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The Bloomberg Hit Piece on the Koch Brothers


Bloomberg Markets has a print cover story on “The SECRET SINS of KOCH INDUSTRIES” (unusual capitalization and italicization choices theirs), which is plugged heavily in a long (nigh interminable) web item headlined:

“Koch Brothers Flout Law With Secret Iran Sales”

The nut of it is that, in 2008, a newly-hired Koch ethics officer discovered evidence of improper bribes paid by a French subsidiary to secure six different deals in Africa, India, and the Middle East. (I know, I know. But try to contain your shock that doing business in Africa could be anything but above-the-board.) Koch HQ then dispatched a larger investigative team that confirmed the findings and the parties responsible were terminated.

Fast-forward to over a year later: The ethics officer who first discovered the impropriety, having since been promoted, is let go for emerging performance issues. She files suit against Koch for wrongful termination, and not only loses, but is ordered to pay Koch’s legal fees. Now she’s giving quotes to Bloomberg. Unrelatedly, and this is crucial, the Koch subsidiary also had some business (which has since completely desisted) with Iran at a time when — both Bloomberg and Koch reps seem to agree — that business was perfectly legal under U.S. law. Again, the Iran business was entirely separate from the alleged bribes. But go back and look at that headline. Would you ever know?

I reached out to the Koch Industries and got this statement from general counsel Mark Holden:

“The Bloomberg story is deeply dishonest and in our view intentionally misleading. The improper payments were dealt with by the company as soon as we learned of them. The employees involved are no longer with the company as a result. Ms. Egorovav [the ethics officer] filed a suit against the company alleging wrongful termination. The French court ruled in the company’s favor, determining that she was treated fairly and ordering her to pay the costs of the matter. She is appealing. Contrary to Bloomberg and Egorova’s statements, the court in Ms. Egorova’s case was aware of the issue concerning improper payments as that was fully disclosed by the company during the proceeding. Regarding the sales at issue to Iran, the foreign subsidiary in question had protocols in place that were consistent with US law, still several years ago Koch voluntarily put in place a policy halting all dealings with Iran that is more restrictive than US law.”

Koch addresses the piece point by point here. And Jennifer Rubin has a lengthy interview here.

I don’t get as excited over lefty media bias as some other conservatives, but the Bloomberg story is full of vague innuendo and elliptical suggestions of the evil and conspiracy that pervades the Kochs and their empire. The Koch family is described as “anti-government” (am I “anti-water” if I’d rather not drown?) and David Koch’s advocacy, 30 years ago, for the abolition of Social Security is treated to its own sub-head. Then there’s the earth-shattering revelation that a company with interests in some of the most heavily regulated industries has spent money lobbying regulators. The late Fred Koch (d. 1967), from whom sons David and Charles “inherited” their political beliefs, is brought out for the purposes of establishing his early connection to the John Birch society, the taint left to hang in the air without mentioning, for instance, that the elder Koch came to his views after doing business for years in Stalin’s Soviet Union and seeing the human misery wrought by socialism.

Then there’s this: “Koch Industries is obsessed with secrecy, to the point that it discloses only an approximation of its annual revenue — $100 billion a year — and says nothing about its profits,” (bold mine). Koch is, of course, a privately held company and has no obligation to publicly disclose any details at all. In fact, it’s not so different in this respect from the privately owned Bloomberg, L.P. Want to know what Bloomberg’s revenues and profits were last year? You’ll have to rely on leaked company memos and educated guesses from analysts, because, you know, Bloomberg is obsessed with secrecy.

Beyond the bribe stuff and the Iran stuff — which relies almost exclusively on disgruntled former Koch employees for sources — there are some legitimate questions raised about whether Koch and its subsidiaries were less than enthusiastic in efforts to comply with federal regulations in certain areas. For example, Koch settled one case about whether they were intentionally mismeasuring oil extraction from an Indian reservation to save money on federal royalties, and another about whether they were negligent in failing to repair a leaky pipeline that led to the tragic death of two teenagers. But the overall rhetorical aim of the article — to draw a connection between the Koch brothers’ free-market, limited government political beliefs and a real or imagined culture of corporate malfeasance — is so clearly telegraphed that any larger point is obscured.