Koch brothers’ firm hid subsidiary’s violations of criminal law
In May 2008, the compliance and ethics manager of Koch Industries discovered that a French subsidiary of the privately-held firm had been paying bribes to gain contracts.
As described in the November issue of Bloomberg Markets magazine, she promptly notified her supervisors, who found evidence that the business director of Koch-Glitsch had authorized improper payments in six different countries, going back to 2002. “Those activities constitute violations of criminal law,” an internal memo dated December 8, 2008 frankly stated.
However, the company gave no credit to Ludmila Egorova-Farines, who had originally uncovered the corruption. She had been removed from the inquiry in August and was fired for “incompetence” in June 2009. She sued the French subsidiary for wrongful termination, and the details of the Koch investigation came out a year ago as part of her civil case.
According to Bloomberg Markets, however, this is the first time the December 2008 letter has been reported in the media.
Duke Law School professor Sara Sun Beale believes there is sufficient evidence of wrongdoing for the Department of Justice to launch an investigation into whether Koch Industries violated the Foreign Corrupt Practices Act, which forbids American companies and their subsidiaries from making bribes overseas.
A Justice Department spokesperson refused to either confirm or deny whether such an investigation was under way.
The billionaire brothers who own Koch Industries, Charles and David Koch, have been heavily involved in bankrolling anti-government and anti-regulation politicians and organizations, including the Tea Party. At the same time, their company — which Bloomberg describes as “obsessed with secrecy” — has repeatedly been hit by criminal charges and by whistleblower allegations that they instruct employees to lie or falsify data.
As described by Bloomberg, “Koch Industries units have also rigged prices with competitors, lied to regulators and repeatedly run afoul of environmental regulations, resulting in five criminal convictions since 1999 in the U.S. and Canada. From 1999 through 2003, Koch Industries was assessed more than $400 million in fines, penalties and judgments. In December 1999, a civil jury found that Koch Industries had taken oil it didn’t pay for from federal land by mismeasuring the amount of crude it was extracting. Koch paid a $25 million settlement to the U.S.”
The Bloomberg story goes into extensive detail on these and other allegations.
Koch industries has issued a statement saying that it has fired the employees who had been making bribes, has learned from past mistakes, and now complies with all rules and regulations.
This photo is by abiodork and is available at Flickr under a Creative Commons license.