Coke and Confiscation
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|Edwin Black||September 21st 2009|
In a stunning new court filing, Coca-Cola has been accused of near-criminal collusion in Egypt’s program of ethnic cleansing and property seizures targeting Jews during the 1960s.
The long-standing case involves Egyptian Jewish businessman Refael Bigio and his family against his former partner, Coca-Cola in the illicit takeover of the family bottling business and property near Cairo. The conflict was covered extensively last year by The Cutting Edge News in a special report (see April 14, 2008 Page One, “Coca-Cola and Confiscation: On Passover, an Egyptian Jew Battles Coca-Cola in the USA for a Modern Day Injustice”)
The Egyptian government takeover occurred in 1962 during the openly anti-Jewish regime of President Gamal Abdel Nasser. Coca-Cola joined in the process by purchasing the Bigios’seized property for a relative pittance. The process is reminiscent of the Nazi program of Aryanization against German Jewish property during the 1930s. Egypt’s government has long ago ruled its Nasser-era seizure of the Bigio property was illegal, but Coca-Cola refuses to reimburse the Bigios for the factories the company’s overseas operations took over.
Now, after years of international litigation and fruitless negotiation, Bigio’s attorneys have fired a stinging motion for summary judgment, asserting that the uncontradicted facts surrounding Coca-Cola’s actions were so blatant that the court should immediately find the corporation guilty.
“Coca-Cola is not," wrote attorney Nathan Lewin in his motion, “as it likes to portray itself, a trusting and guileless American corporation that in 1994 innocently purchased a 'minority interest' in some remote business entity that utilizes the Bigios’ property. The undisputed evidence, “ he continues, “establishes that Coca-Cola witnessed how the Bigio family – with which it was intimately bound in a mutually profitable business relationship between the 1940s and 1962 – was victimized by Nasser’s ethnic-cleansing policy of taking Jewish property and expelling Jews from Egypt.
Years later, after the Egyptian government took minimal steps to remedy the religiously discriminatory brutality of the Nasser regime, Coca-Cola happily took control – through entities which it now claims cannot be “pierced”–of property that Coca-Cola knows was immorally and illegally plundered from the Bigios.
Lewin made the point simple: “Coca-Cola is, we submit, the occupier of stolen property. If this case concerned personalty [personal property] that had been taken in violation of international law from the Bigios, and Coca-Cola knowingly received and used that personal property in order to make enormous profits in Egypt, there would be no doubt that Coca-Cola would be civilly–and possibly even criminally–liable. The rule of law is no different when the stolen goods that are being used by the defendant are land and businesses. The receiver and user of such stolen merchandise cannot claim immunity on the ground that the entity that is directly using the stolen goods is only a subsidiary or an affiliate. Principles governing the tort of trespass and of aiding-and-abetting liability make all who partake in the illegal exploitation – and particularly the head of the entire enterprise – liable to the victims.”
The complex case began for Refael Bigio one day in August 1962. Refael was driving to the factory with his father when they encountered police cordons surrounding the buildings at 14 Aswan Street in the Cairo suburb of Heliopolis. As Bigio and his father nervously stepped up the stairs, a policeman barked that the government had nationalized the business. "Give me the keys," he demanded. Once inside the offices, policemen and soldiers demanded the keys to the vault as well.
The nightmare of dispossession suffered by approximately one million Jews throughout the Arab world had finally descended upon the Bigio family. Brutal jailings and intimidation against Bigio family members culminated in a forced penniless exodus from the nation. The Bigios, along with a million other Jews across the Arab world, were expelled with just a few dollars in their pockets. The family fled to Canada. But the Bigios never forgot the life they knew in Egypt—or their assets.
The Bigio assemblage of warehouses and manufacturing buildings sprawled across 10,000 square meters in the midst of bustling Heliopolis traces its main commercial life to the 1930s when Bigio’s grandfather first bought the land and built a shoe polish plant. Eventually, the family business added a tin container operation to hold the shoe polish, and from that expanded into general tin plating. Eventually they produced tin bottle caps for soda. In 1942, at the height of World War II, a Coca-Cola licensed bottler became the family’s tenant, bottling the world-famous cola. Later the fruity drink called Fanta that Coca-Cola originally developed for the Nazi military was added.
In the fifties, the Coca-Cola licensed bottler in Egypt expanded greatly, the plant was moved to a nearby location, and in 1959 Coca-Cola in Atlanta signed a major license agreement with the Bigios to produce the bottle caps.
