Edwin Black: An Egyptian Jew Battles Coca-Cola in the USA for a Modern Day Injustice

Roundup: Historians' Take

[Edwin Black is the award-winning and New York Times bestselling author of IBM and the Holocaust, as well as award-winning investigations of the relationships between General Motors, Ford Motor Co, Carnegie Institution and the Rockefeller Foundation with Nazi genocide.]

Refael Bigio in Montreal remembers the moment that the regime of Egyptian President Gamal Abdel Nasser seized his family’s property. He was driving to the factory with his father that traumatic August day in 1962. Police cordons surrounded 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’s 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 a White House 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 and actress Jodie Foster. 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.

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.

A copy of the Coca-Cola Code of Ethics states that extensive and careful review is required, often by company attorneys, prior to completing all transactions. In an emailed statement to this reporter, Coke averred, "Prior to submission of the bid for the purchase of the Egyptian bottler by a Coca-Cola Company subsidiary, a due diligence investigation was conducted. The investigation did not reveal any pending claims by the Bigios against ENBC."

But in fact, Coca-Cola did know in detail, according to correspondence and other documents obtained by this reporter. According to a review of documents, Bigio on February 3, 1994, long before the acquisition, telephoned Coca-Cola in Atlanta to alert the company that it was about to purchase his stolen property.

The record details letter after letter by Bigio warning the company not to proceed until compensation had been arranged. These letters went to senior officials including top attorneys in Coca-Cola’s Legal Department.

For example, on February 4, 1994, Bigio wrote Joseph O. Gladden, board member and chief of the company’s legal department, "We wish to hereby confirm our telephone conversation of yesterday by which we have advised you that we have started a lawsuit in Egypt to stop the sale of Coca-Cola Egypt. As I have informed you the Bigio Family owns the 10,000 square meters on which El Nasr Bottling has its warehouse in Heliopolis (Cairo)... In addition, Mrs. Bahia Bigio [Bigio’s mother] owns exclusively some of the buildings on this land. The two nationalized plants belong to the Bigio family… [and] are now part of litigations against Misr Insurance Company and are based on a release obtained from the Egyptian Ministry of Finance (Department of Sequestration)."

Bigio even enclosed a clip from an Egyptian newspaper that had covered the controversial pending sale.

"The purpose of having started the above stated litigation in Egypt," Bigio’s February 4, 1994 letter continued, "is not in fact to prevent the sale of El Nasr Bottling but to insure that the payments representing the value of this sale be distributed in such a fashion that the ultimate owners of these assets and factories receive a just and fair compensation share in this acquisition.

"By being presently notified, all parties to this acquisition will undoubtedly be able to take the best possible decision with regards to how the funds should be distributed, this insuring a smooth and sure operation. It is our opinion that Coca-Cola International seeks only clean and clear cut operations."

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."

The 12-page June 20, 1995 letter again outlines all the historical facts about the decades-old family enterprise in Egypt and the many efforts the family had made to communicate with Coca-Cola to obtain some element of compensation. One passage of the Bigio letter to Coca-Cola attorneys reads: "After speaking with Mr. Tom Hall we did agree on a meeting date, to take place at the end of May [1994] and at which time which we would put forth our proposal. Regretfully, due to the above, we had no idea of what in fact was in store … Two days before the date set for our encounter, Mr. Hall who was calling to reconfirm that we were meeting as planned, stated: ‘I wonder, is there really a reason to meet as we have just finalized our deal with the Egyptian Government which we just signed a week ago.’

"To which we replied: "How could you have done such a thing! …You know, we may have to sue you now for such an act!" … to which Mr. Hall responded: "I hope not."

Another passage in the June 20, 1995 letter states: "You are continuing to carry on the shameful, illegal and forceful occupancy of the real estate of Mrs. B. Bigio, denying her rent owed for the last 30 years (since you have acquired the assets and liabilities of Coca-Cola Egypt), or vacate the property to enable us to sell it at the market price of today, which would actually fetch millions, as you are well aware."

In a summary section, the letter states: "Our properties were confiscated and our plants nationalized; we were never compensated in any adequate manner with regards to the nationalization of our manufacturing plants, in any adequate manner, and you benefiting from such hideous acts."

