Thursday, March 3, 2011

Coca Cola and the Qaddafis

2 Qaddafis Fought Over Business, Cables Show

By James Risen
The New York Times
March 2, 2011

WASHINGTON — Soon after Coca-Cola decided to move into Libya in 2005, it received a harsh lesson in how the personal jealousies and brutality of the feuding family of Col. Muammar el-Qaddafi shape the nation’s economy.

Two of Colonel Qaddafi’s sons began to fight for control of the local Coca-Cola bottling company, and their battle turned into an armed confrontation dominated by a militia loyal to one of the sons, according to American diplomatic cables released by WikiLeaks. The dispute was settled when Colonel Qaddafi’s daughter intervened, but only after at least one worker was hurt, one Qaddafi cousin was stuffed into the trunk of a car and the Coca-Cola plant was shut down for months, the cables said.

The episode provides a rare, behind-the-scenes glimpse into the Qaddafis and more broadly underscores how the whims of ruling families have tainted the climate for economic development in parts of the Arab world.

In the 1990s, with Libya chafing under international sanctions, Coca-Cola did not have a bottling plant in the country. Instead, it was distributed through a franchise in neighboring Tunisia. It was only after Colonel Qaddafi abandoned his nuclear weapons program in 2003 and sanctions were relaxed by the West that American companies, including Coca-Cola, began to invest there again. Coca-Cola’s new bottling plant opened in 2005 through a local franchise known as the Global Beverage Company.

But almost immediately, two of Colonel Qaddafi’s sons, Mutassim and Mohammed, began to compete for control of Global Beverage. The feud burst into view in late 2005, just two weeks after the plant opened, when security troops loyal to Mutassim occupied the bottling plant in Tripoli, according to a 2006 State Department cable. His militia occupied the plant until February 2006, blocking production.

The State Department cable recounts how on Dec. 28, 2005, “Two military cars carrying armed personnel without clear identification illegally broke into the facility, asked the employees to leave the premises and shut down the plant.” Mutassim’s forces quickly took control of the plant after one foreign worker was injured and some equipment was destroyed.

During the plant’s occupation, managers were initially allowed to enter the plant “singly or in pairs,” but later Coca-Cola employees were barred completely. Over the following weeks, company shareholders received extortion demands from “freelancers” while anonymous callers threatened the plant’s foreign workers with “political problems” or physical harm, according to the cable.

“At no time did any Libyan authority offer a legal justification for the plant’s shutdown,” the cable said, recounting complaints from business officials involved.

The battle reached a peak in February 2006, when men loyal to Mutassim went to Mohammed’s residence, where they abducted and assaulted one of his cousins, who is also one of Mohammed’s in-laws, in order to “send a signal to The Engineer (Mohammed),” according to the cable.

Mutassim’s associates arrived at “Mohammed’s residence and began shouting for him to come out,” the cable says, quoting a witness. “Receiving no response, they left in search of one of Mohammed’s cousins, whom they stowed in the trunk of one of their cars and brought back to the residence.”

One of the company’s board members received a hurried call warning him to leave Tripoli before Mutassim’s men could find him.

Finally, their sister, Aisha Qaddafi, appeared to have become fed up with the fighting and brokered a deal between her brothers. According to the cable, the compromise called for Mohammed to sell his shares in the bottling operation, and in return Mutassim would call off his men and leave the company alone.

One person caught in the middle of the fight told an official from the United States Embassy, according to one of the cables, that “although he had heard stories about doing business in Libya, he never imagined that what transpired was still possible here. ‘You know the movie, ‘The Godfather’? We’ve been living it for the last few months.’ ”

On Wednesday, Kerry Tressler, a spokeswoman for Coca-Cola at the company’s headquarters in Atlanta, acknowledged that in 2006 there had been “a period of uncertainty about the local ownership of the bottler” in Libya, but that the problem was eventually resolved.

She said that production and distribution at the bottling plant have now stopped because of the protests and unrest.

The State Department spokesman, Philip J. Crowley, said it would have no comment on the cables’ revelations.

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