Wednesday, October 5, 2011

Koch brothers in the Dock Over Trades with Iran

Billionaire Koch brothers in the dock over trades with Iran


Tea Party backers made multimillion-dollar deals with Tehran,

report claims


By Guy Adams in Los Angeles

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 Iran.


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 Tehran, despite a longstanding US trade

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

Iran were legal, and said that Bloomberg's reporting team

"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 Iran, the documents

suggest the company paid illegal bribes in six countries

between 2002 and 2008 to win contracts in Africa, India and

the Middle East. It allegedly then sacked a compliance

officer who complained to superiors about the practice. Some

of the paperwork is described by Sara Sun Beale, a criminal

law professor at Duke Law School, as a "smoking gun". It

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 US and Canada".


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, Texas, in 1996.


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 Iran, their

approach is "more conservative than that required by US law".


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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