Thanks to the readers who sent me this story. I have written to Oxbow to seek further comment.
Koch’s Oxbow Carbon lawsuit alleges ‘scheme to defraud,’ millions in loses
By Michele Dargan Daily News Staff Writer
Posted: 7:59 p.m. Friday, March 23, 2012
Bill Koch’s Oxbow Carbon has filed a lawsuit against three company executives, alleging they defrauded the company by accepting illegal bribes and kickbacks from competing companies.
The lawsuit says Oxbow Carbon and two of its subsidiaries — Oxbow Carbon & Minerals and Oxbow Carbon & Minerals International — have suffered “substantial damages in the millions of dollars.”
The three executives — one based in California and the other two in Asia — are alleged to have participated in a “wide-ranging scheme to defraud” the company and its subsidiaries. The executives, the lawsuit says, used their access to confidential information to promote the business interests of competitors for their own gain.
Oxbow Carbon, which is based in West Palm Beach, is one of the largest providers of natural gas, coal and petroleum in the world. According to the lawsuit, Oxbow is the largest distributor of petroleum coke in the world, selling significant amounts in Asia.
The lawsuit, filed Thursday in Palm Beach County Circuit Court, alleges the following:
■ Beginning in March 2009, shell companies began secretly buying petroleum coke and coal from two Oxbow subsidiaries with direct involvement from the three executives.
■ The shell companies then would resell that petroleum coke or coal at unusually high profit margins — sometimes as high as 12 times higher than that which Oxbow charged their customers.
■ The executives facilitated those purchases for the benefit of themselves and the shell companies. One of the executives “received a secretive monetary payment ($11,400) from Shell Company One for payment of school tuition for his son.”
■ The executives steered business to a freight company of a known competitor that they had been instructed by their superiors not to use. The freight company inflated the shipping rates to Oxbow’s customers and put the “overpayments” into the shell companies for the executives’ benefit.
“Shell Company One alone, with the active knowledge, assistance and participation of defendants, misappropriated at least $1.2 million in freight payments from plaintiffs’ legitimate customers.”
Update: Oxbow have replied to my email, but declined to comment further.