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

by Michael Blanding

  He quickly succeeded in persuading the other five guards to join. But at the time, union leaders thought the idea too risky, so Palacios bided his time for more than a decade until 2004 when new leaders were willing to risk it. As soon as they made their intentions clear, though, Palacios says he started receiving threats from the plant’s personnel manager, Eduardo García, who allegedly told him he’d have to abandon the effort, or else he’d use his connections in the army to have him disappeared. (Palacios reported the incident to the Public Prosecutor’s Office, which set up a meeting with García, in which he denied making any threats but did sign a statement with Palacios promising to continue woking with “mutual respect” in the future.) A few months later, in June 2004, Palacios was working the graveyard shift when he heard shouts at one-thirty in the morning saying, “You are going to die, you son-of-a-bitch unionist!” Palacios threw himself to the ground just as shots rang out. He crawled under a truck, heart pounding and breathing heavily as he waited to be killed.

  He survived, as several private security guards arrived to rescue him and his assailants fled. Those same guards later showed him a copy of a memo they had received from García to the head of their company, a retired army colonel, saying Palacios was “totally damaging” to the company, and listing the hours he worked at night. If anything, the shooting strengthened Palacios’s resolve to unionize, with memories of the bravery of the bottling plant leaders in the 1980s still in his mind. “If our movement didn’t have martyrs, capitalism would have swallowed us long ago,” he says.

  After the shooting, the bottler offered to pay him severance and fly him to the United States if he resigned. Soon after he refused, men burst into his house while he was out shopping, threatening his wife and son at gunpoint before leaving—an incident Palacios sees as a direct reprisal for his intransigence. Finally, in May 2005, the bottler fired him, just two months after Ed Potter had arrived at Coke, and even as he was promoting Coke’s new zero-tolerance policy for anti-union violence. The union protested the firing as illegal, and fought to reinstate him at the company. After several more attempts on his life, however, Palacios went into hiding, eventually reaching out through a nonprofit to the Coca-Cola Company in Atlanta.

  In December, he received an e-mail from Ron Oswald, head of the IUF—the international union that had supported the organizing effort in Guatemala in the 1980s, but had more recently been critical of SINALTRAINAL’s fight in Colombia. Oswald told him that he’d been in contact with Ed Potter, and the Coca-Cola Company was offering to “make resources available to improve security” for him—if he agreed to leave the bottling company. “They recognize that this cannot be done through the bottler since there is at least some ground for our suspicions that the threats are instigated by the local bottler,” he wrote. (In an interview, Oswald says that he was not involved in the details of the negotiations with Coke, though he does feel that the bottling company in Guatemala has long been hostile to union organizing.)

  But Palacios didn’t want to leave the bottler, he told Oswald, as e-mails flew between intermediaries with the company. In January 2006, he received another offer from a Coke representative, repeating the offer that Coke Atlanta would fund a hefty “protection package” if Palacios would only leave the bottling company. Once again, Palacios refused. The very next day, he headed home briefly to pick up a few things, parking his red pickup truck on the street. As he got out of the car, another man in a red car pulled up on the same street and got out at virtually the same time. A man standing on the corner pulled out a revolver and shot that man three times in the chest, killing him right in front of Palacios, who believes the shots were actually intended for him.

  From that point on, Palacios lost faith in talking with Coke. Oswald still wrote e-mails assuring him he was in “almost daily contact” with Potter about the case, but there might be a complication should Palacios happen to be “approached by a certain D.C.-based lawyer with promises of significant sums of ‘settlement’ money”—a clear allusion to Collingsworth and the Colombia ATCA case. Around the same time, a Costa Rican lawyer for the Coca-Cola Company named Rodrigo Romero arranged a meeting at a hotel in Guatemala City. According to Palacios, he offered him $15,000 and a plane ticket to the United States, if only he would sign a blank piece of paper, which he was told was a confidentiality agreement requiring him never to badmouth INCASA or Coca-Cola again. Palacios’s struggled to control his anger. Thinking of his family, he told the lawyer calmly that he’d consider the offer. A few days later, Romero sent Palacios an e-mail, cc’ing Potter, to confirm he offered money to Palacios, whom he says “agreed to let me know the sum over the weekend.”

