by Gjelten, Tom
The big winners in the rum trademark war were lawyers and lobbyists. Litigation and representation fees rose well into the millions of dollars for both sides, and with appeals and unresolved issues, the end was not in sight. To Bacardi’s dismay, the U.S. Patent and Trademark Office did not immediately cancel the Cuban government’s registration of the Havana Club trademark in spite of the federal court ruling (the ruling barred only the enforcement of the trademark, not the trademark itself), nor did it give the Havana Club mark to Bacardi. The battle took yet another turn in January 2002, when the World Trade Organization dispute settlement board concluded that parts of the Section 211 legislation violated U.S. trade commitments and needed to be amended by Congress to conform to WTO rules. As enacted, the U.S. prohibition against registering confiscated trademarks appeared to apply only to Cuban petitioners, a feature the WTO considered discriminatory. Bacardi thus found itself needing help from both the executive and the legislative branches of the U.S. government in order to press its claim to the Havana Club brand. The stage was set for a massive lobbying push. It was time for Bacardi to get seriously into the money-and-politics game.
The company was a relative latecomer to the world of lobbyists and political fund-raising, but it quickly become a major player. In the 1996 election cycle, Bacardi-Martini made just ten thousand dollars in political contributions at the federal level. Two years later, with the company pushing for a change in U.S. trademark law, its contributions jumped to nearly $110,000, with Bacardi family members and employees contributing another $44,000, to Republicans and Democrats alike. For the 2000 election cycle, Bacardi political contributions soared again, with the company giving more than $400,000 to party organizations, political action committees, and advocacy groups. The company also became active in Florida state politics. From 1998 to 2002, Bacardi political contributions in Florida totaled about $240,000, with more than 90 percent of the total going to the Florida Republican Party, under the leadership of Governor Jeb Bush, a Bacardi friend.
The company’s political activism was spearheaded by two individuals, lobbyist Jonathan Slade in Washington and in Miami by Jorge Rodríguez, the Bacardi vice president for corporate communications (and a Bacardi son-in-law). Like many lobbyists, Slade specialized in gathering individual and corporate contributions in “bundles” earmarked for particular candidates or groups with whom the company wanted to establish a friendly relationship. Rodríguez, meanwhile, worked the Florida political scene. His top priority was to get the Patent and Trademark Office in Washington to settle the Havana Club issue definitively in Bacardi’s favor, and his plan was to get his ally Jeb Bush to intervene with the agency on Bacardi’s behalf.
“We need your help,” Rodríguez e-mailed Bush in January 2002.
Bush responded within twenty-four hours: “Jorge, I will see what I can do.”
It was the first of dozens of e-mail exchanges over the next several months between Rodríguez, Bush, and the governor’s staff in Florida and Washington, all focusing on Bacardi’s effort to get the PTO and the Office of Foreign Assets Control (OFAC)to take the Havana Club mark away from the French-Cuban venture and give it to Bacardi. As the months went by, Rodríguez became increasingly demanding. By April, he was furious with the lack of action on the part of what he called the “bureaucrats” at the PTO and OFAC. “This application NEEDS to be denied,” Rodríguez wrote to a D.C.-based aide to Governor Bush, referring to the French-Cuban request for a renewal of the Havana Club trademark registration.
On April 23, the governor’s Washington office notified Jeb Bush that his brother, President George W. Bush, had appointed a former Republican congressman from California, James Rogan, to oversee the Patent and Trademark Office. The governor’s staff—guided by Jorge Rodríguez—immediately began drafting a letter for the governor to send to Rogan, explaining the Bacardi case. On May 23, Rodríguez arranged a $50,000 Bacardi contribution to the Florida Republican Party. Two weeks later, a slightly revised version of the letter drafted by Rodríguez and others went out over the governor’s signature, with Jeb Bush asking Rogan to take “quick, decisive action” in Bacardi’s favor. Rodríguez and the governor both insisted later that there was no connection between the Bacardi contribution and the subsequent letter written on Bacardi’s behalf.