A Coca-Cola attorney replied on July 19, 1995: "I have given careful consideration to the matters raised by you in your letter of June 20, 1995, and to the other correspondence and exchanges between you and this Company last year regarding the claims you allege against the Company in respect of certain Bigio family assets in Egypt. This review has given me no reason to advise the Company to change its position… The company performed a thorough due diligence of the books and records of the El-Nasr Bottling Company ("ENBC") prior to the acquisition. This process disclosed no record of any current liability then due from ENBC to your mother, Mrs. Bahia Bigio… 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."

Bigio’s uphill litigation against Coke has spanned more than a decade. In recent years, his cause was taken up by Mort Klein, executive director of the Zionist Organization of American, a pro-Israeli group. Klein became an active agitator and in the run-up to Coca-Cola’s 2007 annual shareholder meeting, he threatened a visible protest and boycott of Coke. The media—from the Chicago Tribune to the Wall Street Journal was filled with brief articles about Bigio’s "David and Goliath" struggle. The noise was enough to get Coca-Cola’s attention. To assuage Klein and quiet the tumult, Coca-Cola promised to negotiate fairly with Bigio’s attorneys to resolve the matter.

A year later, little has happened to show progress, according to those close to the legal team. Coke to this day continues to pay a pittance for rent on the Bigio property—not to the Bigios but to Misr Insurance Company which refuses to comply with the Egyptian governmental decree to return the property. The rent on the multimillion dollar Heliopolis properties: a mere $350 per month.

An angry Klein said he has given up waiting for fairness from Coca-Cola. "For a year" he said, "Coca-Cola made no more than a miserly offer on the properties despite a valuation of millions. Coke’s conduct is completely absurd."

Attorney Lewin who has been heading the stalemated negotiations agreed, the Coke offer is "world’s apart," from the economic value of the property.

Klein vowed to throw a protest line in front of the annual stockholder’s meeting tomorrow April 15, 2008 at the Hotel du Pont in Wilmington, Delaware. He stated, "The only answer now is a boycott of Coke and we are launching one in time for Passover. It is important," Klein continues, "to remind people that Jews of Arab countries had their wealth and possessions stolen." The irony was not lost that Passover observes the ancient injustices heaped upon the Jews in Egypt. Indeed, the House of Representatives on April 1, 2008 adopted House Resolution 185 officially recognizing the refugee status and plight of Jews expelled from Arab countries."

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."

Jewish leaders also want to see good faith negotiations. Abraham Foxman, national director of the Anti-Defamation League states, "It’s about time that the Bigio matter be resolved, in good faith, either by negotiation or speedy litigation."

Malcolm Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations, which represents some 26 leading groups, added, "When the government of Egypt originally seized this property, that was clearly wrong. The fact that Coke joined in needs to be taken into account. It is not realistic to give back the property, but it is realistic to provide fair compensation to the Bigios." Hoenlein emphasized, "The very essence of the word ‘compensation’ means it must be a fair amount."

One observer of corporate conduct stated, "Coke will probably find it easier to throw some token money at Jewish organizations to buy their silence, rather than deal fairly with the Bigio family."

Despite numerous attempts by this reporter to pose questions or obtain any specific answers on the topic, officials at Coca-Cola headquarters in Atlanta would not respond, with the spokesman’s office asserting it was short-staffed and busy preparing for the annual meeting. But the company did email this reporter a 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."

But those who support the Bigios say they will press on both seeking justice and proliferating a Jewish-led boycott of Coke products.

As the Passover period starts among Jews, they will recall the injustice of ancient Egypt, injustices that saw civilization’s first reparations as fleeing Israelites collected just compensation from their former taskmasters. As Jewish families recall that story, not a few of them will raise a glass of the special seasonal "Kosher for Passover" cola. Ironically, the leading maker of that beverage is none other than Coca-Cola. The Bigio family wishes they would choose another beverage as for them, the bitter taste has never gone away.

Read entire article at TheCuttingEdgeNews.com

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omar ibrahim baker - 4/19/2008

I wish the Bigios success and hope to see a similar aticle by award winning Edwin Black , and parallel legal suits in American courts and elsewhere , about Palestinians' properties in Israel.
That, and the stand of the Kleins and Foxmans, would test the mettle of American justice , US media and the integrity of the leaders of the pro Israel lobby!