Complaint Filed with SEC over Coca-Cola's Failure to Disclose Legal Problems in Mexico
Despite Lawsuits and a Government Investigation in Mexico that Could Cost Shareholders Billions of Dollars, Coke Refuses to Address Potential Liabilities
For Immediate Release:
Contact: Pat Clark
info@corporatecampaign.org
718-852-2808
NEW YORK, June 14, 2011 — Ray Rogers, Director of Corporate Campaign, Inc. (CCI) and the Campaign to Stop Killer Coke filed a complaint on June 6, 2011, with the U.S. Securities and Exchange Commission (SEC), urging the regulatory agency to investigate violations of U.S. securities law committed by The Coca-Cola Company and its Chief Executive and Chairman Muhtar Kent.
CCI's complaint to the SEC involves Coca-Cola's and Mr. Kent's public denial of the existence of an ongoing series of lawsuits and government investigation regarding the company's operations in Mexico that could potentially cost Coca-Cola and its shareholders billions of dollars. (See complaint below.)
In its complaint to the SEC, Mr. Rogers outlined Coca-Cola's clear violation of this nation's securities laws, in accordance to the Securities Exchange Act of 1934, and its Anti-fraud provision, outlined in Section 10(b), which was codified in SEC Rule 10(b)-5. The Rule reads, in part, that it is illegal to "omit to state a material fact" if such omission makes other statements untrue.
The Coca-Cola Company-in its SEC filings or in its executives' public statements-has refused to acknowledge a series of lawsuits filed in Mexico, dating back to 2007, that detail the company's participation in an ongoing 24-year conspiracy to de-fraud Mexican workers out of legally mandated compensation and to cheat the Mexican government out of lawful tax revenue through a scheme of outsourcing and tax evasion.
In addition, Mr. Kent took the additional step of publicly denying the existence of the lawsuits and government investigation before the entire Annual Meeting of Shareholders in April when asked directly about the situation by Mr. Rogers. Mr. Kent replied that any claim that Coca-Cola was facing such legal problems in Mexico were "false" and had "no merit". Documents obtained by the Campaign to Stop Killer Coke show that Mr. Kent knew of the Mexican situation and its larger implications as early as December 2009.
"It is clear that Mr. Kent has lied to and tried to mislead both shareholders and the investment community, in regards to the company's situation in Mexico," according to CCI's SEC complaint. "He has also withheld information of potential liabilities that the investment community should be aware of because they could cost the company billions of dollars in fines, restitution and legal damages."
At Coca-Cola's annual shareholders meeting on April 27, Mr. Kent boasted that he had spent a lot of time meeting with government officials in Mexico and that he had "very recently received a letter by the Mexican president, Mr. Calderon, inviting the Board of Directors to have a meeting in Mexico."
"Does Mr. Kent think he can peddle his influence with the highest levels of the Mexican government all the way to President Calderon, and get away with violating Mexican laws with impunity?" said Mr. Rogers.
In the complaint, Rogers strongly urged SEC investigators to examine Mr. Kent's comments and compel The Coca-Cola Company and Mr. Kent to make full disclosure about this situation in order to fully comply with this nation's securities laws.
For further information on Coca-Cola's abuses in Mexico, go to KillerCoke.org Coke's Crimes In Mexico.
-end-
SEC Complaint
Reference #: TCR1307395939385
I want to make the Securities and Exchange Commission aware of what I believe is an SEC Rule 10(b)-5 violation by the Chief Executive Officer and Chairman Muhtar Kent of The Coca-Cola Company.
During the company's Annual Meeting of Shareholders, held on April 27, 2011, in Atlanta, Ga., I-as a shareholder of the company's stock-was able to publicly ask Mr. Kent why the company, in neither its SEC filings nor in its executives' public statements, has not acknowledged a series of lawsuits filed in Mexico, dating back to 2007. The lawsuits-brought in the Mexican Federal Court of Labor Law, the Mexican Treasury Department, and the Procuraduria General de La Republica-were filed by Ángel Alvarado-Agüero, a former 16-year employee and marketing executive with Coca-Cola in Mexico. The series of lawsuits contend that Coca-Cola and an affiliate conspired over the past 24 years to cheat 1) Mexican workers, including Mr. Alvarado-Agüero, out of agreed-upon and legally mandated compensation; and 2) the Mexican government out of lawful tax revenue through a scheme of outsourcing and tax evasion. [SUPPORTING DOCUMENT "Original 2007 Lawsuit WILL BE MAILED SEPARATELY.]
