Coke Admits Rigging Test
By Harry R. Weber
Associated Press
June 18, 2003

ATLANTA Coca-Cola Co. admitted that employees rigged a marketing test of Frozen Coke at Burger King, as a former manager alleged last month in a whistleblower lawsuit.

An internal Coke document filed as part of the suit said an outside consultant was hired to spend up to $10,000 to boost demand for Frozen Coke and other frozen drinks during the test three years ago in Richmond, Va.

Steven Heyer, Coke's president and chief operating officer, apologized in a letter late Tuesday to Burger King CEO Brad Blum.

"These actions were wrong and inconsistent with the values of the Coca-Cola Co.," Heyer wrote. "Our relationships with Burger King and all of our customers are of the utmost importance to us and should be firmly grounded in only the highest-integrity actions."

The Atlanta-based beverage maker said the employees were disciplined in 2001.

Miami-based Burger King said it was disappointed by the manipulation and is continuing its own probe. The fast-food chain is among Coke's largest customers, and according to the lawsuit, the Richmond promotion resulted in a $65 million Frozen Coke investment by Burger King.

The lawsuit, filed in state court in Atlanta by former manager Matthew Whitley, also accused the world's largest beverage maker of discriminating against minority employees and of using funds fraudulently to boost equipment sales.

Coke spokesman Ben Deutsch said the SEC recently opened an informal inquiry of Whitley's allegations and has requested documents from Coke.

Whitley lost his job as finance director for supply management at the fountain division in March, amid a reorganization that eliminated 1,000 jobs. Coke has said Whitley was fired after it refused a demand to pay him $44.4 million.

An internal auditing committee said Tuesday there is no evidence the company discriminates against minorities or women.

The panel did find that the company's fountain division had improperly valued some equipment, and the company will take a $9 million pretax writedown to correct the value.

It also said it found no evidence to support a charge that the fountain division improperly shifted $4 million of capital funding to a fountain project in 2002.

The fountain division handles sales of fountain-dispensed beverages to restaurants, movie theaters and other venues.

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