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DeLay Pours It On for Bacardi

With help from House Majority Leader Tom DeLay (R-Texas), Bacardi-Martini Inc., the U.S. subsidiary of the Bermuda-based rum maker, is on the verge of scoring a big victory in the long-running battle over who owns the rights to the legendary “Havana Club” rum label, a victory that could prove very lucrative in a post-Fidel Castro world.

DeLay is lobbying to include language in the 2004 Defense authorization conference report to amend U.S. trademark law to make it comply with a ruling by the World Trade Organization last year that threatened Bacardi’s claim to the Havana Club brand.

Opponents of DeLay’s proposal point out that his measure was never vetted by any committee in either the House or the Senate, and benefits Bacardi alone, and they claim it could potentially harm U.S. companies that have intellectual or property claims in Cuba.

A liberal government watchdog group slammed DeLay for his action on behalf of Bacardi, alleging the Texas Republican is simply bailing out a big financial backer. Bacardi has given DeLay or organizations under his control more than $43,000 during the past several years, a portion of the $800,000-plus the company has spread around to both parties since 1997.

DeLay aides strongly dispute any link between his proposal and Bacardi’s donations and say the Texas Republican’s interest in the issue is purely ideological. They point out that DeLay wants to continue the U.S. embargo of Cuba as long as Castro is in power and argue the WTO ruling could give Cuban companies a chance to sell products in this country unless they are specifically blocked from doing so.

Jonathan Grella, DeLay’s spokesman, said his boss is “working in conjunction with U.S. Trade Representative Robert Zoellick” to bring American trademark law into compliance with the WTO ruling. USTR officials said they are now looking to Congress for help.

Grella cautioned that the legislative vehicle the Majority Leader will try to attach the Bacardi measure to is “not solid” yet, although Armed Services Chairman Duncan Hunter (R-Calif.) has apparently agreed to include it in the Defense bill, according to several sources close to the issue. The newsletter Cuba Trader first disclosed details of DeLay’s initiative.

Bacardi has been locked in a bitter struggle for years with Pernod Ricard of France and CubaExport, a Cuban government-controlled company, over control of the Havana Club trademark. In 1993, the French-Cuban alliance formed a joint venture to market Havana Club, which the Cuban government registered with the U.S. Patent Office in 1976. Bacardi was later able to convince American officials to back off from their recognition of the Cuban government’s claims.

Bacardi, which has opposed lifting the U.S. embargo of Cuba, fearing a flood of Cuban rum into the U.S. market, purchased the rights for Havana Club from the original owner, Jose Arechabala S.A., in the mid-1990s. The two sides have since waged a protracted contest on both the political and legal fronts.

The provision DeLay is proposing would alter a 1999 law known as Section 211, pushed through Congress at Bacardi’s request by then-Sen. Connie Mack (R-Fla.), to ensure that U.S. and foreign companies are prevented from registering or defending in court trademarks associated with property expropriated by foreign governments. After a challenge by the European Union on behalf of France, the WTO ruled last year that U.S. law as it is written applies only to foreign companies and thus needs to be changed. The United States has until Dec. 31 to comply.

Grella said DeLay is “seeking to protect American companies from predatory French companies that are conspiring with a murderous dictator.”

Until the United States and Cuba normalize relations, including trade, no one is allowed to use the Havana Club name. Normalization is expected to occur only after Castro’s death.

DeLay’s activity on Bacardi’s behalf has brought loud complaints from at least one liberal watchdog group.

“It’s like Westar all over again,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. Sloan was referring to allegations that Westar Energy gave $25,000 to a DeLay-affiliated political action committee in 2002 to win his support for a legislative measure potentially worth billions to the firm, a charge that DeLay has denied repeatedly. Westar officials were later indicted for fraud and the proposal was withdrawn.

“There’s nothing that DeLay can’t get away with and no one will do anything about it,” added Sloan.

Bacardi has spent heavily during the past several years to build a relationship with DeLay and other leaders in both parties, relationships that have repeatedly paid off when the company flexes its political muscle.

Bacardi gave $20,000 in soft money to Americans for a Republican Majority PAC in 2001, with another $20,000 going to Texans for a Republican Majority PAC in July 2002. DeLay cut his ties to the two organizations, which he controlled, after last year’s campaign finance legislation banned soft-money fundraising by Members.

Bacardi also donated $3,000 to DeLay’s legal defense fund following a civil racketeering lawsuit against the Texas Republican by the Democratic Congressional Campaign Committee in 2000. That case was later dropped, although it cost DeLay hundreds of thousands of dollars in legal bills.

And Bacardi helped DeLay pay the bills for events he hosted at the 2000 Republican National Convention in Philadelphia, as well as supplying the liquor and gifts for DeLay-run golf tournaments.

Bacardi officials declined to comment for this article.

DeLay, however, is not the only lawmaker or well-connected official to have tasted Bacardi’s financial largess.

In the three election cycles prior to last year’s soft-money ban, Bacardi handed out more than $651,000 in checks to the national parties, with the GOP having a slight edge in the amount it received.

Bacardi also donated another $202,500 to 527 nonprofit groups affiliated with Democratic and GOP lawmakers between August 2000 and November 2002, according to the Center for Public Integrity. Senate Minority Leader Tom Daschle (D-S.D.) is among those who benefited from Bacardi’s generosity.

Bacardi officials also persuaded Florida Gov. Jeb Bush (R), brother of President Bush, to weigh in on their behalf with the U.S. Patent and Trademark Office in early 2002. Bush’s intervention came at around the same time the company gave $50,000 to the Florida GOP. Those efforts were unsuccessful, and Bush later denied any link between his actions and the Bacardi donation.

Pernod Ricard has responded to Bacardi’s latest offensive by bringing in its own lobbyists, including former Rep. Thomas Bliley (R-Va.), to ask senior House Republicans to reject DeLay’s proposal, although they have had little luck so far, according to GOP insiders. The company is also targeting the Senate, specifically the Finance Committee, for help.

Several Members, led by Rep. Charlie Rangel (D-N.Y.), are pushing legislation to repeal Section 211 outright, arguing that it is the only way to bring the United States into true compliance with the WTO and other international agreements. Despite corporate interest, including backing from DuPont, Ford and General Motors, among others, the outlook for that bill is considered poor.

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