Coca-Cola was made aware of these lawsuits upon each filing (in June 2007, December 2008 and October 2010), as well as via a personal letter to Mr. Kent in December 2009 that outlined all the claims in the lawsuits and the scope of the tax evasion issues. At that time, the Coca-Cola tax situation was even being discussed in the Mexican Congress. [SUPPORTING DOCUMENT "2009 Letter to Mr. Kent" SUPPLIED.]
Despite all this, Coca-Cola and Mr. Kent continue to purposefully deceive the investing public as to the potential financial and litigation damage, estimated in the billions of dollars, the company may face in Mexico, which is Coca-Cola's second-largest market. In previous public statements by its executives and in its publicly filed documents with the SEC, Coca-Cola has refused to inform shareholders of these on-going events, which carry potentially damaging consequences for the company's brand name, legal liability, profits and, of course, stock price.
At the April 27 Annual Meeting, however, Mr. Kent blatantly crossed the line into what I am certain is a securities law violation in accordance to the Securities Exchange Act of 1934, and its Antifraud provision, outlined in Section 10(b), which was codified in SEC Rule 10(b)-5. The Rule reads, in part:
"It shall be unlawful for any person, directly or indirectly... [t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading..."
During that meeting, I asked Mr. Kent publicly before the entire Annual Meeting of Shareholders why the company and its executives have refused to acknowledge the situation in Mexico and its potentially damaging consequences for the company, and by extension, its shareholders. Mr. Kent replied that my claim that Coca-Cola was facing any such legal problem in Mexico was "false" and had "no merit". Pushed further, he continued to state that any claims that Coca-Cola faced a lawsuit and government investigation in Mexico were "groundless" and had "no facts to back them up." Mr. Kent's denials were in direct contrast to the public record, both in this country and in Mexico, which includes press accounts, government correspondence and legal documents. [SUPPORTING VIDEO "Ray Rogers addressing Coca-Cola CEO Muhtar Kent at the 2011 Shareholders Meeting" available on YouTube.]
It is clear that Mr. Kent has lied to and tried to mislead both shareholders and the investment community, in regards to the company's situation in Mexico. He has also withheld information of potential liabilities that the investment community should be aware of because they could cost the company billions of dollars in fines, restitution and legal damages. As it is, the company is already losing tens of millions of dollars in revenue as well as irreparable harm to its brand value due to boycotts and protests against the company because of its illegal and immoral activity in many parts of the world.
More urgently, the latest of Mr. Alvarado-Agüero's lawsuits, filed last October, has sparked an investigation by Mexico's Fiscal Crimes division of the Federal Treasury Investigation Department, and the story has been picked up by the Mexican press. It is only a matter of time before it breaks in the U.S. press with likely very dire consequences for the company and its shareholders.
I would strongly encourage the SEC to investigate Mr. Kent's comments and compel The Coca-Cola Company and Mr. Kent to fully comply with this nation's securities laws, especially those laws requiring a company's complete and truthful disclosure of all material matters.
Ray Rogers
Director
Corporate Campaign, Inc.
Campaign to Stop Killer Coke
Update of June 6, 2011 SEC Complaint
TCR Submitted Successfully - Reference Number: TCR1340818969558
Please select the option that best describes your complaint
Material misstatement or omission in a company's public filings or financial statements, or a failure to file
Please select the specific category that best describes your complaint
Failure to notify shareholders of corporate events
Provide additional details about your complaint:
I want to follow-up and update my previous complaint, filed one year ago [June 6, 2011; Reference #TCR1307395939385], to continue to alert the Securities and Exchange Commission to what I believe is on-going SEC Rule 10(b)-5 violations by the Chief Executive Officer and Chairman Muhtar Kent of The Coca-Cola Company.
Since the time of my last complaint, Mr. Kent and Coca-Cola have repeatedly failed to inform shareholders of potentially damaging litigation and government investigations related to the company's activities in Mexico. This includes a series of lawsuits filed in Mexico by angel Alvarado-Agüero, a former employee and marketing executive with Coca-Cola in Mexico; and an investigation by Mexico's Fiscal Crimes division of the Federal Treasury Investigation Department.
As described in my previous complaint, the series of lawsuits contend that Coca-Cola and an affiliate conspired over the past 25 years to cheat Mexican workers, including Mr. Alvarado-Agüero, out of agreed-upon and legally mandated compensation; and the Mexican government out of lawful tax revenue through a scheme of outsourcing and tax evasion. The lawsuits-brought in the Mexican Federal Court of Labor Law, the Mexican Treasury Department, and the Procuraduria General de La Republica-date back to 2007. [PLEASE SEE THE SUPPORTING DOCUMENT "Original 2007 Lawsuit" SUPPLIED IN MY ORIGINAL COMPLAINT.]