  Palacios intended nothing of the sort. “He thought I was some fool,” says Palacios, “to sign some document I would later regret for the rest of his life.” Finally after realizing that neither the bottling company nor the Coca-Cola Company would protect him, he reluctantly took a severance package (without a confidentiality agreement) and fled to the United States. It took another two years for his family to be able to join him on asylum there. Now living in Detroit, Palacios started talking with “a certain D.C.-based lawyer” about bringing a lawsuit, which Collingsworth eventually filed in New York Supreme Court in February 2010.

  On the face of it, the case for Coke’s culpability was even stronger than the SINALTRAINAL case in Colombia. After all, Potter and Coke’s lawyer had directly inserted themselves into the situation, telling Palacios they could assure his security in exchange for his resignation and his silence. When he refused, they left him and his family unprotected from attack. “I think Coca-Cola could have stopped INCASA from doing what it was doing at any time,” says Palacios. “If they didn’t stop it, it’s because they didn’t want to.”

  The parallels between Colombia and Guatemala are too strong to ignore. In one sense at least, Potter is right: The company was all over the case from the beginning. But it was not to protect the workers, but to protect the company. In fact, at the very same time Coke was negotiating with SINALTRAINAL’s leaders to make them leave the union and stop disparaging Coke, it was following the same script with Palacios. To be fair, in both cases the company was dealing with avowed troublemakers with an active anticorporate, even anticapitalist mind-set. Asked what he thinks is really going on with the Colombia case, Potter answers indirectly, but his response speaks volumes.

  A few years ago, he says, he read a book about the investigation of the murder of a Catholic priest in Guatemala. “The author describes how trade unionists have learned to protect themselves by making themselves martyrs,” he says. “By drawing attention to themselves, they protect themselves.” In that view, Coke is the scapegoat, exploited by workers for their own self-preservation. In such a scenario, it makes sense that the company should fight tooth and nail against making concessions. No matter how lamentable the violence in some Third World country, it doesn’t justify ransoming the company’s brand.

  “I’ve had lots of discussions with some of the oil companies we’ve sued,” says Collingsworth. “Basically the way they put it is: ‘Look, Colombia or Indonesia or Burma, that’s a rough country. We’re there to create jobs and to make the best of a bad situation, but we didn’t start that war. We’re not going to end that war.’ But you can’t say you are an innocent bystander if you are part of the support network for one of the actors in a violent exchange.”

  It’s hard to believe that a company like Coca-Cola doesn’t care about the safety of its workers or the health of its customers or the environment at least on some level. If there is a larger lesson to be drawn from the various attempts to hold Coke accountable, it’s that a corporation will never willingly box itself into a corner with any legally binding ties that force it to improve the lot of the communities where it operates—at least not when they cut into its ability to make a profit. That includes binding collective bargaining agreements with unions as much as binding regulations on water use or on how it can advertise and sell it
products.

  Just as Asa Candler and Robert Woodruff were happy to give millions for philanthropic causes but resented paying thousands in taxes, today’s generation of leaders at Coke have done real good in the world—building schools, sponsoring physical education, spurring recycling, stewarding water—when their programs are both voluntary and in support of the larger goals of the company. In a perfect world, the free market would ensure it more broadly took health and environmental issues through pressure from consumers in buying products that supported their moral viewpoint. The amount of money and advertising Coke has put into creating its brand, however, distorts the ability of consumer actions to hold it accountable.

