The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink

by Michael Blanding

  Even after energy was siphoned off from the movement in the wake of the September 11, 2001, terrorist attacks, the new alliance between environmental and labor activists against corporate globalization held strong. It’s that attitude students brought with them when they returned to campus in the fall of 2003, at the same time the Campaign to Stop Killer Coke was finding its feet. Suddenly, here was a campaign against the very symbol of American capitalism, accused of horrific crimes of murder and intimidation in a far-off country. Rogers encouraged anyone who wanted to run with the campaign to download literature and campaign materials from the Campaign to Stop Killer Coke’s website. But even he was surprised when word came that a 1,200-student college in Illinois had removed Coke from its campus in favor of Pepsi after a student petition. Soon after, 1,400-student Bard College in upstate New York followed suit, on the basis of violations to the code of conduct it implemented for vendors after the sweatshop campaign.

  It was enough for the Coca-Cola Company to take notice. “Unfortunately, Bard College officials appear to be relying on discredited allegations that have been reviewed and repeatedly rejected by courts and independent investigations in the United States and Canada,” Coke spokeswoman Lori Billingsley told the Atlanta Business Chronicle (without elaborating on which investigations she was referring to). “There is no factual or legal basis that our company and its bottling partners were responsible for wrongful conduct in Colombia.”

  Despite Coke’s denials, the college campaign really took off across the Atlantic when the 20,000-student University College Dublin scheduled a referendum on dropping its contract with Coke. With three thousand votes cast, the measure passed by fewer than sixty votes. Coke flew into action, sending in a public relations representative from Latin America to give a presentation in support of the company; SINALTRAINAL countered by sending Luis “Chile” García to present its side. When a revote came down on November 19, 2003, the campaign won by an even higher margin than before—causing the first serious blow against the company, and putting the Campaign to Stop Killer Coke on the map.

  In a sense, colleges seemed the perfect venue for the campaign—a way to “cut out markets” in the one place that Coke was most eager to keep them in order to develop that key early brand loyalty. Meanwhile, Corporate Campaign could rely on a virtually unlimited amount of foot soldiers that cost it virtually nothing—a not insignificant fact given that the campaign never had more than a $100,000-a-year budget, compared with Coke’s $30 billion. The college battle also created waves far from campus, as the media piled on Coke’s alleged misdeeds overseas. Coke’s hometown Atlanta Business Chronicle wrote a long, unflattering article, and business magazine Forbes ran a cover story titled “Coke’s Sinful World” that mentioned the situation in Colombia. Rogers’s strategy of publicly embarrassing the company was working—and the company only dug itself into a deeper hole when it tried to fight back. When Carleton College invited Coke spokeswoman Lori Billingsley to speak in the spring of 2004, Rogers was in the audience. When she repeated her assertion that an independent investigation had cleared the company, he leaped up, yelling, “They’re lying! They’re lying!” The investigation, he told students, was done by the company’s own law firm White & Case, the same firm representing them in the ATCA case in Miami. “There’s a moment in history that’s very rare where students have the power to change one of the largest corporations in the world,” he continued, urging them to boot Coke from campus. Following the meeting, the student senate voted twelve to eight to remove Carleton’s Coke machines.

  Meanwhile, students started campaigns at more than a hundred other colleges, lured by the opportunity to do something concrete about the overwhelming issue of global injustice. “It’s something that students feel personally connected to, because it’s something they can hold in their hand,” said Avi Chomsky, a professor of Latin American studies at Salem State College in Massachusetts, the next campus to sever its ties with Coke.

  As the student campaigns started to gain momentum, they rallied around the idea of a truly independent investigation into the Colombia murders that would determine once and for all the truth of the situation: What hand did local bottling plant managers play in fomenting the violence against the union, and how much and when did bottling heads and the Coca-Cola Company itself know about that violence. The stakes for Coke were high in such a scenario—agree to an investigation and it would be able to put the case behind it once and for all; but if something turned up in the investigation that was unflattering to Coke’s image, it would cause a backlash even greater than the one it was currently facing, not to mention potentially open it up to hundreds of millions of dollars in damages. And in 2003, Coke could ill afford any more controversy. It was already fighting for its life in the midst of the obesity crisis, not to mention dealing with the fallout from its catastrophic dip in earnings after the death of Goizueta and the rejection of Ivester.

