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Coca-Cola Issues an Apology to Burger King

June 19, 2003|From Associated Press

Coca-Cola Co. is working to mend relations with one of its biggest customers, Burger King Corp., after conceding that employees undermined a marketing test of Frozen Coke three years ago at one of the fast-food chain's outlets.

Steven Heyer, Coke's president and chief operating officer, apologized for the rigging episode in a letter late Tuesday to Brad Blum, Burger King's chief executive.

An audit committee, investigating several allegations by a former Coke manager, also found that the company's fountain division had improperly valued some equipment. The company will take a $9-million pretax write-down to correct the value.

The Frozen Coke issue was raised last month in a lawsuit by a former manager, Matthew Whitley, who also accused the world's largest beverage maker of discriminating against minority employees. The Securities and Exchange Commission also has begun an informal probe of the suit's allegations.

"These actions were wrong and inconsistent with the values of the Coca-Cola Co.," Heyer wrote. "Our relationships with Burger King and all of our customers are of the utmost importance to us and should be firmly grounded in only the highest-integrity actions."

Additionally, Coke CEO Doug Daft sent workers a memo reminding them that "each of us must ensure that our conduct always reflects the core values we stand for."

Burger King said it was disappointed by Coke's actions in the test and was continuing its own probe. The fast-food chain is among Coke's largest customers.

In a statement, Burger King said, "We expect and demand the highest standards of conduct and integrity in all of our vendor relationships and will not tolerate any deviation from these standards."

Coke's audit committee said Tuesday that there was no evidence to support Whitley's accusations that it discriminates against minorities or women. It also said it found no evidence that the fountain division improperly shifted $4 million of capital funding to a fountain project in 2002.

The Atlanta-based company has said Whitley's suit was filed after Coke refused a demand to pay him $44.4 million. He lost his job as finance director for supply management at the fountain division in March, amid a reorganization that eliminated 1,000 jobs.

Coca-Cola fell 20 cents to $47 on the New York Stock Exchange.

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