Meanwhile, the company faced the challenge of arranging a legislative “fix” to bring the Section 211 law into conformity with the WTO requirements. Senator Connie Mack, who had been so helpful in getting Section 211 enacted, had retired in 2000, but Bacardi lobbyist Jonathan Slade had found a new ally in Republican Tom DeLay of Texas. DeLay was second to no one in the U.S. Congress in his hatred for Fidel Castro, and he was almost as famous for holding the French in contempt, so he was a natural Bacardi ally in this fight.
As the House majority whip, DeLay was so effective in lining up Republican votes for his favored initiatives that he was called The Hammer. He was also known, however, for his “pay to play” approach. Special-interest groups or corporations who wanted DeLay on their side were expected to contribute generously to Republican coffers, in ways designated by DeLay or his associates. DeLay created or oversaw a vast network of political action committees, state party organizations, and other advocacy organizations. Jonathan Slade and the other Bacardi lobbyists knew that if they wanted DeLay’s help in protecting the Section 211 achievement, it would be a good idea to support his various fund-raising efforts.
Bacardi USA (as Bacardi-Martini had been renamed) was credited with a December 31, 2001, contribution of $20,000 to DeLay’s “leadership committee,” Americans for a Republican Majority. DeLay’s top priority at the time was to help Republican candidates during the 2002 state legislative elections in Texas, where the Democrats had long ruled. If the Republicans took control, DeLay figured, the legislature could then redraw congressional district boundaries and produce more districts that leaned Republican. Business groups and lobbyists who wanted to gain influence with DeLay were instructed to contribute to the political action committees that had been set up to bring about Republican control in the state. In July 2002, Bacardi USA followed up with a second $20,000 contribution, this one to DeLay’s Texans for a Republican Majority. With those contributions, Bacardi became one of DeLay’s leading backers.
One year later, DeLay took up the Bacardi cause in Washington, agreeing to amend the Section 211 language to make it apply to all confiscated trademarks, not just those expropriated by the Cuban government. Such a change would presumably make the law acceptable to the WTO and thus preserve the protection it afforded Bacardi in the company’s standoff with Pernod Ricard and its Cuban partner. DeLay’s spokesman, Jonathan Grella, bristled at the suggestion that DeLay’s action was a quid pro quo for the Bacardi donations, saying that his boss was only seeking “to protect American companies from predatory French companies that are conspiring with a murderous dictator.” In truth, DeLay needed little encouragement to go after a French firm allied with Fidel Castro, but the Texas congressman customarily demanded contributions from all his corporate allies.
In October 2003, DeLay attempted to insert the Section 211 revision into the 2004 Defense Authorization Act. His intention was to move quietly, without hearings or debate, as Florida senator Connie Mack had done in promoting the original legislation five years earlier. This time, however, the maneuver encountered opposition, and it had to be dropped. A second attempt the following spring also failed, due at least in part to controversy over the Bacardi-DeLay connection.
Before the congressional session was concluded, three DeLay aides were indicted for their management of the Texans for a Republican Majority political action committee (TRMPAC). The indictment charged that the corporate contributions to the committee, including Bacardi’s $20,000, had been directed to state legislative candidates, in violation of campaign finance laws. Bacardi USA and seven other corporations were also indicted, charged with violating Texas laws that prohibit corporate contributions to political campaigns. Four
of the companies subsequently settled, but the charges against Bacardi and the other companies were still pending in early 2008. Bacardi spokespersons insisted that contributions were legal and that the company was innocent. DeLay, who had broken official ties with TRMPAC after the passage of campaign finance reform legislation in 2002, was not himself indicted at the time, although charges were brought against him three years later. The effort to revise the Section 211 legislation was put off indefinitely, WTO pressures notwithstanding.