  Given that context, it’s surprising that the company executives actually considered giving in to activist demands on this point—even in one case agreeing sincerely to carry one out. When Coke’s general counsel Deval Patrick was being honored as a civil rights pioneer by the legal nonprofit Equal Justice Works, the campaign saw an opening. Patrick had formerly headed the civil rights division in the Clinton administration Justice Department, before becoming a corporate lawyer for the likes of Ameriquest, Texaco, and finally Coke, which he joined in 2000. He was hailed as a reformer, trying to extricate the company from its legal troubles in the nineties with the channel-stuffing allegations and the frozen Coke fraud revealed by whistle-blower Matthew Whitley. Collingsworth sent a letter to his colleagues at Equal Justice Works criticizing Coke, which he said profited “from human rights violations while limiting liability to a local entity that is a mere facilitator for the parent company’s operations.” When one of the nonprofit’s members raised the issue publicly at the awards ceremony, Patrick impulsively pledged to create an independent delegation to Colombia “so we could see that those workers were in fact organized and were able to be organized.”

  When Patrick got back to headquarters, however, CEO Doug Daft nixed the idea, telling Patrick in March 2004 that it wouldn’t happen. Patrick resigned a month later, with The Washington Post quoting “sources close to the situation” as saying “the frustration played a role in Patrick’s decision.” Coke denied it, saying Patrick’s decision to resign was “predominantly personal.” Running for governor of Massachusetts a year later, however, Patrick said that even though Coke’s internal investigations hadn’t turned up links between the Colombian bottlers and paramilitaries, he had pushed for an independent investigation to give consumers “confidence in the brand.” In his mind, he said, “either of two things would happen. . . . Either that independent investigation would confirm what we had found with our internal investigation, or we would find something we didn’t know, in which case we needed to know and the bottling company needed to know it and deal with it.” The company refused, he said, and “that’s why I resigned.” His devotion to principle, however, hardly stopped him from accepting a $2.1 million consulting contract with the company on the eve of his successful gubernatorial campaign.

  Rogers takes credit for forcing Patrick out of the company—the first casualty of Killer Coke’s corporate campaign. He also suspects that the campaign played a role in Daft’s own retirement from the company shortly thereafter. Whether or not that’s true, Rogers did at least ensure he went out with a bang. Unlike the tepid protests at the previous year’s shareholder meeting, Rogers intended the 2004 meeting to be an affair to remember.

  Rogers had a love-hate relationship with shareholder meetings. It was his one opportunity all year to confront his enemies in the ring, mano a mano. But he also hated the pressure of direct confrontation. He couldn’t sleep the night before Coke’s annual meeting in April 2004, and he was still scribbling notes as he sat in the audience in the ballroom of the Hotel Dupont in Wilmington, Delaware, n
ot exactly sure what he would say.

  At least he had a new weapon in his arsenal. Just a month earlier, a New York City councillor, Hiram Monserrate, had released a report from a fact-finding mission to Coke plants in Colombia. In ten days, Monserrate and his team had met with dozens of Coke workers and Coke FEMSA managers who admitted that it was possible that bottling plant managers may have worked with paramilitaries without authorization. Shockingly, however, those officials said neither Coca-Cola nor any of its bottling companies had ever done any internal investigations into the violence. The report’s conclusions were damning to the company. “Coke has shown—at best—disregard for the lives of its workers,” it stated, adding that the company “has allowed if not itself orchestrated the human rights violations of its workers, and it has benefited economically from those violations, which have severely weakened the workers’ union and their bargaining power.”

