Coke Accused of Tax Evasion in Brazil
Bloomberg News
June 4, 2004

Coca-Cola Co.'s Brazilian unit may be probed by Congress after a local soft drink maker accused the world's biggest soft drink maker of tax evasion and unfair competition practices.

Lower House Deputy Andre Luiz, speaking after a hearing in Congress, said he may lead legislators proposing to the lower house's 40-member controlling and supervision committee that a probe into Coke's operations be opened. Marco Simoes, spokesman for Coke in Brazil, said the accusations, which were made by Dolly Refrigerantes, are ``unfounded.''

The Atlanta-based Coca-Cola, the world's biggest soft drink maker, has been accused by Laerte Condonho, president of the Sao Paulo state-based Dolly, of spreading allegations by e-mail that Dolly's drinks could cause cancer and forcing suppliers to suspend sales to Dolly.

Deputy Celso Russomanno said he estimates Coca-Cola has evaded 7 billion reais ($2.2 billion) in taxes on goods and services owed to the state of Sao Paulo.

Coke controls about 50 percent of Brazil's soft drinks market while Dolly has 1.6 percent, according to a report by Meio & Mensagem, citing an ACNielsen report from July 2003.

Coke shares fell 17 cents, or 0.3 percent, to $51.77.

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