  The actions against Coke show that changing a corporation against its will requires two things: binding legal consequences that threaten its bottom line and a sustained public campaign that threatens its brand image. In places where activists have been most successful against Coke—for example, in the closure of the Hindustan Coca-Cola plant in Kerala—both elements have been present. In places where neither is there—look no farther than Chiapas—a campaign can barely get off the ground. And of the two elements, it is ultimately the threat to brand image that has proved more important in Coke’s case—that’s why the campaigners against soda in schools were able to eke out an agreement without the threat of a lawsuit, while the Colombian union leaders foundered once they took away the public pressure of a campaign.

  In each of these cases, the tactics by the company have been the same—to remove the threat to its brand without agreeing to any enforceable requirements that might hold it accountable down the line. To fight back the various threats, the company has allayed public pressure by promising increasingly strict but still voluntary solutions—guidelines on soda sales it could oversee, workplace policies that applied only to direct employees, independent investigations that didn’t actually investigate the most controversial accusations—until it found ones that the general public would accept.

  In the case of the murder of Isidro Gil and the other Colombian union members, that was enough. When the decision came down on the ATCA appeal on August 11, 2009, it surprised no one. In a thirty-page opinion, the three-judge panel essentially called the allegations “too vague and conclusory” to warrant further discovery. Barring some sensational testimony from a demobilized paramilitary commander, it’s unlikely we’ll ever know what connections, if any, Coke’s Colombian bottlers—much less Coke Atlanta—had to the murders. In point of fact, though, we’ll also never know with any certainty whether Coke is innocent. After all, if the company honestly had no involvement in the violence, then why have company executives so long resisted an investigation into the murders, as their own general counsel urged them to conduct more than five years ago?

  In at least one regard, Potter and Collingsworth agree—the union members do look to the lawsuit and the Killer Coke campaign as the reason they are still alive. Despite its missteps during negotiations, the campaign did show how an activist campaign could support a court case and lead a company to change its policies, if not its practices. And however confident the Coca-Cola Company may be that Neville Isdell’s combination of socially responsible marketing, penthouse negotiations, and predetermined investigations has dispensed with the activist campaign, his final appearance as CEO of the Coca-Cola Company showed the activists against Coke are not through yet.

  It was a diminished crew that arrived for Coke’s annual shareholder meeting in April 2009. Unlike past years when the meeting had been held in Wilmington, this year Coke had called it home to Atlanta, ostensibly as a tribute to outgoing CEO Neville Isdell. But the company must surely have considered the fact that Atlanta is much farther to travel for activists from Boston, New York, and San Francisco. The dozen or so who did make the trip included Ray Rogers, of course, as well as Camilo Romero, Amit Srivastava, and CAI’s Gigi Kellett. Hoping to still make a splash in spite of the low numbers, Rogers brought what he called his “secret weapon,” a giant mobile billboard attached to a truck cab with the slogan, “Don’t Drink Killer Coke Zero—Zero Ethics! Zero Justice! Zero Health!” on the side and pictures of murdered union workers Isidro Gil and Adolfo de Jesús Múnera on the back.

  A warm, southern breeze was blowing as shareholders walked up the ramp to the Gwinnett Convention Center, a half-hour north of the city where Coke was born. By coincidence, the day chosen for the meeting happened to be Earth Day, a fact underscored by the environmental showcase Coke set up in the lobby with displays touting new soda bottles and T-shirts made from recycled PET and a video loop of the Spartanburg recycling plant.

  Inside the convention hall, a high ceiling full of metal panels in geometrical shapes created the feeling of being inside a giant erector set. “We’d like to start with a little bit of happiness from Coca-Cola,” began Isdell, taking the stage to launch Coke’s newest advertising campaign, “Open Happiness,” with a new music video. “I think the song really captures the positivity, the optimism, and the real fun of Brand Coke,” he said. “This is a business about people, a business about belief. If we want to have a sustainable business, then the communities we serve need to be sustainable in and of themselves.”