  Sitting in the audience, Rogers grew increasingly angry listening to Daft standing at the podium. After he declared record first-quarter profits of $1.13 billion—an increase of 35 percent over the previous year— Daft addressed the Colombia situation, saying not only that Coca-Cola was innocent of any violence but that no union member had ever been harmed on the grounds of a Coca-Cola bottling plant in Colombia. That was too much, for Rogers, who leaped to the microphone as soon as Daft opened the floor to comments.

  “After months of investigation into Coca-Cola,” he began shouting, “all evidence shows that the Coca-Cola system is rife with immorality, corruption, and complicity in gross human rights violations including murder and torture. Mr. Daft, you lied earlier today about the situation in Colombia,” he continued. “Isidro Gil was assassinated, murdered, in one of your bottling plants in Colombia.” As Rogers’s voice boomed off the ballroom’s high ceiling, Daft impatiently tried to break into his speech, warning Rogers had exceeded his two-minute limit. “Please do not interrupt me, Mr. Daft!” Rogers yelled, as audience members started joining in the call for him to be quiet.

  Rogers continued on about the Monserrate report and the ATCA lawsuit, as Daft ordered his microphone shut off. Security guards moved in, but the former boxer wouldn’t be taken out of the ring without a fight. “You’re getting out of here,” said one guard, trying to put an arm around Rogers’s neck in a chokehold. “Oh no, I’m not,” said Rogers, struggling free. Three more guards came to help, knocking out Rogers’s legs and tackling him to the floor, knocking off his glasses. “I’m not leaving,” he continued to yell, even as Daft pleaded from the podium for the police to be gentle. Finally, Rogers relented and they carried him out of the room. “We shouldn’t have done that,” Daft said to a fellow executive on the podium, even as more members of the audience—a fired-up member of the Teamsters, several student activists—repeated the call for an independent investigation into the murders.

  To this day, Rogers insists he hadn’t intended the meeting to turn physical—but he doesn’t regret what happened. “It certainly got more attention,” he grins. One person who noticed was B. Wardlaw, a descendent of a member of the 1919 syndicate and the company’s largest individual shareholder, with 77,000 shares of common stock worth more than $4 million at the time. “The cops didn’t have to choke you and drag you off to earn my respect,” he wrote in a handwritten note to Rogers. “But, hey, Ray, I certainly admire the way you handle yourself!” Enclosed was a $5,000 check to Corporate Campaign, Inc.

  Meanwhile, major stories on the incident appeared in The Washington Post and The Atlanta Journal-Constitution, casting an unflattering light on Daft. And a month later, a new Fortune cover story slamming Coke mentioned its refusal to investigate in Colombia a “public relations nightmare.” Encouraged by so much success just a year into the campaign, Rogers redoubled efforts for the coming school year—looking for a big campus in the United States that could serve as a poster child for the campaign. By that time, however, Colombia wasn’t the only issue being talked about on campus. Rogers’s open invitation to take part in the Campaign to Stop Killer Coke was taken up by a campaign against Coke in another country. While less sensational than murder, the allegations were potentially damaging to Coke’s core business in one of its key growth markets overseas—India.

  NINE

  All the Water in India

  The sun has yet to come up over the horizon as a boy pushes his wooden skiff into the current of the holy river Ganges. Already the city is waking up. Yellow lights shine from the tiers of steps along the bank, and men stripped to the waist and women in colorful saris descend for ablutions to Ganga Ma in a ritual as ancient as anything on earth. Nowhere in the world is water as revered as in Varanasi, the holiest city of Hinduism, where every Hindu Indian is expected to bathe at least once in life, and where, Hindus believe, to be cremated is to skip to the head of the line of reincarnation straight through to liberation.

  Temples built centuries ago by maharajas from desert lands line the steps along the river, or ghats, where the sacred and profane intermingle now with the dawn. Tourists with zoom lenses watch from rowboats as ascetics smeared with ash strike yoga poses on concrete walls and dhobiwallahs soaked thigh-deep in the river beat the city’s dirty laundry against stone blocks. Ads painted on the ghats boast of guesthouses and book-stores, silk emporiums and German bakeries. Amid piles of trash and scavenging children, someone has painted in English: “Fortunate are those who live along the banks of Ganga.”

