Friday, August 27, 2004

Coca-Cola employees given immunity in rigged-test case

The Associated Press

ATLANTA - Federal investigators have granted immunity to at least two former Coca-Cola Co. employees in return for testimony about how company officials rigged marketing tests at Burger King four years ago, the Atlanta Journal-Constitution reported Thursday.

Prosecutors are believed to be considering criminal charges in the case.

A spokesman for the U.S. attorney's office declined to comment, and Coke spokesman Ben Deutsch said the company is continuing "to cooperate with the authorities," the newspaper said.

Coke admitted tampering with the test and said the employees involved were disciplined. The company offered Miami-based Burger King and its franchisees $21 million as part of an apology, and the Coke executive who oversaw the division responsible for the test stepped down a year ago.

In October, Coke agreed to pay $540,000 to Matthew Whitley, a former company finance manager, to settle a whistleblower lawsuit that led to the criminal investigation. Whitley sued in May 2003 for wrongful termination and accused Coke of falsely inflating the popularity of Frozen Coke at Burger King restaurants in Virginia during the test marketing.

The U.S. Justice Department and the Securities and Exchange Commission have been conducting separate investigations of Coke that have focused on, among other things, the Burger King case, allegations of accounting irregularities at the company's Japan unit and accounting issues with some suppliers.

In the Burger King case, Coke acknowledged in June 2003 that a midlevel executive, John Fisher, approved a plan to spend up to $10,000 to boost demand for Frozen Coke as part of a test conducted at restaurants in Richmond, Va.

According to an internal memo written by Coke employee Bob Bader in March 2001, the Richmond test was not producing the desired results when it first began.

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