Lawyers who threaten journalists don’t always score points. But the stakes are high in the swirl of publicity around the maker of Lancome lipsticks and Paloma Picasso perfumes. For about three years, the $7 billion company has been vilified for alleged Nazi ties, anti-Semitic policies and adherence to the Arab boycott. Jean and David Frydman, two Franco-Israeli brothers who are suing L’Oreal after a business deal gone sour, sponsored the Times ad to keep the pot boiling. Even as the Arab League’s 43-year-old campaign to isolate Israel’s economy (chart) is weakening amid the Middle East’s peace fervor, old news about L’Oreal’s history is stirring fresh controversy.
That several former L’Oreal executives had Nazi ties is beyond dispute. Jacques Correze, chairman of L’Oreal’s Helena Rubinstein unit, resigned in 1991 after French papers reminded readers of his 1948 conviction for wartime crimes. When it comes to the Arab boycott, the facts get murkier. The Frydmans, who had formed a venture with L’Oreal in 1988, contend that L’Oreal forced them out a year later to meet Arab demands; Pope, the L’Oreal lawyer, responds that they “bilked” L’Oreal for millions of dollars. Following their French criminal complaint, a 1991 police raid on L’Oreal’s Paris office turned up letters to the Arab League’s boycott office in which L’Oreal said it would cut ties to Israel. Last year a commission linked to a French government inquiry concluded that L’Oreal had complied with the boycott. Company executives were not available for comment, but Pope says the letters were meant to give “the appearance of complying with the boycott” while L’Oreal built business in Israel. L’Oreal, he said, “never complied with the Arab boycott.”
Fast forward to 1994. L’Oreal is now the biggest cosmetics company in Israel. It has invested $7 million in a distributor. But all is not well. Jewish groups and the Israeli government are pressing it to build a factory to replace one closed in 1988. Washington is investigating whether L’Oreal violated U.S. anti-boycott law. The Frydmans, having withdrawn their criminal complaint and having won only $3 million for their share of the French venture, have sued L’Oreal in New York for $100 million, again alleging L’Oreal defrauded them to please the Arab League. Why sue in New York? Says Frydman lawyer Stanley Arkin, “America is the best place . . . to get a decent hearing for issues that may relate to anti-Semitism.”
Enter the politicians. At a July 31 press conference, which the Frydmans helped publicize, U.S. Reps. Charles Schumer and Jerrold Nadler of New York accused L’Oreal of still supporting the Arab boycott and called for a product boycott. Representatives of the Simon Wiesenthal Center and the National Council of Jewish Women appeared with the politicians. However, both Jewish groups disavow the claim that L’Oreal still supports the boycott, and neither group advocates a boycott of the company. “[The charges] absolutely are several years old,” says Wiesenthal’s Mark Weitzman.
Some Jewish groups, such as the Anti-Defamation League, have praised L’Oreal’s new interest in Israel. The issue is “Has L’Oreal compensated for less than honorable behavior in the past?” says an officer of the World Jewish Congress. “We’re on weaker ground if the contention is that L’Oreal continues those practices.” No matter. After activist Beth Gilinsky read about Schumer, her Jewish Action Alliance called for a “dressed to kill” protest at L’Oreal’s Fifth Avenue offices this week. “I put demonstrations together all the time,” she says, “so that’s what I’m doing now.”
That, of course, is good news for the Frydmans. Although marketers doubt that consumers will boycott L’Oreal’s creams and perfumes, “any publicity is bad publicity,” says consultant Wendy Liebmann. The company is boxed in: it won’t satisfy critics unless it admits past sins, but doing so might strengthen the Frydmans’ claim. Years of charges and countercharges lie ahead before the case gets to court. Give the Frydmans credit for grasping the first rule of American jurisprudence: the court of public opinion gets you a quicker verdict.
