Bloomberg Whiffs, Part 4

My dissection of Bloomberg Markets’ hit piece on Koch Industries is drawing near a close. Parts one, two and three covered the main themes of Bloomberg’s article. This briefer post addresses Bloomberg’s use of a single source, a German named George Bentu.

Bentu worked for a Koch subsidiary in Germany from 2001 to 2007. Bloomberg uses him in two ways. First, he is part of the theme that Koch “flouted the law” by acting “in defiance of a U.S. trade ban” and making “illicit” sales to Iran. This claim was entirely false, as Bloomberg’s own sister publication admitted, no doubt with some embarrassment. Bentu doesn’t add anything substantive to Bloomberg’s false charge, but provides a little color by saying that he complained about Iran sales to his bosses:

Koch-Glitsch told employees in 2006 that the company was winding down business in Iran, Bentu says. At this point, he says, his bosses still asked him to work on Iran bids. He says he told them he was no longer willing to sig off on such work, leading to arguments between Bentu and his managers.

Bloomberg also uses Bentu to sum up its charges against Koch Industries, to portray them as a coherent whole rather than a thin pastiche of disconnected episodes spanning a period of decades:

Bentu says he felt dismayed because Koch Industries clearly tells all of its employees around the world that integrity is the company’s No. 1 value. “You fell totally betrayed,” Bentu says. “Everything Koch stood for was a lie.”

Powerful stuff, huh? Unfortunately, if Bloomberg had dug a little deeper they would have found Bentu’s claims to be entirely incredible. On March 20, 2007, around the time he left Koch-Glitsch Germany, Bentu wrote a letter to Charles Koch, the CEO and co-owner of Koch Industries. You can read the letter in its entirety here, but be forewarned, it goes on for five long pages. The key parts, however, are near the beginning:

Between May 1, 2001 and April 30, 2007, I had the privilege to be a Koch-Glitsch Germany employee. It was a pleasure to work for a company which sets very high standards and at the same time expects all its employees to act according to the core values and MBM Guiding Principles. …

We have been instructed by Christoph Ender, European president, that at no time and for no reason must the application of these Principles compromise our commitment to Principle 1 (Integrity) and Principle 2 (Compliance). As mentioned in the Environmental, Health and Safety progress and Community Stewardship Report 2006, Koch employees are expected to report any unethical or illegal activities.

Not exactly what he said to Bloomberg, is it? Bentu did have grievances, however: he told Charles Koch that K-G Germany failed to live up to the high standards of Koch Industries. He had a nearly-endless litany of complaints about his boss at K-G Germany, ranging from approval of expense accounts to priority for vacations. But one notable thing: in a list of complaints into which Bentu obviously threw the kitchen sink, there is not a word about Iran.

Were Bentu’s complaints about his German boss meritorious? I have no first-hand knowledge, but they were referred for investigation to none other than Ludmila Egorova-Farines, the principal heroine of Bloomberg’s piece. She concluded that Bentu’s grievances were completely without merit. Her investigation “revealed no substantiation of these allegations.”

All of this raises an interesting question: if Bloomberg had known about the letter that Bentu wrote in 2007 and the subsequent investigation by Egorova-Farines, would it have included the Bentu quote in its article? We will never know, but Koch gave Bloomberg every opportunity to avoid embarrassment. As noted here, I obtained from Koch the information that it sent to Bloomberg’s reporters. That email exchange clearly reveals that Koch asked Bloomberg to identify its on-the-record sources so that Koch could more effectively respond to the allegations they made, but Bloomberg refused to do so. Perhaps if Bloomberg had treated Koch more fairly, it would have avoided this particular embarrassment.

As you likely recall, I concluded my earlier posts with a series of questions directed to Jonathan Neumann, who edited the Koch story for Bloomberg. Those questions now number 22. Yesterday, I received partial answers to those questions from Bloomberg’s New York lawyer. Later this weekend, I will do a post that summarizes the controversy over Bloomberg’s smear and includes those responses, along with any appropriate follow-up.