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

by Michael Blanding

  Ed Potter had represented companies as an international labor lawyer in D.C. for more than two decades, even serving as the employer representative to the United Nations’ International Labour Organization (ILO). Recently, he’d helped Coke put into place a Workplace Rights Policy, which went even further in spelling out the protections for workers. Soon after, Isdell hired him on staff as the company’s new director of global relations. Quickly, he moved to get in front of the “Killer Coke” situation by declaring a new corporate code of conduct on labor and environmental issues. Like previous codes, however, it applied only to direct employees of the Coca-Cola Company and subsidiaries in which Coke owned at least a 50 percent interest. As for bottlers, Coke was “committed to working with and encouraging” them “to uphold the values and practices that our Policy encompasses.”

  At the same time, Isdell attempted to take away one of the campaign’s main issues by commissioning an investigation into Colombian working conditions by a supposedly independent group, the Cal Safety Compliance Corporation. Standing up at the 2005 annual meeting, Isdell was able to report the study’s conclusions: that workers were allowed collective bargaining rights free of intimidation.

  He continued with a page out of the obesity playbook, simultaneously denying responsibility for the violence in Colombia and positioning the company as part of the solution with the announcement of a new $10 million foundation to aid victims in the country. Likewise for India, he denied the company was responsible for water shortages, at the same time touting the company’s rainwater-harvesting initiative. All in all, it was an impressive presentation, countering the main allegations against the company head-on with a mix of defiance and compassion.

  Opening the floor to questions, Isdell never knew what hit him. Immediately, activists jumped up to form two long lines. Rogers was first to speak, of course, dismissing Cal Safety as nothing but the “fox guarding the henhouse,” since the group had interviewed workers handpicked by management and didn’t even investigate links to paramilitaries. That was just the beginning of a ninety-minute slugfest the Financial Times later said “felt more like a student protest rally” than a stockholder meeting as Srivastava, CAI’s Gigi Kellett, a nun, a Teamster, and several students all piled on the criticism.

  Despite the finely orchestrated display, the real negotiations began after the meeting, when Potter requested to meet with college administrators to see if they might come to an agreement. USAS’s Romero was tentatively hopeful when Potter suggested a commission with students and administrators that would set the ground rules for a new, truly independent investigation. Whatever good faith Potter may have had going into the negotiations, however, Coke was soon setting its own rules, insisting nothing in the investigation could look back more than five years (falling short of both the Gil case and the detentions in Bucaramanga), and nothing could be admissible in court. The students dismissed those demands out of hand; by October, five out of six of them had dropped out of negotiations.

  By that time, the day of reckoning was approaching at both NYU and the University of Michigan. As NYU’s senate reconvened to consider the vending machine ban, Coke continued in its refusal to meet with the WRC. The university issued an ultimatum—either Coke agree by December, or the Coke machines would go. When the deadline passed, NYU announced it would begin removing Coke from campus, effective immediately. But that wasn’t all. When the University of Michigan’s December 31 deadline passed three weeks later, it, too, declared it would be severing its ties with Coke. This decision was even more significant, since unlike both NYU and Rutgers, the university was breaking an exclusive contract and it was doing so specifically because of the company’s human rights violations—and not only in Colombia but in India as well. Whatever Potter and Isdell were doing, it clearly wasn’t working—at least not yet. By this time, the Killer Coke campaign could claim about two dozen universities around the world that had dumped Coke. Even the student newspaper at Emory—the university started with money from Asa Candler himself and known as “Coca-Cola University”—had written editorials supporting the campaign. “Certainly if there was any wrongdoing in the past,” Emory’s president announced approvingly, “Coke needs to be held responsible for it.”

  Around the same time Coke was suffering these defeats, allegations of anti-union violence emerged in a new country: Turkey. In April 2005, a group of drivers who transported Coke for a contractor were fired after they tried to unionize. When, along with family members, they occupied the local Coca-Cola headquarters in a nonviolent protest, members of Turkey’s secret police attacked them with tear gas and clubs, sending dozens to the hospital. The union accused the company—which owns 40 percent of the bottler—of instigating the violence by calling in the police. After hearing about the Colombia situation, union members contacted Terry Collingsworth, who filed an ATCA case in New York, arguing that the police violence amounted to torture under international law.

