judge Terry Kern said they would do nothing, ruling that the document would not be allowed as evidence in the civil trial.

Besides, the federal court already had one version of a 1989 budget entered into evidence. The plaintiffs were using it to argue
that Koch did not expect to receive any oil that it didn't pay for that year, the same a year a Senate investigation was under way into the company's measuring practices.

When a second version of the 1989 budget was recently found, it threw part of the plaintiff's case out of the ballpark. The
document was recently discovered by none other than Koch's chief executive, Charles Koch.

"We must investigate how this evidence all of a sudden in the ninth inning of our case showed up," said Roy Bell, attorney for Bill Koch, who filed the lawsuit against the company his older brother runs.

Koch is accused of intentionally underreporting the amount of oil purchased from Indian and federal leases during the 1980s. More than 70 witnesses have testified since the trial began four weeks
ago.

Before the jury entered the courtroom Thursday morning, Bellsaid it was his "sad duty" to inform Kern of "possibly serious
fraud in the court" with the discovery of a different 1989 report, a version the plaintiffs had no idea existed in the decade-long
case.

"We are in fact in a bind," Bell said. "This is at the heart of this case."

According to the new version of the 1989 budget, Koch estimated it would receive $6.2 million in overages, or oil the company
acquired but did not pay for. The plaintiffs had earlier received from Koch a different 1989 budget that showed it did not expect any
overages.

Bell said the original budget was a key document in their allegation that Koch suddenly stopped projecting overages in late
1988 when their records were subpoenaed by the U.S. Senate.

It also was during the Senate investigation that Bell said there was mention that Koch kept two sets of financial books. Bell said
that is why they fought with "eyes wide open" for Koch's records and also called executives and their secretaries to testify on the
recording methods.

"I don't know where this document came from," Bell said regarding the second budget.

As for the exact findings of the Senate report, it was barred from the Tulsa trial because Bill Koch was "involved to some degree" with the committee's investigation, according to a federal judge.

The defense claimed that it was as much a surprise to them that there was a second version of a budget. Charles Koch just happened to wonder about some 1989 monthly figures when he asked his
secretary to look through files. That was when the second budget was found, said defense attorney Clyde Muchmore.

"We agree the documents should have been produced and were not," Muchmore said. "There is no evidence it was anything
intentional."

It was not in Koch's interest to just surface with a new document in the middle of the trial, he said. Plus, the case involved hundreds of thousands of pages of records.

"You do the best you can to come up with everything you can," Muchmore said. "It was not deliberate."

Kern discussed the matter further in his chambers and then sealed the public records of the conversation. The only information
released was that the document would not be entered into evidence.

Kern also canceled court Friday, saying that the lawyers had some work to do.

So far, former and current Koch employees from across the country haven testified that they were trained to adjust the amount and quality of oil purchased from producers. The alleged scheme was in 13 states from Louisiana to California to North Dakota.

The defense contends the adjustments are allowed under industry standards for certain conditions like oil shrinkage and tanks
encrusted with sediment.

If the jury finds in favor of the plaintiff, Bill Koch could receive one-third of a court award.

The video deposition of Charles Koch is expected to be played in court early next week.