The Koch Brothers Made Part of Their Fortune Selling Petrochemicals to Iran

Original Link: http://nymag.com/daily/intel/2011/10/the_koch_brothers_made_part_of.html

By Noreen Malone

Koch Industries, the company owned by tea party bankrollers David and Charles Koch, is famously shrouded in secrecy. It won't disclose its profits, for instance, only an "approximation" of its annual revenues. The brothers tout their involvement with various charities, and give copiously and publicly to big-name philanthropic organizations, in addition to their somewhat more secretive, politically minded donations. That's what makes the allegations in a Bloomberg Markets magazine exposé of the company all the more juicy — and also why the brothers were reportedly freaking out over the story, trying to get it discredited before publication. The charges seem pretty damaging indeed:

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 a U.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.

"Improper payments" is a polite way of saying bribes — which are a violation of Foreign Corrupt Practices Act — and the magazine has an internal Koch Industries letter to back up the charge, which a law professor says is a "smoking gun" that should attract the attention of the Justice Department.

The article also explains that these weren't isolated incidents either: One former employee testified that "he and his colleagues were shown by their managers how to steal and cheat." This was dubbed, charmingly, the Koch Method. Another former employee in the company's refinery unit who refused to falsify documents said of her supervisors, "They didn’t know what to do with me.They were really kind of baffled that I had ethics."

In an odd way, the allegations are consistent with the Koch brothers' philosophy: They are, above all, against regulation. That's been the dominant ideology driving their political giving, and apparently, too, the "lawless" way they go after business, as one federal regulator described it in the article. But the charge about sales to Iran — after it had been dubbed a member of the axis of evil by President Bush — probably won't sit well with conservatives who care about more than just regulatory issues. Liberals don't need another reason to be suspicious of the Koch Brothers, who seem to be resembling more and more the left's caricature of them. Beyond the possible additional lawsuits that could stem from the revelations, they could theoretically be quite damaging to their reputation in the movement the pair is helping to bankroll.

But wasn't just the Koch's PR people issuing prebuttals to the Bloomberg story last week, it was the Daily Caller and the Washington Examiner, too. The fact that Koch Industries is already such a target of liberal bile will make it easier for those who want to write off the charges as a politically-motivated hit job to do so.