  While Coke didn’t deny that protesters were attacked, the company claimed that police acted of their own accord, despite requests from Coke to hold off attacking. Even so, the company insisted, the dispute was between the union and the contractor; Coke had nothing to do with it. Coke spokesperson Kari Bjorhus brushed off such attacks as “the flipside of being a big brand,” as she told Brandweek in December 2005. “You become a focal point for many issues because of the visibility of your trademark.” (The case was eventually dismissed upon a finding that the union hadn’t first exhausted its remedies in Turkey; it was promptly appealed.)

  Behind the scenes, however, the Coca-Cola Company was still maneuvering to stop the Campaign Against Killer Coke before it spawned opportunistic attacks from any other countries. Just as it rolled out increasingly stringent policies on soda in schools until it found one the public would accept, Coke now announced a new independent investigation to take the place of the discredited Cal Safety report. This time, it called upon one of the most respected brands in the world: the United Nations. In advance of the 2006 shareholder meeting, the company announced that the International Union of Food and Allied Workers (IUF) had asked the United Nations’ International Labour Organization (ILO) to “investigate and evaluate past and present labor relations and workers’ right practices of the Coca-Cola bottling operations in Colombia,” as Coca-Cola North America president Don Knauss wrote in a letter to the University of Michigan.8

  The anti-Coke campaign immediately cried foul, pointing out that Ed Potter had been the U.S. employer representative to the ILO for the past fifteen years. “There are 640 people who have a final vote in the ILO conference’s legislative process,” responded Potter. “To suggest there is any undue influence is preposterous.” He had less of an explanation for why the company was willing to admit the results of this investigation in court, when that was such a nonstarter in a student-led commission.

  Rogers thought that he saw one: Despite Coke’s assurances that the UN agency would investigate “past and present” practices, an ILO official told him on the phone that the agency would be doing only an “assessment of current working conditions.” At the 2006 meeting, Rogers decried the ILO investigation as just “a new scam” that would do nothing to explore bottling plant managers’ ties to paramilitary violence. “I can’t think that engaging the ILO is a publicity stunt,” replied Isdell coolly. “We have a document. We have an agreement, and they are going to investigate past and prior practices.”

  That wasn’t the only investigation the company would be allowing, Isdell told the crowd. The Energy and Resources Institute (TERI), a respected NGO based in New Delhi, would also be conducting an audit of the company’s water use. “My message to you today is that the transition is complete,” said Isdell. “We are well on our way to becoming the company you expect us to be.” As with the ILO, activists raised red flags against TERI—with Srivastava pointing out that the organization listed Coca-Cola as a sponsor on its website, had been paid by Coke to do environmental assessments in the past,
and had publicly declared Coke one of the most responsible companies in India, and thus was hopelessly biased.

  But the two proposed investigations were good enough to buy the company time. The University of Michigan reinstated its contract just three months after cutting it, pending the outcomes of the ILO and TERI reports. The campaigns at other colleges, meanwhile, lost momentum as administrators adopted a wait-and-see attitude. By August 2006, Potter insisted that the student campaign had “stalled,” something virtually inconceivable when NYU and Michigan had dumped Coke months earlier. Now he and Isdell sought to press the advantage to get rid of Killer Coke back where the fight began—in court.

  The three years since Judge Martínez had dismissed Coke from the ATCA case in 2003 had not been kind to Terry Collingsworth and Dan Kovalik. Martínez’s indifference, if not contempt, for the case was apparent from the get-go. He seemed to take pride in getting details wrong, at points referring to Urabá as “Bogotá or Medellín or wherever the heck it was” and to Isidro Gil as “Joe Blow.” His spontaneous style might seem refreshing to someone without a case before him, but to SINALTRAINAL’s lawyers it was downright infuriating. Each June, he dismissed all pending motions, allowing them to be resubmitted the following year. Finally at a hearing in June 2006, Panamco’s lawyer was reciting the judge’s history of dismissals when Martínez broke in. “If you didn’t know any better,” he said, “you would think that I didn’t want to have anything to do with this case, wouldn’t you?”