Some of the Bacardi energy that had gone into the long Havana Club fight had meanwhile begun to dissipate. In the summer of 2000, Manuel Jorge Cutillas retired as Bacardi chairman, ending more than forty years of active service to his family company. He was replaced by Rubén Rodríguez, the company’s former chief financial officer. Rodríguez simultaneously took on the functions of chief executive, replacing George “Chip” Reid, who had lost favor with family members and directors after unsuccessfully pushing an effort to take the company public. While Reid had been an enthusiastic advocate of the litigation against Pernod Ricard and the Cuban government, Rodríguez was less convinced it was a good use of Bacardi time and resources.
Though a native Cuban (and a cousin of Jorge Rodríguez), Rodríguez was the first company chairman from outside the Bacardi family, and he was less emotionally connected with the company’s Cuba history than his predecessors had been. With his background in financial analysis, he was also mindful of bottom-line concerns. Between the lawyers’ fees and the campaign contributions and the lobbying charges, the Havana Club fight had become quite costly, and Rodríguez was anxious to bring the expenditures under closer control. A few months after taking charge, he disbanded the company’s so-called Cuba Group, which had been coordinating the Havana Club fight and other Cuba-related issues. Subsequent accounting showed that between 1998 and 2003 Bacardi had spent nearly three million dollars on lobbying expenses alone.
As part of its effort to press its Havana Club case, Bacardi exerted political pressure on U.S. government agencies, interrupted a judicial proceeding through special congressional action, and paid out millions of dollars to lobbyists and political action committees. The efforts inevitably tarnished Bacardi’s achievements. The conservative Washington Times newspaper, edi torializing on the passage of the pro-Bacardi Section 211 legislation, suggested that the members of Congress who approved it were “perhaps intoxicated by visions of campaign dollars.”
More than a hundred years earlier, the patriot José Martí—a Cuban whose writings and friendship inspired Emilio Bacardi—observed while living in the United States that the U.S. House of Representatives “is chosen by such corrupt methods that every election is falsified by the use of vast sums of money.” What, then, would Martí have thought of Bacardi’s contributions to Tom DeLay’s political action committees at the very time it was seeking his legislative help? In the process, Bacardi had been linked not only to DeLay himself, but to what New York Times columnist David Brooks called “DeLay-ism,” by which he meant “the whole culture that merged K Street [the center of lobbying activity] with the Hill, and held that raising money is the most important way to contribute to the team.”
In truth, all this was unfamiliar territory for Bacardi. According to Otto Reich, a Cuban-American who had served as U.S. ambassador to Venezuela and later became a Bacardi lobbyist, company executives were initially reluctant to get their company involved in the Washington game. “They had this corporate Latin American view that politics is dirty,” Reich said in a 2007 interview. “They didn’t want anything to do with lobbying or political activism.” Reich, who subsequently became an anti-Castro hard-liner on George W. Bush’s foreign policy team, pushed the Bacardi leadership to take a strong stand. “I kept saying to them, ‘But you have a role!’”
What was perhaps most unfortunate for the Bacardi leadership was that the company’s management of its fight with the Havana Club joint venture overshadowed, at least for a time, the company’s established progressive ideals and long record of civic activism. From Cuba to Puerto Rico to Miami to Brazil, Bacardi had been known as a fair employer, a responsible corporate citizen, a patron of the arts, and a friend of the environment. In truth, it would be a mistake to read too much into the company’s political activism during the decade from 1994 to 2004. Those were also years when the company distinguished itself by making wise investment decisions, acquiring prestigious brands, and increasing its capitalization beyond the predictions of many financial analysts. Within the spirits industry generally, Bacardi’s reputation was enhanced, not diminished, by its performance as a company in the late 1990s.
In fact, its promotion of special-interest legislation in the U.S. Congress hardly put Bacardi in a category all by itself. U.S. corporations, including U.S. subsidiaries of foreign corporations, had made similar efforts before. Bacardi was different only because its activism around the Havana Club dispute developed in the context of a long history of involvement in Cuban causes. It was a company with deep Cuban roots, still entirely owned by a Cuban family. It had reason to reclaim its heritage as the originator of Cuban rum, and family members had long assumed the company would return to the island once Fidel Castro was no longer an issue. That day was now approaching. But what the Havana Club episode showed was that Bacardi would reengage with Cuba on vastly changed terms, as a wealthy and sophisticated spirits empire, one more multinational firm accustomed to confronting global rivals and triumphing over them. On one level, Cuba would be just another battlefield.
