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Campaign to Stop Killer Coke Newsletter October 31, 2011

Coke's Tax Evasion and Upcoming Events

Table of Contents

  1. Coke's Tax Evasion & Tax Avoidance
    1. Mexico
    2. United States
    3. Philippines
  2. Upcoming Events
    1. Campaign Returns to Protest at School of the Americas
    2. "The Coca-Cola Case" Arrives in Taiwan
    3. "The Coca-Cola Case" Showing in London
    4. Help Us Plan for the April 2012 Coca-Cola Co. Annual Meeting
  3. Support & Educate
    1. Contribute to the Campaign
    2. Past Newsletters
    3. Special Sections of Stop Killer Coke Website

1. Coke's Tax Evasion & Tax Avoidance

a. Mexico

Corpusiure — International Law Firm — Warns Corporate Clients Not to Follow in Coca-Cola's Footsteps.

"Despite...the investigation into the company in our country, the president of The Coca-Cola Company, Muhtar Kent [Chairman & CEO], denied on April 27th, before the Annual Shareholders Meeting, that they are under investigation for tax evasion...

"...if the accusations of fraud held against Coca-Cola were found to be true, the company would lose a figure ranging in the billions."

Campaign to Stop Killer Coke Director Ray Rogers
questioning Coke CEO & Chair Muhtar Kent at the 2011 annual meeting

CORPUSIURE International Associated Firms is a large law firm catering to corporate clients. It is based in Mexico and has offices worldwide. It handles claims in many different fields such as, Labor Law, Social Security, Corporate Law, Tax Law, Foreign Trade, Civil Law, Intellectual Property, Banking Law, Stock Market and Administrative Law.

In May, 2011, the law firm issued a special bulletin about Coca-Cola in Mexico.

Excerpts from the report:

"The Coca-Cola Company Investigated for Tax Evasion."

"Recently, it has become common practice to establish and run "payer" companies. These are associations that are constructed either with the sole objective of evading payment of labour and tax benefits or associations that are formed to lighten the commercial responsibilities of companies with numerous suppliers, disconnecting them from the headquarters, which evidently holds the necessary capital to comply with said obligations. They create simulation schemes to elude compliance with labour, tax and commercial obligations, among others...

"The Tributary Administration Service, upon request of the Secretariat of the Treasury, is carrying out an investigation into the tax evasion of The Coca Cola Company in Mexico regarding three of its subsidiary companies: The Coca Cola Export Corporation, the "payer" company Integrated Administration and Senior Management Services (SIAAGSA) and The Mexico branch Coca Cola Export Corporation.

"The present investigation arose in response to the complaint filed by the ex-director of market development, Ángel Alvarado Agüero, who has spent four years seeking to prove the fraud incurred by The Coca Cola Company in Mexico, to the detriment of its employees, the treasury and the Mexican Institute for Social Security (IMSS)...

"In 1987, The Coca-Cola Export Corporation (CCE), subsidiary of The Coca-Cola Company, the largest soft drinks producer in the world and its branch in Mexico, of the same name, created an association named Integrated Administration and Senior Management Services (SIAAGSA), with the aim of leaving the latter in charge of hiring staff, salary distribution, payroll, as well as taking care of the benefits of this company's staff.

"That is to say that Coca-Cola Export has been simulating a scenario before its employees claiming that the true boss is SIAAGSA, an association created by Coca-Cola Export exclusively as a way of avoiding payment of PTU (Employees Participation in Utilities), salaries and other benefits, which legally correspond to the employees of Coca-Cola. The only real activity carried out by SIAAGSA is that of the "payer" company for The Coca-Cola Export Corporation.

"Therefore, in the case of the ex-director Angel Alvarado Agüero, Coca-Cola Export's defence has been to deny any working relationship between the two, claiming that the latter was never a Coca-Cola Export employee, but rather a SIAAGSA employee. The above has clearly displayed the simulation incurred by The Mexican branch Coca-Cola Export Company, given that this company technically does not have employees and consequently does not distribute utilities, pay taxes or fees to the IMSS (or does so to a minimum)...

"By being legally unconnected to the company the employees do not benefit from the real utilities of the company, rather they receive those generated by SIAAGSA, which for tax and labour purposes is not linked to Coca-Cola Mexico. However, incidentally the latter is the SIAAGSA's only client and is run by the same executives as the soft drinks producer. It is for this reason that the Secretariat of the Treasury, the IMSS and the employees see very little of the money that would in reality be around 700 million dollars in utilities obtained by Coca-Cola per year in Mexico...