  Collingsworth and Kovalik were flabbergasted to hear such disdain expressed openly by a United States judge. A few months later, Martínez proved the point in a ruling that finally dismissed all the bottlers from the case as well. The evidence provided by Collingsworth and Kovalik was just too vague to link plant managers to the paramilitaries, wrote Martínez, adding that it was the duty of the courts to guard against “unwarranted international fishing expeditions against corporate entities.” Coca-Cola Company spokeswoman Kerry Kerr swiftly responded, saying, “We hope this decision will now enable us to put this case behind us.” It wouldn’t, of course. Collingsworth and Kovalik filed a right to appeal, arguing that the case was wrongly decided when the judge allowed the sample bottling agreement rather than the actual one, thereby denying the union proper discovery to prove its case. “Put aside Colombia, Coca-Cola, murders, anything. This appeal is about fundamental, inflexible, never can violate legal procedures,” says Collingsworth.

  Before the lawyers could file, Collingsworth received a call from Ed Potter, whom he knew through D.C. labor law circles. Now just a year into his position, Potter asked if perhaps there was a way they could work out a settlement. At his insistence, the two sides engaged a retired judge in San Francisco, Daniel Weinstein, to act as a formal mediator in their talks. The two sides drew up a “term sheet” on August 17, 2006, agreeing they would use their “best efforts” to finalize a settlement within six weeks. In broad terms, the settlement would include cash compensation for the victims in Colombia along with a new workers’ rights policy by the company to prevent future violations. In exchange, the lawyers would call off the dogs, including Ray Rogers’s campaign maligning Coke.

  Collingsworth told Potter that while he wouldn’t be able to curtail campaigning by Rogers while negotiations ensued—or USAS or Srivastava for that matter—he could promise that as an act of good faith SINALTRAINAL would suspend its campaign and refrain from publicly criticizing Coke as they talked out a settlement. That promise was a hasty one—and in the end, a fatal one for the union’s case.

  Instead of the promised six weeks, the negotiations dragged on for the next eighteen months. And once the union’s biggest weapon—its voice in the campaign—was taken away, it lost the leverage to make strong demands of the company. The negotiations unfolded under a strict cloak of confidentiality, and both sides’ lawyers are still prohibited from revealing what was discussed. Documents from the settlement talks, however, reveal the extent of the gap between the union’s and Coke’s goals—and how aggressively Coke was willing to protect its image.

  Whether through misunderstanding or willful disregard for the agreement, SINALTRAINAL resumed criticizing Coke on its website. After all, Coke was destroying the union with its increasing use of contract workers, union leaders reasoned, and the death threats continued to appear at their union halls. If Coke wasn’t going to stop the paramilitaries from threatening them, why should they keep their mouths shut? Immediately, Coke’s lawyers protested to Judge Weinstein, who blasted back from his BlackBerry that both sides refrain from public statements until he had a draft of the settlement on his desk by the first week of October 2006. Despite a flurry of conference calls and e-mails among Collingsworth, Kovalik, and Coke’s lawyers, SINALTRAINAL continued to distribute flyers and post messages to its site about its ongoing campaign, and Coke trolled Web and newspaper reports for even the slightest notice of disparagement that it could use to hold over the union’s head with the judge.

