Kinder Morgan Sued by Investor Over Pipeline Distributions
Kinder Morgan Inc., which manages more than 80,000 miles of gas, oil and carbon dioxide pipelines, was sued in Delaware by an investor seeking damages for alleged improper distribution of affiliates’ profits.
Jon Slotoroff, a unit holder of Kinder Morgan Energy Partners LP (KMP), said in a lawsuit made public today that the Houston-based company is taking almost 50 percent of the allocations, when some of it should be kept to pay for maintenance of the pipeline systems.
“Kinder Morgan Inc. (KMI) has used its control over Kinder Morgan Energy Partners to allocate cash flow for distributions in bad faith,” taking $3.2 billion improperly since 2010, and causing the operating entity to incur unnecessary debt, according to the complaint in Chancery Court in Wilmington.
“Kinder Morgan Inc. has ensured that, quarter after quarter, hundreds of millions of dollars exit Kinder Morgan Energy Partners and are thereafter not available for needed maintenance,” Slotoroff said.
His lawyers are seeking unspecified compensatory and punitive damages and legal fees in behalf of public shareholders and the energy company.
Inadequate maintenance of the pipelines has led to problems, including a 100,000 gallon diesel spill in California in 2004, according to the complaint. The U.S. Department of Transportation ordered safety improvements after that spill, Slotoroff said.
Larry Pierce, a Kinder Morgan spokesman, didn’t immediately respond to phone and e-mail messages seeking comment on the lawsuit.‘
The case is Slotoroff v. Kinder Morgan Inc., CA9318, Delaware Chancery Court (Wilmington).
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