Log In

Reset Password

It's a rum do! Bacardi is caught in DeLay indictment

BERMUDA-based Bacardi International's US subsidiary has been indicted in Texas over allegations that it made illegal corporate donations to a political action committee called Texans for a Republican Majority (TRMPAC), set up in 2001 by US House of Representatives Majority Leader Tom DeLay.

The reported that a legal defence fund that was set up to help Congressman DeLay pay his legal fees had been supported principally by US corporations and their executives and that "among the corporate donors to the defence fund is Bacardi USA, the Florida-based rum maker, which has also been indicted in the Texas investigation".

DeLay, arguably the most powerful and influential Texan in Congress since the late President Lyndon Baines Johnson was Senate Majority Leader in the 1950s, has become embroiled in a series of ethics disputes, but none more serious than TRMPAC, a committee which sought, successfully, to redraw the Texan congressional map and elect more Republican congressmen.

However, in so doing, it is alleged that TRMPAC accepted corporate contributions, which are illegal under Texan state law. A grand jury in the case issued indictments last September against the director of DeLay's national political action committee and his major fund-raiser, and eight companies that donated to TRMPAC, including Bacardi USA.

Major consumer brands usually attempt to avoid partisan politics, and there have been few politicians in Washington as aggressively partisan as Mr. DeLay.

Bacardi USA, which has contributed about $650,000 to congressional members of both parties since 1997, has been involved for many years in the non-partisan anti-Castro effort, but this legal imbroglio with powerful Republicans appears to be less about ideology than about a lucrative trade mark acquired with the help of powerful political friends.

Republican Congressman Lamar Smith of San Antonio, a close political ally of DeLay's, filed a bill last year to alter US trademark laws to benefit Bacardi, to whose eponymous rum labels and global brands like Dewar's Scotch has recently been added Grey Goose vodka,

However, unlikely bedfellows as far apart on the political and economic spectrum as services giant Halliburton and the progressive activists at Public Citizen cried foul, because "the legislation was similar to a sharply criticised provision that was quietly slipped into the defence appropriations bill (in 2003) by House Majority Leader Tom Delay, R ? Sugar Land. After it was revealed that DeLay political committees had received $40,000 from Bacardi, the resulting outcry didn't stop until the provision was stripped out," reported Chuck Lindell.

"Bacardi has (also) contributed . . . $20,000 to Texans for a Republican Majority, a DeLay sponsored political action committee under investigation for allegedly using corporate money in the 2002 Texas elections in violation of state law."

Bacardi's unrelenting effort to encourage Republican congressmen to support its cause has been ongoing for a decade. Working with an exiled Cuban family whose "Havana Club" trademark was supposedly confiscated by the Castro regime in 1960, Bacardi filed for a US trademark for Havana Club in 1994. CubaExport and its international-distribution partner Pernod Ricard, the French conglomerate, filed suit, but Bacardi won a number of court cases which stripped CubaExport of any right to the Havana Club trademark in the US.

But it was the way that Bacardi won that raised questions; CubaExport's claims were dismissed by a federal court based on Section 211 of US trademark law, a provision quietly inserted into a 1998 spending bill by former Republican Senator Connie Mack of Florida, using a tactic very similar to DeLay's five years later.

Section 211 barred the US from registering trademarks associated with property that had been seized by governments without compensation. Senator Mack was also a recipient of Bacardi PAC money, and is now a Washington lobbyist for Bacardi.

Lamar Smith's bill last year, like Tom DeLay's earlier effort, sought to amend 211 to answer complaints by the World Trade Organisation (WTO), which ruled that 211 violated copyright treaty obligations. Critics contend that the bill would mollify the WTO while protecting Bacardi.

Several major US companies are working to repeal 211, including DuPont, General Motors, Eastman Kodak, and Halliburton, based on fears that companies in other countries may attempt to overturn US trademark protections.

The left-leaning, Washington-based activist lobby Public Citizen excoriated DeLay and his corporate benefactors for what it saw as a flagrant breach of ethical behaviour.

Craig Holman, campaign finance lobbyist at Public Citizen, told the that, even by the standards of corporate lobbying for political influence, Bacardi's efforts went beyond "business as usual".

"Corporations will make campaign contributions in the hope of buying political influence or access, but Bacardi USA has given money to everything associated with Tom DeLay in an effort to try to get favourable legislation through, including helping with his legal defence for taking this kind of money! It's so abusive, and so brazen, that both Bacardi and Tom DeLay are in trouble over it. No one is pinning a date on it, but I fully expect that DeLay will not only resign his leadership post, but also resign from Congress altogether."

Another activist group, Citizens for Responsibility and Ethics in Washington (CREW), had criticised DeLay's provision and found little to like about Smith's, although Smith appeared to be the only politician involved who had received no campaign contributions from Bacardi.

Melinda Sloan, director of the government-accountability group, told the that Bacardi was still attempting to press its trademark legislation, and that it was all about money.

"Bacardi gave money to TRMPAC and DeLay's legal fund, because he has been pushing legislation they want for a very long time, and they are still trying to push (the 211 amendment) through. It got killed last year, but now it's back.

"They keep looking for a bill to put it in, if they can't get a stand-alone bill. It's bad policy because it undermines protections for other US companies in other countries. It's a very stupid thing to do, and although I don't expect politicians to care much about what Public Citizen and CREW think, they normally care about General Motors and Halliburton.

"It's not even about using the 'Havana Club' trademark right now. It's about being able to sell a rum with that label in the US in a post-Castro world. It was never Bacardi's trade mark and the former owners let it lapse in 1973. Cuban rum cannot be sold here now because of the embargo.

"It's a ridiculous thing that Bacardi is trying to pull; they found this Cuban exile family, and got them to say that the rights were stolen from them, and it's just not true.

"It's outrageous that they would be able to enlist the majority leader of the US Congress to go along with this incredibly shady deal, but then Tom DeLay is the most corrupt politician in America today."

Bacardi International in Bermuda referred inquiries to Patricia Neal, a spokeswoman for Bacardi USA, who said, with regard to the trademark matter: "No civil society recognises confiscation without compensation. Bacardi is proud that every time this issue has gone before court, all the way up to the US Supreme Court, the courts have decided in favour of Bacardi."

With reference to the Texas case, Ms Neal said: "Bacardi USA made a legal contribution in full compliance with Texas laws and regulations and we are confident that this matter will be cleared."