Coca-Cola’s Uzbekistan business has always been worth a story as it is so neatly interwoven with some Karimov family gossip.

A quick background: In 1991, President Karimov’s daugther, Gulnora Karimova, got married to Afghan-Uzbek enterpreneur Mansur Maqsudi. Not long after that, Maqsudi approached Coca-Cola offering the company to manage their Uzbekistan operations. It only took three years until Coke’s major competitor Pepsi was driven out of the market - and Coke could establish a quasi-monopoly.

However, once the illustrious couple divorced back in 2001, the fortunes of the Uzbek Coke-bottler Maqsudi faded. Almost immediately after the news of the break-up had come through to Uzbekistan, security service people entered the offices of the Coca-Cola Bottlers Uzbekistan (CCBU), the ministry of finance filed a tax investigation, and police interfered with the distribution of the sugary drinks.

Maqsudi’s ROZ Limited Trading Company got stripped of its shares in CCBU within ten months after the high-profile divorce. But Coca-Cola continued to produce in Uzbekistan:

“Uzbekistan is an important country for us,” said the company’s Mr. Bozer. “We have a good relationship with the Uzbek government, and I don’t see what has happened as taking away from that.”

Maqsudi is now taking the American soft-drink giant to an arbitration court, seeking more than $100m in damages. Did Coca-Cola really “conspire with the Uzbek government” against a joint venture partner who fell out with the country’s President?

Mind you, but the New Jersey based businessman is himself no stranger to unorthodox business practices:

Most of the goods CCBU imported (sugar, bottling equipment, plastic preforms, labels, caps, etc.) went through the Maqsudi-owned companies. And while Coke was paid, often late, in wobbly Uzbek currency that couldn’t be taken out of the country, Maqsudi’s properties got preferential treatment; they were paid in hard currency, often in advance. From 1998 to 2001, while Coke was struggling to get paid, almost $100 million was wired from Uzbekistan to Maqsudi affiliates, including a Dubai-based trading firm, Valuelink FZE, and various offshore affiliates of Roz Trading (the Maqsudi company that held the family’s CCBU stake), according to Uzbek Central Bank records.

While it may seem incredibly unpopular, I have to take sides here and wish Coca-Cola all the best in the upcoming court case. After all, they are no longer the bad and immoral monopolist. Olya, on TeenWorldNews, said back in 2002:

Competition on the market of beverages is strong nowadays, there is broad option there and Coca-Cola is one of others competing on the market. I think that already now I can hardly remember that days when a person looking for something to slake his thirst, could find only three things everywhere: Coca-Cola, Sprite, Fanta. I don’t take into account very few local beverages of extremely low quality.

Update:
The FT ran a story yesterday that sheds some more light on Mr. Maqsudi’s claim (HT: CXW):

Coke endured an 18-month shutdown of the plant that ended only last year but, despite attempts by the Uzbek government to gain control of its share as well, the company has managed to retain its stake in the operation. The filing alleges that, rather than coming to the aid of its joint-venture partner, the company collaborated with the Uzbek government and discouraged US authorities from intervening on Mr Maqsudi’s behalf.

Apart from that 2003 Forbes story referenced above, the current news coverage seems to be pretty much in favour of the Afghan-Uzbek businessman.