Iran targets Irish Coke connection

Sunday Times: An Irish subsidiary of Coca-Cola has been targeted by Iranian officials in an escalating row over sales of the drink in the Islamic republic. A leading Iranian official has called for sales of Coke to be banned because profits are being routed through a subsidiary company in Drogheda to the “Zionist-supporting regime” of America. The Sunday Times

Mark Paul and Mark Tighe

AN Irish subsidiary of Coca-Cola has been targeted by Iranian officials in an escalating row over sales of the drink in the Islamic republic. A leading Iranian official has called for sales of Coke to be banned because profits are being routed through a subsidiary company in Drogheda to the “Zionist-supporting regime” of America.

The Irish company, which employs 400 people, exports syrup to Khoshgovar, the Iranian distributor of the soft drink, which is under investigation by Iranian officials.

Last week the BBC Middle East monitoring service reported that Mehdi Minai, a senior official with the “public demands council” investigating the business, had identified an Irish company as being responsible for transferring €150,000 of profits annually from the Iranian company to Coca-Cola in America.

The Iranian government, under the direction of Manouchehr Mottaki, the foreign affairs minister, is compiling a list of companies it believes are supporting Israel by allowing profits to transfer to America — Israel’s main supplier of military hardware. Mahmoud Ahmadinejad, the Iranian president, has said he wants Israel to be wiped off the map.

Once the list of companies is published by the ministry for foreign affairs, those named will be banned from trading. According to Minai, the executive director of the council, its investigation has confirmed Irish involvement with the bottler.

“During meetings the council had with Khoshgovar, we verified that this company maintained its license from the American Coca-Cola company since the revolution,” he said.

“On this basis it has been transferring €150,000 through an Irish company into Coca-Cola’s American account annually.”

Because of the delicate nature of doing business in Iran, Coca-Cola is sensitive about how the brand is portrayed in the region. The company website has a “myths” section rebutting suggestions its products should be boycotted because of their American identity.

“Our products are often identified with America, but the fact is the Coca-Cola company is a truly international business operating in more than 200 countries,” it states.

When asked to comment on the Iranian assertion that an Irish company was acting as a conduit for profits from Khoshgovar, Drogheda Concentrates referred the matter to Coca-Cola’s American headquarters in Atlanta, Georgia.

Dana Bolden, a director at Coca-Cola headquarters, said it had permission from the American Office of Foreign Assets Control (OFAC) to sell concentrate to a bottler in Iran. He added that Coca-Cola did not have any ownership interest in the bottler or maintain any tangible assets in the country.

Asked if the Iranians were correct to say an Irish company was being used to transfer profits from Iran, Bolden said: “For proprietary reasons I cannot comment on countries to which we export or the financial relationships and processes Coca-Cola has in place.”

Coke has had a fraught history in Iran since the Shah was overthrown by the Islamic revolution led by the Ayatollah Khomeini in 1979. Its bottling operations in the country were nationalised and home-grown brands such as ZamZam and Sassan, which between them still dominate the market, flourished.

While the distinctive and genuine Coke bottles were available on Iranian shelves, they didn’t contain the “Real Thing”, being filled instead with other home-produced colas. Muslim-friendly versions, such as Mecca-Cola, were also launched on the market.

Coke re-entered Iran in 1994, signing franchise agreements with two bottlers, including Khoshgovar, which began sourcing its syrup from Ireland via the Coca-Cola Atlantic company, now Drogheda Concentrates.

However, American trade sanctions imposed the following year by President Bill Clinton put an end to Coke’s Iranian revival. One of Khoshgovar’s competitors subsequently claimed in an Iranian court that the company was still sourcing its syrup from Coke’s Irish arm. Coke denied claims of sanction busting at the time.

The trade restrictions were relaxed in 2000, and Khoshgovar renewed its relationship with Coke, including sourcing its syrup from Ireland. Khoshgovar still produces cheaper cola, but now sells the genuine article at about three times the price of its other brands.

Iranian authorities are now planning to ban a range of international brands, including Coca-Cola and Pepsi, over their alleged links with Israel.

A special commission was recently set up by the Iranian government to compile a hit list of “Zionist” brands to be outlawed.

A rally last Friday in Tehran, which was addressed by Ahmadinejad, featured banners that accused Coke of supporting the state of Israel.

A state broadcast currently on Iranian television tells viewers: “Pepsi stands for ‘Pay Each Penny to Save Israel’.

“Zionists are the biggest shareholders in the soft-drinks industry and each year they make billions of dollars for their colonialist aims.”

It has also been alleged by some Iranian clerics that Coca-Cola spelled backwards constitutes a slur in Arabic on the prophet Muhammad.

A spokesman for the Iranian embassy in Ireland refused to comment.