Bloomberg Responds (Sort Of)

I have done a series of posts critiquing Bloomberg Markets’ hit piece on Koch Industries. If you haven’t already read them, you can follow these links to parts one, two, three and four. I concluded each of my first three posts with questions directed to Jonathan Neumann, the Bloomberg editor who was responsible for the Koch Industries article. I suggested that our readers join with me in urging Mr. Neumann to respond; apparently a large number did so.

On Friday, I received answers to some (but not most) of the questions I had posed to Mr. Neumann. Oddly, they came in an email not from Neumann, but from a New York lawyer whom Bloomberg has retained to represent it, who noted that Koch Industries has referred to a possible defamation claim against Bloomberg. I have no idea whether any such lawsuit is likely–the law of defamation is extremely restrictive these days–but it is easy to see why Bloomberg is worried about getting sued. Bloomberg wrote that Koch Industries “flouted the law” by acting “in defiance of a U.S. trade ban” and making “illicit” sales to Iran. Those statements were plainly false, as one of my posts pointed out, and as even Bloomberg Markets’ sister publication has now admitted. I assume further that a false statement to the effect that a person or company broke the law would be considered defamatory. However, the subject of my posts was not defamation, but rather Bloomberg’s journalistic standards.

Altogether, I asked Neumann to respond to 22 questions. Here they are, together with the answers that Neumann supplied through his lawyer, and my comments on those answers:

1) News reports indicate that you are preparing a story on Koch Industries which will be published on Monday. How did Bloomberg select Koch Industries as the subject of this story?

No response from Bloomberg.

2) Reports indicate that your story will focus on an incident in 2008 in which Koch learned that employees of a French subsidiary had made illegal payments. Why did you find this fact newsworthy? Has Bloomberg done stories on the hundreds of other American companies that have had the same experience? If not, why not?

No response from Bloomberg.

3) Is Leon Mausen one of your sources? If so, are you aware that he was the employee primarily responsible for the illegal actions in question, for which he was fired? If so, why do you consider him a credible source?

Bloomberg responds: “You question the credibility of Bloomberg’s sources, and suggest that Mr. Mausen was a source. Bloomberg has never said he was a source. Every former employee quoted in the story provides commentary on the facts reported in the article–just as Koch spokeswoman Melissa Cohlmia provides commentary throughout the story. The former employees quoted are not quoted to document Koch’s actions; the court records and Koch documents provide that documentation.”

My comment: This question was asked in my first post, which was written before Bloomberg’s story appeared and was based on news reports that had already surfaced concerning the article. When the article did appear, it stated that “Mausen declined to comment, beyond saying he disputed Koch’s arguments in court.”

4) Reports also indicate that your story will focus on the fact that a sub-subsidiary of Koch in Europe sold goods to Iran. Why do you find this newsworthy? Has Bloomberg done stories on the hundreds of other American companies whose subsidiaries have done business with Iran, legally? If not, why not? Do you consider it praiseworthy that Koch has gone beyond the requirements of the law by dictating that no Koch affiliate will do business with Iran?

No response from Bloomberg.

5) What research has Bloomberg done into Koch Industries’ environmental record? Are you aware that Koch and its subsidiaries have been awarded more than 400 environmental, health and safety awards since the Obama administration took office? Will Koch’s outstanding environmental record be highlighted in your story? If not, why not?

No response from Bloomberg, but the article, when it appeared, did include a quote from Koch Industries’ spokeswoman noting the large number of environmental awards that Koch has received.

6) On September 22, a Koch representative told you that Bloomberg’s reporters have harassed Koch’s employees. In particular, that representative wrote that a European Bloomberg reporter named Elisa Martinuzzi telephoned a Koch employee at work and lied to that employee, claiming falsely that Koch had provided Ms. Martinuzzi with documents and information about that employee. Have you investigated Ms. Martinuzzi’s conduct? Has she been disciplined in any way?

Bloomberg responds: “You also claim that a Bloomberg reporter ‘lied’ in an interview to [sic] a Koch employee. At no point did the Bloomberg reporter you identify, or any Bloomberg reporter, lie.”

My comment: I take it that Bloomberg denies that its employee made the representation that was reported by the Koch employee, rather than asserting that any such representation, if made, was true.

7) In the same email, Koch’s representative told you that your reporter David Evans traveled to Wichita, Kansas and attempted to “ambush” a Koch employee at his home. Failing to do so, he quizzed neighbors about the Koch employee’s whereabouts and told one neighbor that he was writing a story about the employee. Have you investigated Mr. Evans’s conduct? Has he been disciplined in any way?

Bloomberg responds: “You criticize a Bloomberg reporter because he went to a Koch employee’s house seeking an interview. The reporter did so because he couldn’t reach the employee by telephone at any Koch office. Far from improper, his conduct shows that Bloomberg made every effort to get his side of the story.”

