NEW YORK (Bloomberg) — William Koch allegedly held a senior executive of his Oxbow energy company captive after discovering his concerns with a plan, the official claimed in a lawsuit sought to evade U.S. taxes on $200 million in profit.
Former Oxbow Senior Vice President Kirby Martensen alleged an internal company probe revealed his misgivings over a plan by Oxbow Carbon & Minerals to evade taxes. As a result, Martensen claimed, he was falsely imprisoned for almost two days by Koch’s agents and interrogated at a remote Colorado ranch as part of an effort to intimidate him. He was also fired, he said.
Koch, who Forbes estimates is worth close to $4 billion, is the brother of conservative tea party funders David Koch and Charles Koch. Martensen, promoted last year to senior vice president of Oxbow, said he was lured to the billionaire’s Bear Ranch near Aspen in March on false pretenses and questioned about anonymous allegations of wrongdoing against him tied to a kickback scheme, and a related investigation by the firm.
“Based on this surreptitious review of plaintiff’s e-mails and voice communications, Koch learned that Martensen and others expressed concern of the legality of what they were doing on behalf of Oxbow and their distrust of upper management,” Martensen said in his complaint filed Oct. 11 in San Francisco federal court. “As a result, William Koch promoted and implemented a plan to intimidate and discredit plaintiff for the purpose of chilling his speech and damaging his credibility.”
Koch, 72, who made his fortune partly by developing underground coal deposits in Somerset, Colorado, maintains a working cattle operation at Bear Ranch, southwest of Aspen. Oxbow, a West Palm Beach, Florida-based petroleum coke export broker, and two affiliates have combined annual sales of more than $4 billion and more than 1,100 employees worldwide, according to the company.
In a statement on its website, the firm claimed that Martensen’s lawsuit was filed in response to litigation in Florida state court related to an alleged $40 million fraud at the company.
The company denied the allegations in Martensen’s lawsuit.
“In the spring of 2011, Oxbow initiated a year-long investigation culminating in the dismissal of several executives and a civil complaint being filed last March in state court in Florida,” the company said. “Martensen states in a lawsuit that we investigated him for participating in a wide-ranging scheme to defraud, accepting bribes and diverting business from our company. He is right. We absolutely investigated Martensen.”
John Scott, Martensen’s lawyer, declined to comment on Oxbow’s allegations. A spokesperson for Oxbow didn’t return a telephone call made outside regular business hours seeking comment. The Florida litigation referenced by Oxbow couldn’t be immediately confirmed in Florida state court records.
Oxbow Carbon is the largest distributor of petroleum coke in the world, with annual shipments of almost 1 million metric tons, exporting petroleum coke to markets in Europe, Latin America and Asia, according to court papers.
Martensen said he was promoted late last year to the position of senior vice president-Asia with OCM International and relocated to its Singapore office. Koch agreed to give him a 40 percent salary increase, two leased vehicles, and pay for his rent, utilities, appliances and house cleaning costs, as well as fully paying for his children’s education, according to the complaint.
Martensen claimed he “understood that the goal of this assignment was to help legitimize OCM’s Bahamian shell company. This included, but was not limited to, discussions and negotiations concerning the sourcing of pet-coke and sales to Asian customers.”
The executive stated that he was told his relocation to Asia was for tax purposes. More than 75 percent of Oxbow’s fuel- grade petroleum coke export profits were derived from its Asian trading business, he said in the court filing.
Martensen said in the complaint he “has information and believes this relocation was part of a plan being implemented to evade paying taxes to the U.S. on profits in excess of $200,000,000 per year.”
Meanwhile, Koch had been notified of an anonymous letter claiming Martensen and another employee had been engaging in theft, breaches of fiduciary duty, fraud, and self-dealing against the Oxbow companies, Martensen said in the complaint.
“Based on this information, William Koch directed a lengthy comprehensive forensic review of thousands of documents, including the written corporate communications files (letters, memoranda, electronic corporate communications, etc.) of several employees, including Martensen,” according to Martensen’s complaint.
It was during this review that Martensen’s concerns about the alleged tax evasion plan were discovered by Koch, Martensen said.