Court to adjudicate in Zimbabwe Coca-Cola war

Robert Mugabe and Coca-Cola, the world's largest soft-drink company, are locked in a courtroom battle with a South African businessman in a case that could take the fizz out of Zimbabwe's economic revival.

At stake is control of Zimbabwe’s soft-drink industry – once largely controlled by Zimbabwean-born Mutumwa Mawere – which was nationalised three years ago by Mugabe’s Zanu-PF regime.

As a result of being nationalised – under laws outlawing the "externalisation" of foreign assets and permitting the seizure of insolvent or state-indebted companies – several of Mawere’s firms, some listed on the Zimbabwe Stock Exchange and in South Africa, were liquidated by Zimbabwean authorities.

One of Mawere’s South African companies, Petter Trading, owes money to creditors. And local liquidators of the firm are claiming that the way it was nationalised was unconstitutional.

If the Zimbabwean courts uphold this claim, it will give the South African liquidators access to assets seized by Mugabe’s government.

The liquidators are trying to secure the assets of Mawere’s former Zimbabwean soft-drink company, Schweppes Zimbabwe, which he acquired from Coca-Cola several years ago. The assets, worth an estimated US$20-million, are now owned and managed by Coca-Cola, in conjunction with a Zimbabwean state administrator.

A lawyer representing the liquidators, Frank Cohen, said he believed the case had a good chance of success: "I see light at the end of the tunnel. The (Zimbabwe) government has to ultimately capitulate because this issue isn’t going to go away.

"Schweppes Zimbabwe was ultimately owned by one of the Coke companies. After reconstruction they (the Zimbabwe government) went and took the assets and shares of Schweppes Zim and sold it back to Coca-Cola – and they then became the owner of the company.

"That’s why we subpoenaed Coke," Cohen explained.

Court documents show an internal battle between Zimbabwean officials who disagree over the circumstances of Mawere’s case.

Coca-Cola and the Zimbabwean administrator of Mawere’s former companies this week denied any wrongdoing.

Coca-Cola Central Africa’s spokesman, Innocent Jam, confirmed the company "took over control of the shares and re-assumed management of Schweppes Zimbabwe Ltd" – but only because Mawere defaulted on the original terms of the sale agreement.

The situation forced Coke to deal with the Zimbabwean state-appointed administrator.

"The Coca-Cola Company has granted licences to several bottlers in Zimbabwe to manufacture and produce beverages bearing its trademarks.

"There have been no dealings with any persons or legal entities currently under sanctions imposed by America, Britain or any other country," the company said in a statement.

Jam added that Coca-Cola was phasing out its involvement in Zimbabwe, including its management role at Schweppes Zimbabwe.

State administrator Arafas Gwaradzimba said he was confident the Zimbabwean government would triumph in court – as it had done in similar cases in South African courts involving some of Mawere’s other liquidated companies.

Gwaradzimba said: "They lost all the cases in South Africa, which shows … the courts have seen the impropriety with which the companies were handled, whether in Zimbabwe or in South Africa."