SEC to Probe Coca-Cola Over Rigged Marketing Test

15 January 2004

Accusations of fraud and marketing improprieties against the globe's largest beverage company have led to a formal investigation of Coca-Cola by the US Securities and Exchange Commission, the company revealed yesterday.

The SEC's probe follows allegations made by Matthew Whitley, a former finance director in the company's fountains unit. Among his accusations: a $2 billion accounting fraud, discrimination against minorities and women, manipulating inventories and rigging a Frozen Coke marketing test at Burger King.

Whitley's allegations were not music to the ears of Coca-Cola's senior management, who terminated his employment last March citing a reorganization. Although he was later referred to as a "disgruntled employee", Whitley's subsequent lawsuit in October for wrongful termination resulted in a $540,000 (€427,215; £295,839) settlement between the parties.

According to Whitley, the rigged Burger King test involved Coke's secret handover of $10,000 to pay for hundreds of BK's so-called 'value meals' during a marketing test in Richmond, Virginia.

A key promotional element of the kids' meal package was a Frozen Coke, and the freebie meals funded by the beverage company were intended to inflate the apparent popularity of the product and trigger a national rollout of the promo.

Said Coca-Cola on Wednesday: "The company will continue to cooperate fully with the SEC's investigation."

Data sourced from: New York Times; additional content by WARC staff