  Among all of the ironies of the river, however, the deepest is how much the water of this holy river is rife with pollution. The upstream side of Varanasi has a fecal coliform bacteria count of 600,000 per liter—more than one hundred times what’s considered safe for bathing. At the downstream end, levels approach 15 million. Meanwhile, a toxic soup of heavy metals—including cadmium, chromium, and lead—flows downstream from the electroplating factories, tanneries, and brick kilns. All of that makes the Ganges, as The Economist put it, “a cloudy brown soup of excrement and industrial effluent.”

  It’s not a lack of environmental laws that makes it that way—regulations in India are as strict as those in the United States or Europe. Nor is it insufficient resources or political will. Since 1985, the government has spent some 14 billion rupees ($300 million) on an ambitious cleanup plan that includes sewage treatment and chromium recovery. Sadly, the plan has been a colossal disappointment, beset by power failures and local indifference, lack of enforcement, and outright corruption. Nearly half of those who bathe regularly in the river suffer from skin diseases and stomach ailments, according to local health officials. The World Health Organization estimates that Ganges river water accounts for the deaths of 1.5 million children each year. This is the environment the Coca-Cola Company reentered in 1991 after more than a decade away from the country. The question is whether the company would follow the prevailing laxity in environmental enforcement or set a higher standard in keeping with the image of international harmony it so assiduously projects. As with water issues in Mexico or labor protections in Colombia, however, it has been accused of falling far short of the mark.

  On a drive through the outskirts of Varanasi, the smells of diesel, shit, and curry assault the nostrils, carried through the open window of the taxi with a blast of 110-degree heat. For those unused to it, the humidity makes even breathing a chore. The car narrowly avoids countless collisions as it merges onto the Grand Trunk Highway, a chaos of cars, motorcycles, bicycles, and honking cargo trucks running clear between New Delhi in the west and Kolkata (Calcutta) in the east. Just as suddenly as it entered the highway, however, the taxi veers through a claustrophobic alley to break suddenly into agricultural fields. Water buffalo and wooden carts amble slowly past orderly plots of green wheat and sugarcane, pixilated with the bright saris of women stopping to weed and till. The landscape looks almost biblical—or would if not for the Bollywood music screeching from the Lok Samiti school in the middle of the village of Mehdiganj.

  Several hundred people, mostly women and children, sit on
blankets spread on the grass between smudged yellow walls. Onstage, teenage girls in saris of crimson, saffron, and cobalt shake their hips and arms to the Bollywood numbers, seemingly impervious to the heat. In contrast to Chiapas, there is no obesity here. The peasants live lean and close to the bone, and children sport the sallow eyes and sharp angles of malnutrition. After the dancing, the head of the school, Nandlal Master, steps up to the podium to congratulate the girls on completing a summer certificate program, with courses including candlemaking, sewing, and computers. With speakers buzzing, he announces the name of each girl along with that of her father, as one by one they rise to accept their diplomas.

  The school is only the most visible project of Lok Samiti, which translates to “people’s committee” in Hindi. “Lok Samiti follows the Gandhian idea of village democracy,” Nandlal says after the ceremony, once the girls have piled into a three-wheeled pickup to be taken home. The air fills with the woodsy smell of burning cow dung, as the men congregate around a buzzing electric light. “Our idea is that people in the villages should have jobs and stay rather than go to the city, and that production should be done by hand and not by machines.”

  The villages around Varanasi are prized for their silk saris, and Nandlal himself comes from a family of weavers. His father died when he was only five years old; perhaps because of that loss, he in turn has become a father figure to some of the village children, teaching weaving skills and eventually opening his own school. Over time, the group grew into a one-stop social services agency, called upon to settle land disputes and domestic squabbles, and performing a group marriage ceremony for couples each spring. So it was only natural that farmers would come to the committee when they began having problems with their neighbor, a Coca-Cola bottling plant.