Despite all this, Coca-Cola and Mr. Kent continue to purposefully deceive the investing public as to the potential financial and litigation damage, estimated in the billions of dollars, the company may face in Mexico, which is Coca-Cola's second-largest market. In previous public statements by its executives and in its publicly filed documents with the SEC, Coca-Cola has refused to inform shareholders of these on-going events, which carry potentially damaging consequences for the company's brand name, legal liability, profits and, of course, stock price.
Worse yet, in behavior similar to that exhibited at last year's Annual Meeting of Shareholders (which preceded my previous complaint), Mr. Kent continued to commit actionable fraud upon the company shareholders at this year's Annual Meeting, held on April 25, 2012, in Atlanta, Ga.
I — as a shareholder of the company's stock — was again able to publicly ask Mr. Kent why the company has not acknowledged, in its SEC filings nor in its executives' public statements, the series of lawsuits filed in Mexico nor the current investigation of the company by Mexican authorities.
And in his response, again Mr. Kent blatantly crossed the line into what I am certain is a securities law violation in accordance to the Securities Exchange Act of 1934, and its Antifraud provision, outlined in Section 10(b), which was codified in SEC Rule 10(b)-5.
During the April 25, 2012 Annual Meeting, when Mr. Kent was asked publicly before the entire Annual Meeting of Shareholders why the company and its executives have refused to acknowledge the situation in Mexico and its potentially damaging consequences for the company, and by extension, its shareholders, Mr. Kent replied that any charges that Coca-Cola was facing any such legal problem in Mexico was based on "false, misleading and exaggerated claims".
Mr. Kent went on to say that the allegations brought by Mr. Angel Alvarado-Agüero, were: "Not true-Full Stop!" and that there was: 'No pending investigations by competition authorities or any authorities in Mexico involving our company. Full Stop!'
Mr. Kent's clear denials were in direct contrast to the public record, both in this country and in Mexico, which includes press accounts, government correspondence and legal documents that demonstrate the truth of these charges and of Coke's ultimate liability in this matter.
Most recently (and see attached documents), the Mexican newspaper "El Universal" wrote of these lawsuits and investigations on June 7, 2012; also, the renown Mexican legal firm of Corpusiure International Associated Firms, wrote a highly critical legal paper in May 2011 outlining the Mexican federal tax authorities case against Coca-Cola, entitled "The Coca-Cola Company Investigated for Tax Evasion".
Despite this growing body of evidence, Mr. Kent and the Coca-Cola Company continue to deny the very existence of these lawsuits and investigations stemming from the company's behavior in Mexico over the past quarter-century. And it continues to be clear that Mr. Kent has lied to and tried to mislead both shareholders and the investment community, in regards to the company's situation in Mexico. He has also withheld information of potential liabilities that the investment community should be aware of because they could cost the company billions of dollars in fines, restitution and legal damages.
Again, I would strongly encourage the SEC to investigate Mr. Kent's comments and compel The Coca-Cola Company and Mr. Kent to fully comply with this nation's securities laws, especially those laws requiring a company's complete and truthful disclosure of all material matters.
Second Update to June 6, 2011 SEC Complaint
TCR Submitted Successfully - May 16, 2013 - Reference Number: TCR1368752600825
Tell us about your complaint
Please select the option that best describes your complaint
Material misstatement or omission in a company's public filings or financial statements, or a failure to file
Please select the specific category that best describes your complaint
Failure to notify shareholders of corporate events
Provide additional details about your complaint:
I am filing my third complaint to continue to alert the U.S. Securities and Exchange Commission to what I believe is on-going SEC Rule 10(b)-5 violations by the Chief Executive Officer and Chairman Muhtar Kent of The Coca-Cola Company.
I originally filed two previous complaints, through the SEC website's "Tips, Complaints and Referrals" section, and also through the mail. I also successfully submitted the Whistleblower Declaration with both previous complaints, as well as with this one. The previous complaints were filed on June 6, 2011 [Reference #TCR1307395939385] and the second was submitted June 27, 2012.
To date, I have received no SEC correspondence from investigators about my complaints, although I did receive a letter on April 1, 2013 from Nicholas Panos, Senior Special Counsel, Office of Mergers and Acquisitions of the SEC. Mr. Panos raised objections to what he called "inflammatory statements" on my website regarding allegations of Coca-Cola Co.'s illegal behavior, and urged me to remove the statements from my website. [PLEASE SEE ATTACHED; MR. PANOS'S LETTER TO ME, AND MY RESPONSE LETTER, DATED APRIL 15, 2013.]
