In search of Corporate Iran and a Coca-Cola

Eric Ellis in Tehran

CORPORATE Iran — now there's a term you don't see that often.

Corporate America we know well. And, of course, Corporate Australia, which Canberra recently banned from Iran.

But Corporate Iran? Google yields just 100 results and most are copies of an article in a US business magazine lamenting the 2005 rise of the "anti-capitalist, anti-West" President Mahmoud Ahmadinejad.

Corporate Iran does exist — and as with most things in this complex and often charming country, a grasping mullah hovers close to its spigot.

And ayatollahs. Take the "Shah of Pistachios" Akbar Hashemi Rafsanjani, Iran's once and perhaps future president and widely regarded by grumpy Iranians as their richest man. The family's writ runs to airlines, caviar, oil, mining, cars, property and agriculture.

There's supposedly billions stashed in Swiss, Singaporean and Luxembourgeois banks — with an emphasis on the bourgeois — property in France, Canada and booming Dubai and beach resorts in India and Thailand. The former president's clan denies it, but Iranians struggling on $2000 a year and seeing their leaders squander Iran's oil wealth in Hezbollah adventurism snort that Rafsanjani doth protest too much.

One intrepid local hack pried a little too far into Rafsanjani Inc and is in jail. A blameless businessman I met is convinced he did three years inside in the '90s because he refused to yield when Rafsanjani's lieutenants fancied his profitable commercial farms. That or because he is Bahai, regarded as heretical by Iran's Shia mullahs.

But he was lucky. Tehran's small coterie of investigative journalists and corruption activists are still reeling from a spate of unsolved murders in 2000.

I repair to lunch at Nayeb, in fashionable north Tehran. Elegant ladies-who-lunch in Jackie O sunglasses pick at grilled Alborz trout and salad, their table chatter gliding between French, English and Farsi.

The clientele is as urbane as any eatery in Paris' VIIe — smart Tehran tilts heavily to France — and the only hint we're in George Bush's Axis of Evil is the hijab Iranian women must wear — lest they risk attacks from Islamist militias, the feared basijis.

The pressing demands of mosque and mode merge in expensive Hermes scarves, exposing sexy blonde-tipped fringes. Ring-heavy hands cradle Marlboro Lights and Kents.

The Nayeb set's preferred tipple is probably Krug, but Khomeini and his Islamist heirs are teetotal revolutionaries, so less chic are making do with Coca-Cola.

Coca-Cola? Marlboro? Hang on, isn't Corporate America — and now Corporate Australia — banned from doing business in Iran? Yes, but Washington bent the rules in 1999 for "foodstuffs", thus opening a door for Pepsi and Coke.

Operating through Irish subsidiaries in Drogheda, Coke has been selling here since 1999 and Pepsi since 2001, after being kicked out in 1979. They have already grabbed about half of Iran's $2 billion beverage market and are taking aim at the sector leader Zamzam.

The theocrats want Iranians to shun "Great Satan" brands, which they say send profits to "Zionist Israel to be converted into bullets piercing the chests of Lebanese and Palestinian children". Hardliners such as Mehdi Minai of the mosque-linked Public Demands Council, love denouncing Pepsi. He says Pepsi stands for "Pay Each Penny to Save Israel".

Big Beverage dismisses such blather as, well, blather.

Australian products are not much evident in Iran, but the region has been happily boycotting US beverages for years. A 1960s saying echoing round the region has it that "Coke is for Jews; Pepsi is for Arabs".

Coke has endured persistent claims that its logo insults the Koran. The whispering campaign got to the point that Atlanta posted a page called "Middle East Rumours" on its website to counter the claims.

One entry denies, with a letter from an Egyptian grand mufti, a widely held belief that Coke's curve swirl says "No Muhammad, no Mecca" in reverse.

The best thing going for Coke and Pepsi here is not their Americanness but probably because Zamzam is run by a bonyad. These are the religious charities Khomeini used to quasi-nationalise Iran's economy after 1979. Conceived to help Iran's needy, bonyads are no model of modern management. Many have become goldmines for the powerful, which in Iran means the pious, or those close to them.

Zamzam's 17 plants are controlled by the Foundation of the Dispossessed, answering to the Supreme Leader, Ayatollah Ali Khamenei.

The cranky Minai is lobbying Khamenei to issue a fatwa on Coke and Pepsi out of Iran, and this is where Corporate Iran can be a trap for young players. A clerical ruling that could appear to be religious in intent might be about something quite different.

Bonyads control trillions of rials of assets, such as the international hotels that operated under the Hyatt, Hilton, Sheraton and Intercontinental banners in the 1970s.

The old Hyatt is called the Azadi (Freedom), and Mamma Mia muzak fills the lobby as junketing officials from Bahrain herd to the coffee shop — to drink Coca-Cola with their eggs. In Corporate Iran, it's hard to avoid Corporate America.

Eric Ellis is South-East Asia correspondent for Fortune magazine