Companies feel the heat in Arab revolution

When Canada’s Suncor Energy opened a natural gas plant in Syria last year, it promised “Energy for today and tomorrow” in an advertisement that showed one of its workers talking to a keenly interested President Bashar al-Assad.

Now the business is scrambling to deal with a tomorrow that has arrived in an unwelcome form: a country in chaos, headed by a leader whose lethal crackdown on a popular uprising has made him a public relations liability.

Asked about its future in Syria, Suncor said it was making a “great deal” of effort to ensure it could operate responsibly there. “We ... continue to work within our sphere of influence to ensure we are upholding the company’s values,” it added.

Suncor’s sense of discomfort is shared by a clutch of big businesses that are feeling the heat from six months of revolution against autocratic regimes across the Arab world.

While some companies have already revealed bottom-line losses, others are facing the prospect of financial damage and campaigns against them by activists and citizens – with the possibility of awkward questions to follow from investors and staff once the full impact of crises becomes known.

As Anthea Lawson, a campaigner at Global Witness, a London-based non-governmental group, put it: “In dealing with a repressive regime a company has to think from the start about the risk of instability – because at some point people are going to get angry enough to do something about it.”

Just as the so-called Arab spring caught politicians, journalists and other international observers by surprise, so the wave of uprisings has triggered evacuations of corporate personnel and the sudden shutdown of sometimes lucrative projects.

The short-term impact was highlighted in research published by Grant Thornton, the accountant and consultant, which said official figures showed US exports to Libya fell 32 per cent annually during the first three months of the year and by 22 per cent to Syria over the same period.

One corporate casualty was the Formula 1 Grand Prix in Bahrain, which was scrapped amid prolonged protests against a decision to reschedule the event later this year after an uprising by the country’s Shia Muslim majority against its Sunni minority rulers.

It was following reports that Shia employees at the Bahrain International Circuit, the government-owned company that hosts the race, were arrested, persecuted and sacked from their jobs that the FIA World Motor Sport Council finally pulled out.

Another company to suffer from the uprisings was Rentokil Initial, the British pest control business. Rentokil – whose rat-catching contract for the cities of Tripoli, Misrata and Benghazi now straddles the frontline in Libya’s civil war – said it had taken a £4.8m hit because it could not collect unpaid bills.

Other companies in the region have faced problems because their products or services have become tools of regimes whose violence has been condemned.

Vodafone, the British telecommunications business, faced calls for a boycott after it and other operators in Egypt shut down mobile phone services during the first week of the uprising in January against President Hosni Mubarak.

Vodafone said revenues from its existing customer base in Egypt fell slightly year-on-year during the three months to March, although it also gained more than half a million new subscribers. It said it was legally obliged to submit to official demands for a network shutdown and that failing to comply could have endangered local staff.

In Libya, Toyota’s US-made Tundra pickups have become such a leitmotif of state security forces accused of murder, torture and arbitrary arrests that articles and discussions on the internet talk about “Libyan blood on American trucks” and how “our trucks are oppressing the Libyan people”. Toyota said it always checked that its vehicles were not to be used for military purposes, adding that its sales in Libya were handled by another company with which it had no capital relationship. It declined to comment on whether it was changing its dealings in Libya, although it did say it was not currently selling any US-made vehicles there.

For all the tricky situations companies face in the Middle East, many still believe there will be good money to be made once it has settled down politically.

France Telecom said it remained comfortable with the Tunisian Orange mobile phone venture it launched in partnership with a business controlled by Marwan Ben Mabrouk, son-in-law of the ousted dictator Zein al-Abidine Ben Ali.

However, the controlling stake of Mr Mabrouk – who said he has done nothing wrong – has been frozen by the authorities for the past three months, its fate as uncertain as that of many companies now looking for commercial green shoots in the long Arab spring.