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University of Michigan seeks probe of Coke's Colombia operations

By Scott Leith
Issue: 6/17/05
Atlanta Journal-Constitution

Coca-Cola, which has faced ongoing criticism concerning its business practices in Colombia, must agree to an independent investigation if the company wants to keep selling drinks at the University of Michigan.

The requirement, handed down by the huge school Friday, means allegations about Colombia and other claims will continue to dog Coca-Cola.

Much of the anti-Coke tension has centered on college campuses, where student activists at schools ranging from New York's Bard College to Michigan have tried to put an end to Coke contracts.

Coca-Cola has tried to clear its name in hopes of ending the controversies, but the issue has grown in prominence, largely due to a grass-roots campaign orchestrated by a longtime labor activist, Ray Rogers.

Thanks to its size and heritage of activism, Michigan's Ann Arbor campus has been watched as a key battleground. On Friday, a seven-person board at the school revealed several concerns about Coke. The board, in a 911-page report, recommended the school extend its Coke contracts for a limited time, with several caveats.

The school's Dispute Review Board said Coke must agree to a "third-party, independent audit" of claims involving Colombia and India, where activists are worried about pesticide residues in soft drinks and other issues. The audit must be finished by the end of March 2006.

Coke will be expected to make necessary corrections. Otherwise, Michigan will cut its 12 contracts with the Coke system.

Frank Stafford, an economics professor who chaired the board that investigated Coke, said it's unclear who would conduct an independent audit and how it might be paid for.

"I don't think that we have a precedent for this," he said. However, Stafford thinks Coke could benefit from such a process, even though the company has previously resisted demands for an independent probe.

The allegations against Coke center on claims the company has been complicit in violence against union members in Colombia. Coke has vigorously denied the charges. The company hoped to douse the disputes by hiring a firm called Cal Safety Compliance Corp. to conduct an investigation in Colombia. In April, Coke released a report that was highly positive for the company.

Activists, however, assailed the results. Michigan's board largely agreed with some of the criticism, saying Cal Safety's report was "problematic because it was commissioned and paid for by Coca-Cola."

Kari Bjorhus, a Coke spokeswoman, said the company plans to work with Michigan. The company recently invited representatives from Michigan and other schools to a meeting, and that group is likely to play a big role in figuring out how to conduct an investigation.

"Although we believe the allegations that led to this decision will ultimately be proven to be untrue, we appreciate the manner in which the Dispute Review Board has engaged with our company," Bjorhus said.

The board includes students, staffers and faculty members.

Drink sales on Michigan's campus make up a tiny portion of revenues for the vast Coke system. Atlanta-based Coca-Cola Enterprises, the bottler that serves the campus, reported $18.16 billion in revenue in 2004. Sales at Michigan accounted for just $1.3 million of that.

But the possibility of getting booted from Michigan's campus is a threat, in part because it could set a precedent that might be followed by other schools. Coke has already lost deals at a number of colleges due to protests related to Colombia.

"On the one hand, I like the actions the university has taken," activist Rogers said. "But I think they really are giving Coca-Cola too much time. They should take their action now and simply ban Coke from the campus."

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