As I described in my previous two complaints, Mr. Kent and Coca-Cola have repeatedly and continuously failed to inform shareholders of potentially damaging litigation and government investigations related to the company's activities in Mexico. This includes a series of lawsuits filed in Mexico by Angel Alvarado Agüero, a former employee and marketing executive with Coca-Cola in Mexico; and an investigation by Mexico's Fiscal Crimes division of the Federal Treasury Investigation Department.
As described in my previous complaints, the series of lawsuits contend that Coca-Cola and an affiliate conspired over the past 25 years to cheat Mexican workers, including Mr. Alvarado-Agüero, out of agreed-upon and legally mandated compensation; and the Mexican government out of lawful tax revenue through a scheme of outsourcing and tax evasion. The lawsuits-brought in the Mexican Federal Court of Labor Law, the Mexican Treasury Department, and the Procuraduria General de La Republica-date back to 2007. [PLEASE SEE THE SUPPORTING DOCUMENT "Original 2007 Lawsuit" SUPPLIED IN MY INITIAL JUNE 6, 2011 COMPLAINT.]
I am compelled to file this third complaint against Coca-Cola and Mr. Kent because they continue to purposefully deceive the investing public as to the potential financial and litigation damage, estimated in the billions of dollars, the company faces in Mexico, which is Coca-Cola's second-largest market. Worse yet, in behavior similar to that exhibited at the last two years' Annual Meetings of Shareholders (which preceded each of my previous complaints), Mr. Kent continued to commit actionable fraud upon the company shareholders at this year's Annual Meeting, held on April 24, 2013, in Atlanta, Ga.
I-as a shareholder of the company's stock-was again able to publicly ask Mr. Kent why the company has not acknowledged, in its SEC filings nor in its executives' public statements, the series of lawsuits filed in Mexico nor the current investigation of the company by Mexican authorities.
And in his response, again Mr. Kent blatantly crossed the line into what I am certain is a securities law violation in accordance to the Securities Exchange Act of 1934, and its Antifraud provision, outlined in Section 10(b), which was codified in SEC Rule 10(b)-5.
During the April 24, 2013 Annual Meeting, when Mr. Kent was asked publicly before the entire Annual Meeting of Shareholders why the company and its executives have refused to acknowledge the situation in Mexico and its potentially damaging consequences for the company, and by extension, its shareholders, Mr. Kent again replied that any charges that Coca-Cola was facing any such legal problem in Mexico was untrue.
"There is no investigation by the competition authorities, [or] any other authorities in Mexico. Mr. Alvarado has filed, yes, filed several lawsuits but every one of those claims have been dismissed," Mr. Kent said at the meeting. [See Mr. Kent's response to my questions on YouTube.]
This statement by Mr. Kent is simply a blatant lie. There are and continue to be an outstanding labor lawsuit, first filed in 2007 and a criminal lawsuit filed in 2009.
"I will not sit up here and lie to anyone," Mr. Kent continued at the Annual Meeting. "I will not lie to anyone, any single day, about anything related to our business."
Mr. Kent's clear denials at this recent and previous Annual Meetings were in direct contrast to the public record, both in this country and in Mexico, which includes press accounts, government correspondence and legal documents that demonstrate the truth of these charges and of Coke's ultimate liability in this matter. Also, at the April 24 Annual Meeting, I again made Mr. Kent aware that the renown Mexican legal firm of Corpusiure International Associated Firms wrote a highly critical legal paper in May 2011 outlining the Mexican federal tax authorities case against Coca-Cola, entitled "The Coca-Cola Company Investigated for Tax Evasion". Given this, his denial that any such situation was occurring in Mexico or that Mexican authorities were investigating is even more clearly false and an actionable violation of the Antifraud provision of the Exchange Act. [PLEASE SEE DOCUMENTS FILED WITH THE JUNE 27, 2012 COMPLAINT.]
Again, I would strongly encourage the SEC to investigate Mr. Kent's comments and compel The Coca-Cola Company and Mr. Kent to fully comply with this nation's securities laws, especially those laws requiring a company's complete and truthful disclosure of all material matters.
Are you having or have you had difficulty in getting access to your funds or securities?
No
Did you suffer a loss?
No
When did you become aware of the alleged conduct? (mm/dd/yyyy)
04/27/2011
When did the alleged conduct begin? (mm/dd/yyyy)
06/02/2007
Is the alleged conduct ongoing?
Yes
Has the individual or firm acknowledged the alleged conduct?
No
What is the source of your information? You may select more than one
Conversations; Publicly available information;
Have you taken any action regarding your complaint? You may select more than one
Complained to firm; Complained to SEC;
Who did you contact and what action did you take?