Chapter 23
Who Gets Cuba
Fidel Castro was energetically addressing an outdoor rally one sunny afternoon in June 2001 when he suddenly faltered, his voice weakening and his face quickly glistening with sweat. He reached up to wipe his brow, then slumped silently forward onto the podium. In an instant, uniformed security officers were at his side, gently leading him off the stage. Another officer, his hand on his gun, scanned the hushed crowd. Never before had people seen Castro collapse. His most loyal aide, Foreign Minister Felipe Pérez Roque, looking terrified, moved to the microphones. “¡Calma y valor!” he shouted. “Stay calm and be brave!” Many in the crowd responded by furiously waving the tiny paper Cuban flags they had been given when they arrived. “Fidel! Fidel! Fidel!” they chanted.
Castro’s brief fainting spell reminded Cubans of the obvious but rarely acknowledged facts: that he was an old man, that his physical powers were diminishing, and that his command of the island would one day end. Within hours, state security agents had appeared outside the homes of prominent dissidents in Havana. By then, everyone knew that Castro had recovered, but the authorities could still show how the regime would deal with any political emergency that might arise. In Miami, where Cuban-Americans waited endlessly for Castro to die, the news of his “illness” dominated Spanish-language radio programs for hours.
In October 2004, Castro tripped as he stepped off a stage after a graduation ceremony. Hitting the floor hard, he fractured both an arm and a knee. His stumble was captured by a television camera, but the image of the old comandante falling clumsily on his face was not one his aides wanted broadcast in Cuba. The footage was kept off the air. It did not matter; Castro’s aging was not a secret. Twenty-one months later, two weeks before his eightieth birthday, his personal secretary appeared on Cuban television and announced that Castro had suffered “an acute intestinal crisis” and undergone “complicated” surgery. Castro’s presidential, military, and political functions were all delegated to his brother, Raúl. For the first time in the memory of most living Cubans, Fidel was no longer in charge.
In Miami, some exile leaders encouraged Cubans on the island to seize the moment and launch a rebellion. “The time has come in Cuba for a campaign of civil resistance, civil disobedience,” said Republican Congressman Lincoln Diaz-Balart, whose father Rafael was Castro’s former brother-in-law. On previous occasions, Diaz-Balart had advocated the imposition of a naval blockade around Cuba, and he had been qu
oted as saying the U.S. government should consider assassinating Castro. Now he was boldly anticipating a confrontation between the Cuban people and the fidelista security forces. “It’s time for the military not to shoot. They either stand with the Cuban people, or their names will be on a list of infamy,” he said, as if he were in a position to know what lay ahead. He was not. In the months that followed Castro’s disappearance from public view, there was no unrest, no violence, and no special security crackdown.
Over four decades, Cuban exile leaders in south Florida such as Diaz-Balart—not to mention Pepín Bosch and other Bacardi players—had repeatedly misjudged conditions in Cuba and made erroneous predictions. It was an indication of the power of wishful thinking, of how much more Cuba had changed than they realized, and of the vast gap between the experience of exile in south Florida and the reality of life on the island. On the other hand, a significant segment of the Cuban population had lost all faith in Castro’s revolution, and the regime authorities could not be sure they would stay in power once Fidel was gone. The reaction among the population to Castro’s disappearance from public view was almost impossible to measure. There was neither joy nor sadness. After forty-seven years under an authoritarian regime where political guidance was passed down from above and where taking the initiative often got one in trouble, Cubans had learned to be inscrutable. The prevailing national sentiment was just anxiety. Life was hard, and people lived so close to the edge that the prospect of dramatic change frightened even those who wanted it. Cuba was entering the post-Fidel era, and its future was a mystery—to its own people and especially to those Cubans who had left.