My comment: Yes, and apparently his neighbors’ sides of the story, too.

8 ) In seeking information from a former government official who is now a lawyer in private practice, one of your reporters made a point of the fact that the Koch brothers have supported the Tea Party movement. As you are no doubt aware, a number of negative stories about the Koch brothers and Koch Industries have appeared in liberal publications over the past year. Did Bloomberg single out Koch Industries for a negative story in order to advance a liberal agenda? If not, can you articulate any reason why Bloomberg is doing a story on what would seem to be minor, years-old events?

Bloomberg responds: “You suggest that Bloomberg had a ‘liberal agenda’ in reporting on Koch. It did not. Its goal, as it always is, is to find and report the truth.

“You suggest that the story details minor, years-old news. In fact, the story is the first ever to write about a Koch unit’s sales to Iran that continued through 2007. And, it is the first story to report that a European Koch unit made what Koch itself describes as ‘criminal’ payments to win contracts.”

My comment: Bloomberg’s denial of a liberal agenda will not be credible to anyone who has read my posts or other published critiques of its article. I pointed out in my posts that hundreds of American companies’ foreign subsidiaries have done business in Iran, and hundreds of American companies, like Koch, have discovered that foreign employees have made improper payments in support of sales. So why the exclusive focus on Koch Industries–which, unlike many American companies, adopted years ago a policy that forbids its foreign subsidiaries from making legal sales in Iran? Bloomberg offers no explanation; I think the real answer is obvious. In one of my posts I also noted that every criticism Bloomberg lodged against Koch Industries could just as well have been made against G.E., based on information easily available through Google searches. So why is Bloomberg doing a hit piece on Koch rather than G.E. or countless other companies? Again, I think the answer is obvious.

9) Bloomberg reportedly has provided a version of its story to ABC. Will you likewise send me the current version of your story? If not, why has Bloomberg chosen to coordinate its story with ABC?

No response from Bloomberg.

My comment: Bloomberg did not send me an advance copy of its story.

10) Do you agree with Koch Industries that its European subsidiary’s business dealings in Iran were legal?

Bloomberg responds: “You ask if Bloomberg thinks the sales to Iran were illegal. The story says that they were probably not illegal, and that Koch “sidestepped,” “thwarted” and “flouted” the U.S. sales ban to Iran by using foreign subsidiaries to make the sales. Bloomberg documented that Koch Industries knew and understood the U.S. trade ban, and chose to find a legal way to get around it. In the hundreds of emails people have sent to Mr. Neumann asking for a reply to your questions, many say it’s no big deal that a Koch unit sold to Iran. Bloomberg would ask you and your followers if you and they feel Koch Industries was acting morally and patriotically by trading with an enemy of the United States and a sponsor of terrorism.”

My comment: This is why Bloomberg is so worried about getting sued. Its answer simply fails to acknowledge what the article really said: that Koch Industries “flouted the law” by acting “in defiance of a U.S. trade ban” and making “illicit” sales to Iran. Bloomberg plainly claimed that the sales were illegal, even as it contradicted itself by noting the great care that Koch took to comply with the law. Bloomberg now admits that its claims of illegal conduct were false.

As for Bloomberg’s question: 1) I don’t think I have any “followers.” 2) Bloomberg tries to change the subject by asking whether Koch acted “morally and patriotically” by allowing one of its foreign subsidiaries to conduct business legally in Iran. That was not, of course, the charge that Bloomberg’s hit piece made. But again, the obvious question is: why does Bloomberg single out Koch when the foreign subsidiaries of many leading American companies not only have made sales in Iran in the past, but continue to do so? This context was completely missing from Bloomberg’s article. For what it is worth, I think that Koch’s management acted morally and patriotically when it decided, years ago, to go beyond the requirements of the law by forbidding all foreign subsidiaries from doing business in Iran. I wish all American companies would do the same.

11) If not, what evidence do you have that they were illegal? There was none in your article. (I am a lawyer, by the way.)

Bloomberg’s response: See above.

My comment: Bloomberg has now abandoned its claim that Koch Industries “flouted the law” by acting “in defiance of a U.S. trade ban” and making “illicit” sales to Iran.

12) Given that the transactions were not illegal, why did Bloomberg headline its online article “Koch Brothers Flout Law With Secret Iran Sales?”

Bloomberg’s response: See above.

13) In the article you edited, you wrote that 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.” Is Bloomberg privately owned, like Koch Industries? Does Bloomberg disclose its annual profits?

No response from Bloomberg.

14) Did you coordinate your article with the Democratic Congressional Campaign Committee [I had noted that almost immediately after Bloomberg’s article appeared, it was featured in a fundraising appeal by the DCCC]?