In the early sixties, using the Nazi Aryanization model that seized Jewish businesses and then either used them for state purposes or sold them to others, the Nasser regime ordered middle-class Egyptian Jews pauperized and expelled from Egypt. The Bigios’ land was seized, and their various cola bottling and manufacturing supply companies were nationalized and merged into a single, larger enterprise called the El Nasr Bottling Company or ENBC. Unbeknownst to the Bigios, the land itself was sold off to the Egyptian national insurance company, Misr.
After the late Egyptian president Anwar Sadat visited Jerusalem and signed the Camp David peace treaty, the beginnings of Jewish restitution appeared in Egypt. The Bigios went back to Cairo and sought to recover their property and factories. The government in 1979 invalidated the earlier confiscation. The Egyptian Ministry of Finance issued Decision Number 335, declaring the land rightfully belonged to the Bigios. The government even returned the money Misr Insurance had originally paid for the illegally seized Bigio property.
But Misr refused to comply, unwilling to give up the constantly appreciating land now purportedly valued at many millions based on its central location in fast-growing Heliopolis.
In the early nineties, Egypt embarked upon a sweeping privatization program, selling off nationalized properties, including those seized from innocent Jews in prior decades. This massive privatization program included not only such public sector entities as the banks and utilities, but also some 400 private enterprises. Together the privatized businesses reportedly accounted for almost 70 percent of the nation’s industrial output. In 1994, pursuant to Public Business Sector Law 203, nearly 50 private businesses were sold, according to a 1995 USAID study. The American Chamber of Commerce in Egypt was active in the government’s decision-making, lobbying on behalf of U.S. companies colliding at the door to scoop up businesses. These included the two major soda companies.
New York Pepsico bought the Egyptian bottler of Pepsi-Cola.
To the Bigios’s astonishment, Atlanta-based Coca-Cola, their former business tenant and customer, purchased Coke bottler ENBC for a reported $142 million. The Atlanta conglomerate acted through a Coke subsidiary and in concert with a partner called MAC Investments, according to documents related to the sale. Amid much fanfare, ENBC was renamed The Coca-Cola Bottling Company of Egypt (TCCBCE). Unmentioned in the glitter and gee-whiz surrounding the acquisition was that the company Coca-Cola purchased from the Egyptian government and renamed TCCBCE included the illegally seized and never returned businesses of the Bigio family.
Coca-Cola was thrilled with its major multimillion dollar business accomplishment. In a 1994 declaration to shareholders shortly after acquisition, the company stated, "The Company is committed to continuing to strengthen its existing strong bottler system. Over the last decade, bottling investments have represented a significant portion of the Company's capital investments.... When considered appropriate, the Company makes equity investments in bottling companies. Through these investments, the Company is able to help focus and improve sales and marketing programs, assist in the development of effective business and information systems and help establish capital structures... For example," the notification continued, "the joint venture known as the Coca-Cola Bottling Companies of Egypt was formed in the second quarter of 1994 following the privatization of the Egyptian bottler, which was previously government-owned."
Coke’s predilection for success came to pass, judging from internal Coca-Cola information and vendor materials and videos obtained by this reporter. TCCBCE now derives an estimated $100-$500 million in annual revenue selling an estimated 150 million cases of soda and related products each year. The operation involves nine bottling plants and approximately 29 sales and distribution centers throughout Egypt. Employing approximately 7000-8000 Egyptians, TCCBCE has become one of that country’s leading employers. Growth became so explosive, TCCBCE needed to install some 700 network computer workstations to handle inventory and customer transactions, monitored by a single state-of-the-art console. A major data center is situated in Cairo, with an emergency back-up facility located 50 kilometers away. Volume escalated so much that the company’s call center was outsourced. Production became so enormous that TCCBCE had to hire an international environmental consultant to develop a multi-phase process for handling emissions, discharges, pollutants and hazards.
So successful was Coca-Cola’s Egyptian enterprise, in 2002, Secretary of State Colin Powell with Ambassador to Egypt David Welch awarded the company the State Department’s "Award for Corporate Excellence" in a special ceremony led by Powell himself. The award cited and hailed Coca-Cola’s stellar accomplishments arising from the 1994 privatization of ENBC.
Bigio, seeing a gigantic multimillion dollar business achievement that incorporated his businesses and involved his land, contacted Coca-Cola in Atlanta early on. Explaining that he was the rightful owner of the land and factories that were seized in the 1960s to create ENBC, he asked for back rent and compensation. Coca-Cola, the record reflects, would not acknowledge his claims. Bigio took Coca-Cola to court under a variety of legal theories including trespass, unjust enrichment and liability under the Alien Tort Claims Act, which has been successfully used in foreign terrorism cases.