As stated above: I originally filed two previous complaints, through the SEC website's "Tips, Complaints and Referrals" section, and also through the mail. I also successfully submitted the Whistleblower Declaration with both previous complaints, as well as with this one. The previous complaints were filed on June 6, 2011 [Reference #TCR1307395939385] and the second was submitted June 27, 2012.
Who are you complaining about? Are you complaining about an individual or a firm?
Individual
Select the title that best describes the individual or firm that you are complaining about:
Executive officer or director
If you are complaining about an entity or individual that has custody or control of your investments, have you had difficulty contacting that entity or individual?
No
Individual's Title:
Mr.
First Name:
Muhtar
Last Name:
Kent
Telephone:
Where is the Individual that you are complaining about employed?
Coca-Cola
Are you or were you associated with the individual or firm when the alleged conduct occurred?
No
How are you or were you associated with the individual or firm you are complaining about?
I am a shareholder of Coca-Cola Co. stock.
Products involved
Select the type of product involved in your complaint:
Equities (e.g., common stock, preferred stock)
Please select the category that best describes your security product:
Common stock (exchange-traded stock)
Enter the security/ticker symbol if known:
KO
Enter the product name(s):
Coca-Cola Co. stock
About you
*Are you submitting this tip, complaint or referral pursuant to the SEC's whistleblower program?
Yes
*Are you submitting this tip, complaint or referral anonymously? Being able to contact you for further information or clarification may be helpful.
No
**Are you represented by an attorney in connection with your submission?
No
Submitter Information
Title:
Mr.
**First Name:
Ray
**Last Name:
Rogers
Street Address:
20 Jay Street, #317
City:
Brooklyn
State / Province:
NY
Zip / Postal Code:
11201
Country:
USA
Home Telephone:
(212) 860-1148
Work Telephone:
(718) 852-2808
Email Address:
info@CorporateCampaign.org
What is the best way to contact you?
Phone
Select the profession that best represents you:
Other
For Other, please specify:
Shareholder
Whistleblower Declarations
*1. Are you, or were you at the time you acquired the original information you are submitting to us, a member, officer, or employee of the Department of Justice, the Securities and Exchange Commission, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the Public Company Accounting Oversight Board, any law enforcement organization, or any national securities exchange, registered securities association, registered clearing agency, or the Municipal Securities Rulemaking Board?
No
*2. Are you, or were you at the time you acquired the original information you are submitting to us, a member, officer, or employee of a foreign government, any political subdivision, department, agency, or instrumentality of a foreign government, or any other foreign financial regulatory authority as that term is defined in Section 3(a)(52) of the Securities Exchange Act of 1934 (15 U.S.C. §78c(a)(52))?
No
*3. Did you acquire the information being submitted to us through the performance of an engagement required under the federal securities laws by an independent public accountant?
No
*4. Are you submitting this information pursuant to a cooperation agreement with the SEC or another agency or organization?
No
*5. Are you a spouse, parent, child, or sibling of a member or employee of the SEC, or do you reside in the same household as a member or employee of the SEC?
No
6. If the answer to any of questions 1 through 5 above is 'yes,' please provide details.
N/A
*7a. Are you submitting this information before you (or anyone representing you) received any investigative request, inquiry, or demand that relates to the subject matter of your submission from the SEC, Congress, or any other federal, state, or local authority, any self regulatory organization, or the Public Company Accounting Oversight Board?
Yes
7b. If the answer to question 7a is 'no,' please provide details.
N/A
*8a. Are you currently a subject or target of a criminal investigation, or have you been convicted of a criminal violation, in connection with the information you are submitting to the SEC?
No
8b. If the answer to question 8a is 'yes,' please provide details.
N/A
*9a. Did you acquire the information being provided to us from any person described in questions 1 through 8?
No
9b. If the answer to question 9a is 'yes,' please provide details about the person from whom you acquired the information.
N/A
10. Identify with particularity any documents or other information in your submission that you believe could reasonably be expected to reveal your identity, and explain the basis for your belief that your identity would be revealed if the documents were disclosed to a third party.
N/A
*I declare under penalty of perjury under the laws of the United States that the information contained in this submission is true, correct, and complete to the best of my knowledge, information, and belief. I fully understand that I may be subject to prosecution and ineligible for a whistleblower award if, in my submission of information, my other dealings with the SEC, or my dealings with another authority in connection with a related action, I knowingly and willfully make any false, fictitious, or fraudulent statements or representations, or use any false writing or document knowing that the writing or document contains any false, fictitious, or fraudulent statement or entry.
Agree
