US: Coke fraud probe brought to a close
The US Securities and Exchange Commission has brought its investigation into the Coca-Cola Company to a close. The probe, initiated in 2003, came about after the company was accused of accounting fraud and 'channel stuffing.'
Although no punishment has been meted out to Coke, the company has agreed to keep in place certain unspecified measures implemented in the last two years. Coke has also agreed "to undertake additional remedial actions in the areas of corporate compliance and disclosure," the company said in a statement.
In a memo to all staff, Coke's chairman and CEO, Neville Isdell said: "The settlement agreement provides that we neither admit nor deny the factual findings made by the SEC. Accordingly, out of respect for our agreement, we will not comment on specific allegations. I can say, however, that we are pleased that this settlement, and the decision by the Department of Justice to close its investigation, mark an end to the US government inquiries initiated in 2003.
"We continue to expect all of our operations around the world to adhere to the highest ethical standards," Isdell continued. "The measures identified in this settlement and those we have taken over the past few years are an important step forward in ensuring our systems continually improve. That is an obligation we all share that requires constant vigilance."
The SEC probe focused on accusations that Coke asked Japanese bottlers to make additional purchases of soft drink concentrate between 1997 and 1999.
Federal investigators, who had interviewed current and former Coke workers as part of the probes, were told that the company used incentives to make the overshipments of concentrate more acceptable to the Japanese bottlers.
In so doing, the company was able to boost its revenues and meet profit targets, according to the SEC. Japan accounts for about 20% of Coca-Cola's annual operating profit.
"Coca-Cola misled investors by failing to disclose end-of-period practices that impacted the company's likely future operating results," Richard Wessel, head of the SEC's Atlanta office, said in a statement.
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