  Standing before the crowd, Isdell had a lot to be happy about. He was handing over a stronger and more secure company than the one he’d inherited, having navigated Coke over the rocky shoals of childhood obesity and Colombian murder trials, the bottled water backlash and controversy over water pollution and depletion in India. He turned over the meeting to Muhtar Kent, a Turkish businessman who rose from head of international relations to become Coke’s newly minted CEO. Immediately, Kent dispensed with the happiness talk to address what mattered most: growth. Every day, he said, the world had “multiple hydration occasions,” and the increasing trends of urbanization and a growing middle class around the world perfectly positioned Coke to take advantage of them. Putting up a PowerPoint chart, he showed that Mexico consumed some six hundred cups of Coke products per person per year, and the United States had four hundred, while the global average languished at one hundred. “What an amazing opportunity!” he concluded.

  Kent handed the meeting back to Isdell for questions. True to form, Rogers was first out of his seat, launching into a rant about the illegitimacy of the ILO and TERI investigations into Colombia and India. “I wish you had updated your facts from the last time you were here,” said Isdell, before turning to another questioner, who asked a more innocuous question about the old age of the board of directors. “I want to start a youth movement,” the questioner said.

  Suddenly a student with the Killer Coke campaign leaped up, yelling, “I am part of the youth movement, and we are not on your side.”

  “If you want to ask your question, I must ask you return to your seat,” responded Isdell. “If not you’ll be evicted.” The youth kept yelling, red-faced, as security guards in black jackets came up and put their hands on his shoulders, leading him out of the room in a reminder of Rogers’s own ejection five years earlier.

  It was pure political theater—but it started a roll for the activists in the crowd. With floodlights in Isdell’s eyes, he had no control over whom he called on, and one by one the forces of Killer Coke took the mic. Srivastava stood up to blast operations in India, warning investors that Coke may be forced to pay hefty fines in India. Next Camilo Romero blamed Coke for failing to bargain in good faith with the Colombians. Then it was Kellett, describing Coke’s newly announced global “water neutrality” policy as just a big Ponzi scheme, sucking down water in one part of the world while conserving it in another.

  And so it went. Emerging into the bright Georgia sunshine, Rogers was elated. “If Neville Isdell thought it was his swan song, that he was going to end on a high note, then he was wrong,” he said. In real terms, of course, the meeting achieved nothing. But symbolically, it put Coke on notice that however hobbled, the campaign against it wasn’t finished.

  After the meeting, Rogers’s mobile billboard led
an activist caravan back down the highway to Atlanta as cars honked and people waved. Like bees drawn to an open bottle of pop, the caravan ended up arriving downtown at the World of Coca-Cola. Few people were in Pemberton Park to see the billboard truck as it drove around blaring an original folk song called “Coke Is the Drink of the Death Squads.” But Rogers would never miss an opportunity to educate one more person about Coke’s misdeeds. Jumping out with a clutch of “Drink That Represses” flyers in his hand, he ran up to a bus of schoolkids on a field trip to the Georgia Aquarium.

  “Hey, kids, look here!” he shouted, jumping aboard the bus and gesticulating wildly at the billboard as it drove past. Before the chaperone could react, he jumped back out, while the billboard truck circled back around the World of Coca-Cola. For a moment a snatch of muzak floated across the park from the entrance to the museum. It took a second to place the tune before it became clear: “I’d like to teach the world to sing, in perfect harmony . . .”

  Acknowledgments

  Obviously, to write a book of this scope, I have a great many people to thank. First and foremost, I want to thank my agent, Elisabeth Weed, who believed in this book from the beginning, encouraged me through two years of proposal revisions and pitch meetings before it had become a reality, and then through another two years of writing after it had. A huge thanks, as well, to my incredible editor, Rachel Holtzman, who was a calm in the storm throughout the writing and editing process, and offered just the right combination of prodding and trust to see me through multiple stages of rewriting, cutting, and framing the manuscript. Thanks, as well, to her assistant, Travers Johnson, and the excellent team at Avery for the behind-the-scenes work they did in making the book the best it could be.