No response from Bloomberg.

15) Did you edit Bloomberg’s article on Koch Industries so as to create the impression that Koch’s French subsidiary terminated Ludmila Egorova-Farines in retaliation for her reporting of improper payments authorized by Leon Mausen? If so, why?

No response from Bloomberg.

16) Do you have some criticism of Koch’s handling of the Mausen matter? If so, what is it?

Bloomberg responds: “You ask if Mr. Neumann has a problem with the way Koch fired Mr. Mausen, who authorized illicit payments to win contracts. The story reports that a French appeals court said the firing came more than 60 days after Koch knew about the illicit payments, and therefore, under French law, Koch had to pay Mr. Mauser 150,808 euros in severance.”

My comments: This answer is highly revealing. Note, first, that Bloomberg understands that “illicit” means “illegal.” Second, my question asked about Koch’s “handling of the Mausen matter.” Obviously, I was referring to the fact that Koch Industries found that Mr. Mausen and one or two others in a French subsidiary had made payments that were illegal under French law; they investigated, and terminated those involved. Bloomberg now says that it has no criticism of what Koch did here, except that its investigation took too long, so that more than 60 days went by before it terminated Mausen. So is that really what it comes down to? Bloomberg titled its hit piece “The Secret Sins of Koch Industries.” It purported to be a major expose, demonstrating that “Koch’s history of flouting rules covers more than two decades.” One of the two episodes to which Bloomberg gave the most prominence was the story about Mr. Mausen. And now Bloomberg admits that the only fault it can find with Koch is that it took a few days too long to fire Mr. Mausen–from Koch’s own perspective, not Mausen’s–and therefore had to pay him severance. Some expose!

17) What did you do to check the story told to your reporters by Sally Barnes-Soliz?

Bloomberg responds: “You ask what Bloomberg did regarding Corpus Christi and the former Koch employee who worked at the refinery there. Bloomberg reporters spent weeks in Corpus Christi reading thousands of pages of court records and interviewing at length the state regulators whose records documented what the former Koch employee did and said. The regulators and their records absolutely confirmed the former employee’s veracity. Those regulators referred the Koch case to the Justice Department, leading to the felony conviction of the Koch unit in question. Everything that Bloomberg wrote about Corpus Christi and Koch is true.”

My comment: You really have to read my post to put this in context, but briefly: if Bloomberg investigated so extensively, then why couldn’t they answer the rest of my questions about the case?

18) Did you know that the 97-count indictment you referred to in your story was dismissed? If so, why did you not report that fact?

No response from Bloomberg.

My comment: If Bloomberg’s reporters really did spend weeks investigating the failed Corpus Christi prosecution and reviewing court records, then their failure to mention this key fact–even though they trumpeted the existence of a 97-count indictment as though it were somehow proof of Koch’s wrongdoing–must have been deliberate.

19) Did you know that the trial judge indicated to the parties that she was inclined to throw out the testimony of the government’s expert witness?

No response from Bloomberg.

My comment: Same as 18).

20) Did your reporters find it odd that the government was concerned about a malicious prosecution suit by the individual Koch employees? Did your reporters ask David Uhlmann why the government insisted on the individuals’ releasing their claims for malicious prosecution as part of the settlement agreement?

No response from Bloomberg.

My comment: Same as 18).

21) Did you know that Koch reported the 1995 benzene non-compliance to the TNRCC in November 1995? If you knew it, why didn’t you report it?

No response from Bloomberg.

My comment: This is really devastating. As my post related, Koch Industries reported the fact that its Corpus Christi had been out of compliance with respect to benzene months before the emergence of the supposed “whistle blower” that Bloomberg lionized. Bloomberg’s reporters must have known this if they spent weeks in Corpus Christi analyzing the court’s records, but they failed to disclose it.

22) Did Sally Barnes-Soliz tell your reporters that the benzene samples she took were not done in compliance with EPA procedures and therefore could not yield accurate data? Did your reporters ask?

No response from Bloomberg.

My comment: So much for the “whistle blower.”

At this point, I don’t think much of a wrap-up is necessary. Bloomberg’s hit piece stands as a reminder to everyone of what can happen when a publication abandons normal journalistic standards in order to pursue a political agenda. It has been widely criticized, and rightly so. Most notably, Bloomberg accused Koch of making illegal sales in Iran, a claim that was so laughable that Bloomberg is now reduced to pretending that it didn’t mean what it said. Beyond that, Bloomberg’s article was so misleading and one-sided that it was obvious to pretty much everyone that its reporters had thrown objectivity and fairness to the winds in order to serve a liberal agenda. If you want more details, read my various linked posts, which stand unrebutted. Let’s hope that Bloomberg learns from this experience.

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