  As the two sides pushed closer to agreement in October, Coke made clear its goal was to stop the bad publicity against the company, refusing any admission of liability in the torture or murder cases. Furthermore, it insisted SINALTRAINAL agree to never campaign internationally against Coke again. In fact, in a draft of the settlement, it required that the union scrub Internet search engines and archives to get rid of any mention of Killer Coke—as if the campaign never existed. For its part, Coke would pay just over $12 million to the union, including $1 million for Isidro Gil’s heirs, and $4 million to be divided among Correa, Galvis, Flores, Garcia, and González. The bulk of the rest would go into a $6 million fund for victims of trade union violence, jointly administered by Coke’s foundation and the union representatives; Collingsworth and Kovalik would receive $2 million in escrow to cover “administrative fees” for their part in managing the fund. Finally, the company would agree to a new workers’ rights policy—but only for full-time workers, not contract workers—and a confidential “global forum” four times a year in which Coke would meet to discuss ongoing labor issues.

  And then there was one more thing, added by Coke’s lawyers: In order for the employees to get their money, they would have to resign from the union.

  When the agreement arrived in Colombia, it was met with disbelief by Javier Correa and the rest of SINALTRAINAL’s leadership. If Coke wanted them to stop talking about past cases such as Gil’s murder, that was fine, but how could they refrain from criticizing the company for abuses that hadn’t occurred yet? And resigning from the union? In their minds, the court case, the campaign, the negotiations—all of it—was an attempt to save the union. That requirement would defeat the entire purpose of the agreement.

  Frustrated with the stalled talks, SINALTRAINAL went on the offensive, sending representatives to participate in a tour in Germany called, without subtlety, “Coke Kills.” Coke’s lawyers hit the roof. “Every request we made for . . . the immediate cessation of anti-Coke hostilities—was met with an attitude that borders on ‘who cares,’” Coke’s outside lawyer Faith Gay wrote to Collingsworth in November. “Obviously this is the primary issue that we do care about. Non-disparagement is why we are paying money to your clients.” As far as the company was concerned, she accused the union of not negotiating in good faith. “To be frank, we believe that plaintiffs are unwilling to disarm for internal political reasons and because they know no other means of interacting with their employer(s).”

  To prove they meant business, Coke’s lawyers filed a motion with Weinstein demanding he fine SINALTRAINAL $150,000 for breach of the term sheet. Furthermore, it demanded he force Rogers to end his campaign as well. Weinstein didn’t go for it, but he did order the union to pay $120,000 in penalties. As frustrated as Coke was getting with the union, Collingsworth was getting just as frustrated. “Look, don’t waste my time,” he told his clients. “If there is an internal political reason why there’s not ever going to be a deal, tell me now.” Correa responded that the union wa
s willing to negotiate—if Coke would give it some assurances that it could stop eroding the union both through use of contract workers and through threats by paramilitaries.

  In April 2007, the negotiating team headed to Atlanta to try one last time to strike an agreement. Serving as a translator for the group, Camilo Romero admits to feeling intimidated as he headed down with Collingsworth and Kovalik into the “lions’ den”: the penthouse suite of Atlanta’s King & Spalding Building. Accompanying them was the union’s team of negotiators: president Javier Correa, international relations head Edgar Paez, and secretary/treasurer Duban Velez. And also along for the ride was Ray Rogers.

  Even as the union had begun its protracted talks with Coke, Rogers had not been idle. He was hot on the trail of a contract at the 35,000-student University of Alberta when Collingsworth called to tell him he’d eventually have to end his campaign if negotiations went according to plan. Rogers was fine with that, he said. “But first, tell me, what did we win?” As he caught wind of the details, he, too, was incredulous. No admission of guilt, no assurances the union would continue, no promise of dealing with subcontracting, and a comparatively minuscule dollar amount by corporate standards. (By comparison, Exxon agreed to pay $5 billion for the Valdez spill.) Rogers told the lawyer he’d go along with whatever the union leaders decided—but he wanted a chance to talk with them first.

  The night before negotiations started in Atlanta, Romero was put in the awkward position of translating for Rogers as he addressed the Colombians in their hotel room. Coke spent $20 million for a few minutes of advertising during the Super Bowl, he told them. Surely they could afford more than that to compensate victims of torture and murder. “We don’t intend to give up our fight against the company,” answered Correa. “Nor will we accept that people make money on us as victims”—implying that Rogers was looking for his own cut. Privately, Romero also interpreted Rogers’s plea as a personal money grab.