Koch Industries Accused of Being Tied to Global Criminal

According the report in the November issue of Bloomberg Markets magazine, company officials have been caught paying bribes to win contracts, trading with Iran in violation of theU.S.embargo, price-fixing, neglecting safety and ignoring environmental regulations.

The Greenpeace Airship A.E. Bates with a banner reading "Koch Brothers: Dirty Money" flies over Rancho Mirage, California on January 28, 2011. Photo by Gus Ruelas/Greenpeace

Koch-Glitsch is part of a global empire run by billionaire brothers Charles and David Koch, who have taken a small oil company they inherited from their father, Fred, after his death in 1967, and built it into a chemical, textile, trading and refining conglomerate spanning more than 50 countries.

The most visible part of Koch Industries is its consumer brands, including Lycra fiber and Stainmaster carpet. Georgia- Pacific LLC, which Koch owns, makes Dixiecups, Brawny paper towels and Quilted Northern bath tissue.

Charles, 75, and David, 71, each worth about $20 billion, are prominent financial backers of groups that believe that excessive regulation is sapping the competitiveness of American business. They inherited their anti-government leanings from their father.

A Bloomberg Markets investigation has found that Koch Industries – in addition to being involved in improper payments to win business in Africa, India and the Middle East – has sold millions of dollars of petrochemical equipment to Iran, a country the U.S. identifies as a sponsor of global terrorism.

Internal company documents show that the company made those sales through foreign subsidiaries, thwarting aU.S.trade ban. 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 billionaire brothers are major donors to FreedomWorks, the Cato Institute, and dozens of other conservative think-tanks and nonprofits. They have also been tied to several independent expenditure groups supporting Republican candidates across the country — and last year The New Yorker exposed the family’s efforts to oppose President Barack Obama.

In 1999, a Texas jury imposed a $296 million verdict on a Koch pipeline unit — the largest compensatory damages judgment in a wrongful death case against a corporation inU.S. history. The jury found that the company’s negligence had led to a butane pipeline rupture that fueled an explosion that killed two teenagers.

According to Bloomberg, Koch Industries allegedly made improper payments to win business in 6 countries over 8 years (through 2008) — a potential violation of the Foreign Corrupt Practices Act. The company described them as “activities constitute violations of criminal law.”

Koch Industries also sold millions of dollars of oil refining equipment to Iran – even after President George W. Bush described the nation as a member of the ‘Axis of Evil.’ The company maintains these sales were legal at the time, and says it has since cut ties with the rogue nation.

Koch Industries allegedly stole 1.95 million barrels of crude oil pumped from federal lands by falsifying purchasing records, a Senate investigation found. Former workers testified to the “Koch Method,” described as trying “to cheat the producer out of crude oil,” my mis-measuring the oil.

Moreover, the company allegedly ignored federal regulations for pipeline safety — resulting in the deaths of at least two people in a pipeline explosion in Lively, Texasin 1996.

The 6,800-word article in Bloomberg Markets magazine is the result of an investigation involving 14 reporters spanning from Tehranto Detroit. [via Bloomberg and Business Insider]

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