Feds Launch Inquiry Into Coke Marketing Fraud Allegations

14 July 2003

An alleged $2 billion accounting and marketing fraud at Coca-Cola is under investigation by federal prosecutors from the US Attorney’s Office for the Northern District of Georgia.

The Atlanta-headquartered beverages behemoth refused comment, save to confirm the probe and say it was cooperating with the investigation.

According to insiders, Coke learned of the official intervention only after hearing from employees who had been interviewed by the government agents. The same source also reported that a federal grand jury is looking into the matter.

The allegations first came to light six weeks ago [WAMN: 21-May-03], when ex-fountain division finance director Matthew Whitley sued Coke, alleging wrongful termination for alerting the company to what he charged was a $2 billion internal accounting fraud.

Before filing his suit, Whitley told Coke he would drop his lawsuit in return for a payment of $44.4 million – an offer the company declined and instigated its own investigation. The whistleblower’s lawyer said his client was “very gratified that a federal grand jury and the Department of Justice will investigate Coke’s misconduct”.

Whitley charges that the company overstated its revenues in North America and Japan by improperly exaggerating sales. He also avers that Coke faked the results of a marketing test to gain more business from Burger King. And, in addition, engaged in fraudulent accounting with some of its suppliers for fountain-dispensing equipment.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff