“Blood Beer” or the paradox of Heineken in the Congo

The fighters raped, tortured and killed and enjoyed a sundowner Primus beer afterwards. Did Heineken’s subsidiary Bralima pay taxes and toll to rebel troupes during the Congolese war to sell its beer? The political scientist Peer Schouten thinks it did. He was in the country to explore the role of the Dutch brewer Heineken in the war. His report “Fluid markets” was published in the September 2013 issue of the journal Foreign Policy. Strangely, it took until 9 November 2013 for the German magazine Der Spiegel to pick it up.

The fighters in the Congolese civil war obeyed only one rule: “You can bomb a hospital, but not Bralima.” That’s what the people of the Kivu region in the eastern Congo, where the civil war raged most savagely, told the Dutchman Peer Schouten. His level-headed, non-accusatory article makes interesting reading. Not only for what it reveals but also for the responses it has drawn so far.

France’s Castel and Dutch Heineken are the two brewers in the Congo, formerly known as Zaire. According to estimates, in 2012 they produced a total of 5 million hl beer, which ranked the Congo sixth among Africa’s beer producing countries. In the Congo, the Dutch have long been active. Bralima has six breweries scattered across the country. It controls about 75 percent of the market in terms of volumes sold and employs 3,300 people. A further 178,000 jobs are directly dependent on the company. This was not always the case. It was Heineken’s Dolf Van den Brink who cleaned up the Congolese business with gusto in the Noughties when he served time there as commercial director. “When he arrived, Heineken was down to 31 percent market share; its biggest competitor, the French brewing company Castel Group - today partially owned by SABMiller - boasted more than a 70 percent share. When van den Brink left [to become CEO of Heineken USA 2009], Bralima’s market share in the Congo had doubled and overtaken that of Castel Group, hitting 74.8 percent,” Fortune Magazine wrote in September 2013.

Bralima is on a growth track. In 2011, the former Heineken manager Hans van Mameren announced plans to invest about EUR 400 million euros in the Congo until 2016, saying: “We produce the cheapest luxury in the world.”

The luxury is called “Primus”. It is the most popular beer in the Congo. “Bralima,” writes Mr Schouten, “is the brewer of not only Primus but a host of other beers and soft drinks (including Coca-Cola). “It can serve as an example of the way businesses can contribute to peace and development in the Congo. That Heineken aims to actively do so is reflected in the Heineken group’s adage ‘brewing a better future’. The brewery Bralima - part of the Dutch Heineken Group - was founded in 1923 and is one of the few companies that has maintained a presence throughout the turbulent history of the country, brewing Primus for Belgian colonials, Mobutu’s Zairian elite, and the many factions part of what came to be known as ‘Africa’s First World War’. According to a corporate brochure, in 2011, Bralima made USD 384 million through its nearly seventy thousand retail locations throughout the country. Through its Foundation, Bralima has been responsible for hundreds of thousands USD worth of vast development projects with such titles as ‘Operation Peace in the DRC’ and ‘Investing in the Well-Being of the Congolese People’. And as the largest company in the country, it supplies secure employment to thousands of people.”

In the eastern Congolese city of Goma Bralima’s market is large: an estimated 6,000 beer crates leave the brewery each day, Mr Schouten reckons. That’s more than two million dollars in sales per month, he says.

Given that there is hardly any infrastructure to speak of in Congo, corruption is rife, and much of the east of the country is plagued by tides of unrest sparked by a disturbing choreography of rebels and predatory security forces, how has Bralima been able to increase profits? Mr Schouten asks. He presses on: “How is it possible that, during one of the world’s fiercest conflicts, the Heineken subsidiary ‘did not stop producing during the conflict and has experienced an upswing in sales’, as the New York Times reported? How is it possible to operate in the Congo without becoming entangled with the plethora of conflict actors that prey on anyone with money in the country?”

And he gives the answer: through payments to both the rebels and the army. He found out that the rebels received USD 5.50 per crate of beer and USD 3.55 per crate of soft drinks in taxes. They also levied other charges, such as an 18 percent “provincial tax”. Thus, Mr Schouten concludes, Bralima was “structurally” connected with the rebels.

