Billionaire Koch brothers in the dock over trades with
Tea Party backers made multimillion-dollar deals with
report claims
By Guy Adams in
The Independent/UK
October 4, 2011
The leading financiers of the Tea Party movement were last
night attempting to rebut claims that a portion of their
wealth comes from secretly doing business with the most un-
American trading partner imaginable: the hard-line government of
Charles and David Koch, the prominent billionaires who fund a
string of influential conservative think-tanks, stand accused
of selling tens of millions of dollars worth of
petrochemicals to
embargo against the nation that the former President, George
W Bush, dubbed a pillar of his "Axis of Evil".
It has been reported that Koch Industries used foreign
subsidiaries to supply the products, in an apparent effort to
stay within the letter - if not the spirit - of the law. It
has been suggested that the company used dozens of lawyers to
help find a way around the embargo, and was trading with
Mahmoud Ahmadinejad's regime as recently as 2007.
The news was just one of a string of revelations made by
Bloomberg Markets magazine, which gave 14 reporters, in
several countries, six months to investigate the brothers and
their business dealings. Their 14-page report was published
on Sunday night.
Koch Industries yesterday issued a lengthy statement claiming
that the article was the result of "substandard reporting"
and contains "major inaccuracies". It insisted the sales to
"relied heavily on unreliable sources, despite our warnings".
The magazine's piece represents the latest effort by
journalists to get to the bottom of the source of Charles and
David Koch's fortune. The brothers, aged 75 and 71
respectively, built their corporation from an oil company
they inherited from their father. They are now worth around
$20bn each.
Though the siblings have traditionally kept a low profile, in
recent years they have faced increased scrutiny for the
roughly $50m they have donated since 2006 to non-profit
organisations and think-tanks. These groups organise Tea
Party events, and campaign against what they see as excessive
taxes and burdensome industry regulation.
Bloomberg's piece relies heavily on information gleaned from
newly obtained documents which were lodged with French
employment tribunals in two labour cases involving the
company's European subsidiary, Koch-Glitsch.
In addition to detailing the sales to
suggest the company paid illegal bribes in six countries
between 2002 and 2008 to win contracts in Africa,
the
officer who complained to superiors about the practice. Some
of the paperwork is described by Sara Sun Beale, a criminal
law professor at
includes communications in which Koch employees admit that
their "activities constituted violations of criminal law".
Bloomberg's reporters spoke to a string of former employees
who were highly critical of the company's ethics. It offered
their perspective on a number of controversies which Koch
Industries have suffered during recent years. They say the
corporation, which never publishes its accounts and says only
that its annual revenue is approximately $100bn a year,
"rigged prices with competitors, lied to regulators and
repeatedly ran afoul of environmental regulations, resulting
in five criminal convictions since 1999 in the
In one incident, the firm was alleged by US Senate
investigators to have pilfered 1.95 million barrels of crude
oil from federal lands by falsifying purchasing records. One
former employee said the practice of incorrectly measuring
oil was known internally as "The Koch Method". In another one
of the misdemeanours detailed in the piece, the firm was
found by regulators to have ignored federal rules regarding
oil pipeline safety. This reportedly resulted in an explosion
which caused the death of two people in Lively,
A spokesman for Koch acknowledged some past mistakes.
However, in a statement which ran to almost 2,500 words, it
said the company has altered its previous practices to stay
within the law. With regard to trading with
approach is "more conservative than that required by
The billionaire brothers
* The two brothers, Charles, 75 and David, 71, each have a
net worth of $20bn after inheriting their father's small oil
company and turning it into a huge conglomerate operating in
dozens of countries. They are enthusiastic promoters of lower
taxes, free markets and small government and they have given
millions of dollars to right-wing candidates. The brothers
have hit back at what they perceive as a media obsession with
their activities. A "Koch counter" on the company website
measures the "fixation at The New York Times" and totals the
newspaper's reports about them.
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