Bigio retained Washington DC superlawyer Nathan Lewin. Lewin, often called "defender of the tribe," has represented such high profile clients as President Richard Nixon, Attorney General Ed Meese, actress Jodie Foster and Chabad against the Russian government in the effort to release the charismatic Jewish group’s archives. Having argued some 27 cases before the U.S. Supreme Court, Lewin has taught law at Harvard, University of Chicago, Georgetown, Columbia and George Washington University Law Schools. He is an expert in the financial prosecution of such terrorist groups as Hamas. Recently the Philadelphia firm of Berger & Montague and attorney Sherrie Savett joined the legal team.
In reviewing the Bigio litigation, the Second Circuit Court of Appeals repeatedly cited as pivotal Lewin’s argument that "Coca-Cola engaged in wrongdoing by ‘acquiring the assets of ENBC, knowing that plaintiffs had been deprived of their rights to the property solely because of their religious faith.’"
Hence, the key question is whether Coca-Cola in Atlanta did or did not know prior to the acquisition of ENBC that it included the looted assets of the Bigio Family. The record seems clear. Despite abundant warnings and requests for reasonableness, Coca-Cola went ahead and in 1994 acquired ENBC, renaming it The Coca-Cola Bottling Company of Egypt.
Even after Coca-Cola proceeded with the acquisition, Bigio tried to reason with the giant beverage firm. A telling June 20, 1995 letter to Coca-Cola attorneys in Atlanta with a copy to Chairman Roberto C. Goizueta, asserts, "We made you explicitly aware of the situation and thus put you on notice by forewarning you on the telephone, in addition to the written confirmation which followed, stating our objection to your acquiring these assets without paying us our just share." In reply, a Coca-Cola attorney wrote: “The company performed a thorough due diligence of the books and records of the El-Nasr Bottling Company ("ENBC") prior to the acquisition… I have to conclude that your claims, regardless of their merits, lie in Egypt, governed by the laws of that country and that they must be pursued there with the relevant Egyptian government authorities and state-owned industries responsible."
Lewin says the problem is this: "It is now more than 13 years after Coca-Cola callously rejected the Bigios’ personal plea made to the corporate officers in Atlanta and embarked on its major capital investment that took and exploited the Bigios’ property in Egypt. The time has come for Coca-Cola to meet a minimal standard of decency and justice."
Efforts to reach the Coca-Cola spokeswoman were not successful. But last year, during coverage of an anti-Coke Passover boycott, the company emailed this reporter the following statement: "We are sensitive to the plight of individuals who have lost property through the actions of others in various countries around the world. We understand their desire for a fair and open hearing of their claims. In this case, The Coca-Cola Company has never had, and currently does not have, any ownership interest in the property at issue in the litigation. Misr, an Egyptian state-owned insurance company, owns the property." The company added that it now uses the property only for "non-critical storage, repair and administrative functions." Coca-Cola, in its emailed statement, also stood by its legal argument: "This dispute is between the competing claimants, Misr and the Bigios. The Coca-Cola Company is not the proper defendant."
However, Lewin’s new motion for summary judgment rebukes the firm’s legal and moral position in the strongest language. “Coca-Cola is comparable to a person who witnesses the rape and murder of a next-door neighbor and watches while the murderer strips the corpse of distinctive jewelry that the victim has been wearing,” Lewin writes, adding, “A short while later, the witness learns that the murderer–who has escaped justice by fleeing to a foreign jurisdiction–is selling the distinctive jewelry that he pillaged from the corpse. Acting through a foreign agent, the witness purchases the distinctive jewelry.”
The motion summarizes Bigio’s position with these words: “Even after a dozen years of litigation and two defeats in the Court of Appeals, Coca-Cola professes ignorance of the venality of its conduct in exploiting, for immense profit, property that was robbed, by blatant religious governmental bigotry, from an Egyptian Jewish family. Instead of acknowledging–as the Egyptian government itself has done–that the Heliopolis property rightfully belongs to the Bigios, and that Coca-Cola should compensate them for the occupancy and use of these properties, Coca-Cola hides behind artificial and inapplicable legalisms to avoid basic fairness and justice."
Edwin Black is the New York Times bestselling author of IBM and the Holocaust and Nazi Nexus. He can be reached at www.edwinblack.com.