Koch Industries Executive Vice President David H. Koch, left, poses for a photo with Julia Koch during the opening night at the Metropolitan Opera in New York on Sept. 26, 2011. |
By Asjylyn Loder and David Evans -
Oct 3, 2011 1:28 PM ET
Bloomberg Markets Magazine
In May 2008, a unit of Koch
Industries Inc., one of the world’s largest privately held
companies, sent Ludmila Egorova-Farines, its newly hired
compliance officer and ethics manager, to investigate the
management of a subsidiary in Arles in southern France. In less
than a week, she discovered that the company had paid bribes to
win contracts.
“I uncovered the practices within a few days,” Egorova- Farines says. “They were not hidden at all.”
“I uncovered the practices within a few days,” Egorova- Farines says. “They were not hidden at all.”
She immediately notified her supervisors in the U.S. A week
later, Wichita, Kansas-based Koch Industries dispatched an
investigative team to look into her findings, Bloomberg Markets
magazine reports in its November issue.
By September of that year, the researchers had found evidence of improper payments to secure contracts in six countries dating back to 2002, authorized by the business director of the company’s Koch-Glitsch affiliate in France.
“Those activities constitute violations of criminal law,” Koch Industries wrote in a Dec. 8, 2008, letter giving details of its findings. The letter was made public in a civil court ruling in France in September 2010; the document has never before been reported by the media.
Egorova-Farines wasn’t rewarded for bringing the illicit payments to the company’s attention. Her superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent, even after Koch’s investigators substantiated her findings. She sued Koch-Glitsch in France for wrongful termination.
Obsessed with Secrecy
By September of that year, the researchers had found evidence of improper payments to secure contracts in six countries dating back to 2002, authorized by the business director of the company’s Koch-Glitsch affiliate in France.
“Those activities constitute violations of criminal law,” Koch Industries wrote in a Dec. 8, 2008, letter giving details of its findings. The letter was made public in a civil court ruling in France in September 2010; the document has never before been reported by the media.
Egorova-Farines wasn’t rewarded for bringing the illicit payments to the company’s attention. Her superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent, even after Koch’s investigators substantiated her findings. She sued Koch-Glitsch in France for wrongful termination.
Obsessed with Secrecy