Another source of income for the rebels is toll collected at road blocks. “In large parts of the eastern Congo, it is rebels, usually unemployed youth with makeshift weapons or renegade Congolese soldiers, who control market access. Anyone driving through eastern Congo quickly becomes familiar with the choreography of checkpoints. They’re often just a wooden log or frayed rope thrown across a muddy red jeep trail, perhaps with a shack nearby sheltering a couple of guys holding Kalashnikovs. The checkpoints are the primary revenue source for local armed groups, more than enough to fund insurgencies in a country where many earn less than a dollar a day and used AK-47s cost under USD 75. With no alternate routes available, even a single checkpoint can bring in at least USD 700,000 per year,” Mr Schouten reports.

He thinks that Bralima, or its logistics subcontractors, continue to pay over a million dollars in toll each year in the eastern Congo although the war is officially over. That’s why in far flung areas a bottle of Primus beer can cost four times as much as in the capital Kinshasa (USD 1 per bottle).

Incidentally, Bralima is not the only one falling prey to extortion. Everybody, from local women going to the market to western NGOs, is held for ransom. This way one rebel group, the infamous M23 group, made millions of dollars each year which it used to spend on weapons, ammunition and wages for the fight against the regular Congolese army, Mr Schouten argues.

When Der Spiegel approached Heineken with Mr Schouten’s allegations, the company stated: “We are still in the country, because the business model allowed us to. An important element was the simple fact that whole communities were dependent upon us.” Raising the moral finger, Der Spiegel goes on to ask – rhetorically - how Heineken can continue doing business in such a region?

This moral dilemma – a wrong life cannot be lived rightly, one cannot act ethically if circumstances are unethical – informs Der Spiegel’s criticism of Heineken’s dealings in the Congo. Der Spiegel reminds its readers that when Heineken was found out to have employed forced labourers in Myanmar, the company exited the country in 1996.

Mr Schouten isn’t one to go for the moral killer argument. He says that his investigation is “not about Heineken in particular, but about how multinational corporations operate in such areas. Other companies pay taxes or duties to questionable governments or rebels. One could also write long articles about them.” The M23 group is financing itself too by smuggling gold, which later ends up in the windows of jewellers all over the world.

Being a political scientist, Mr Schouten raises the pertinent question if western development policies aren’t inherently flawed that say that corporations are supposed to contribute to peace and development in volatile environments. “International NGOs and governments”, says Mr Schouten “have spent the better part of six decades attempting to import poverty reduction and economic development to the most vulnerable parts of the Global South, and to say that the record is mixed is putting it kindly. Adding a trickle-down profit motive atop this schematic in an effort to right the ship can smell like passing the buck, but fits with the liberal peace-building rationale of economic exchange and liberalisation that has been codified amongst the international community’s most important players. But these policies are untested and unproven within fragile countries, which is why both academics and activists are increasingly concerned that they are exacerbating many of the greatest pressures that today’s global poor face. While doubling down on the strategy might please the business community in the short term, securing the dash for unexplored market share may just mean that anything - even beer - will end up entrenching the world’s most violent and despotic warlords in the name of economic opening.”

As his research shows, “in order to tap the Congo market and flood it with Primus and other beverages, Heineken’s subsidiary flirts with the boundaries of the permissible.”

Revealingly, readers who commented on the piece in Der Spiegel, proved far more even-tempered than was perhaps intended by the editor. That may be one of the reasons why Mr Schouten’s original article in Foreign Policy failed to cause a storm of protest against Heineken in the first place. Some readers argued that the Congo was not any different from other African countries (which I can confirm. I had to pass money-spinning road blocks in several countries which were not at war) and if Heineken had pulled out, thousands of people would have been without a job. “A job is a chance to survive”, one reader wrote.

Another one complained about the whole hypocrisy. “If Heineken sells beer to the rebels, that’s bad. However, western relief organisations bribe the murderous thugs too in order to get supplies through to people in need, without wanting their donors to know.”

In my opinion, businesses and the army of western do-gooders are ill equipped to promote the lofty ideals of freedom and democracy in parts of the world where the rule of law is weak or non-existent. That should not stop them from trying. In the meantime, though, they are best advised to not to brag about their achievements. As Heineken’s adage “brewing a better world” shows, it only leads to criticism if scrutinised on the ground.

Red alert: corruption in 2012 (Figure below)

Transparency International’s Corruption Perceptions Index ranks countries and territories based on how corrupt businesses perceive them to be. While no country has a perfect score, the countries painted in various reddish hues have a serious corruption problem. Source: Transparency International