"As you can imagine the estimated contingency in these circumstances for The Coca-Cola Export Corporation is considerably high given the transnational's copious utilities and the fact that the employees that continue to work there could demand PTU payment for all the years that they have been working for the aforementioned company.

Despite the above and the investigation into the company in our country, the president of The Coca Cola Company, Muhtar Kent, denied on April 27th, before the Annual Shareholders Meeting, that they are under investigation for tax evasion.

Felipe Gomez Mont, Angel Alvarado's lawyer in Mexico assured the magazine "Proceso" that the case remains open with a number of legal authorities in Mexico given that the scheme used by Coca-Cola has fraudulent implications in terms of labour, tax, legality and administration, amongst others. Additionally, he disclosed documents that prove that the Treasury received the complaint and found in its preliminary legal analysis elements with which to take legal action before the Attorney General's Office for tax fraud that may reach 70 million dollars per annum. Therefore, if the accusations of fraud held against Coca-Cola were found to be true, the company would lose a figure ranging in the billions...

"Currently the Tributary Administration Service and the competent institutions belonging to the Federal Tax Attorney's Office within the exercise of their verification faculties are reviewing papers, interrogating officials, verifying the functioning of electronic systems and registers and in general they are putting the magnifying glass on Coca-Cola in all areas relating to tax and fee payments to the IMSS. In this way the Tributary Administration Service is reviewing inside out the SIAAGSA and Coca-Cola in Mexico, and the Federal Tax Attorney's Office is gathering elements to carry out proceedings against them.

CONCLUSIONS

"As we have already mentioned, it is currently common practice for companies to create their own businesses with the sole purpose of transferring their staff and productive activity, in order to disassociate themselves from salaries and benefits, and minimise their obligations with treasury, the IMSS, the INFONAVIT (National Trust for Workers Housing), amongst others, given that in theory the headquarters do not have employees, or have very few.

"There is no doubt that for the earlier mentioned labour trial purposes, The Coca-Cola Export Corporation must be considered as largely responsible. Therefore, the utilities generated by them are those that must be taken into account in order to order the PTU payment, and not those of SIAAGSA. On the other hand, from a tax and penal point of view, it could be said that The Coca-Cola Export Corporation has been committing the crime of tax fraud by using a simulation to omit payment of contributions, to the detriment of the federal treasury."

We consider that the present matter shall set a fundamental precedent, therefore we invite companies to avoid simulation of legal acts that put their functioning at risk and produce contingencies that otherwise would be avoided.

The entire report In English: http://www.corpusiure.com.mx/Ingles/boletin_2011/May.pdf

El informe complet en espanol: http://www.corpusiure.com.mx/boletin_2011/Mayo_11.pdf

SEC Complaint Filed over Coke's Failure to Disclose Risk of Legal Problems in Mexico: http://www.killercoke.org/complaint_filed_with_sec_regarding_mexico.php

b. United States

In September 2011, Coca-Cola Chairman & CEO Muhtar Kent complained about the "very large tax burden" of American corporations. However, a September 27th article in The Nation exposes Kent's lie: "...Coca-Cola enjoys very low federal taxes, and pays a lower rate than most Americans. According to Citizens for Tax Justice, the company's current federal tax expense is $470 million, which is only 6.5 percent of the $7.2 billion in pre-tax profits that Coca-Cola reported last year..."

The Campaign to Stop Killer Coke posted two other articles, one in May 2009 and one going back to August 2004, exposing Coke's use of the Cayman Islands to avoid a tax rate that most Americans pay. American corporations are able to avoid billions in tax payments to the U.S. government since the Caymans have no corporate income tax for companies incorporated there.

"The Caribbean island has helped scores of U.S. companies, including Coca-Cola Co. and Oracle Corp., to legally avoid billions in tax payments to the U.S. government," said then-U.S. Senator Byron Dorgan [D-ND].

"When companies...like Coca-Cola, decide they want to minimize their participation in the payment of taxes for that which we enjoy in this country, it bothers me," Dorgan said.

Corporations like Coca-Cola are the cause of so many public services being cut - education, health care, trash removal, police and firefighters as well as social services for the elderly and disabled.

"Beltway Buzzes About Coca-Cola's Bogus Tax Complaint" by George Zornick, The Nation, Sept. 27, 2011
Read Article

"Coca-Cola, Oracle, Intel Use Cayman Islands to Avoid U.S. Taxes" by David Evans - May 5, 2009, Bloomberg
Read Article

"THE $150 BILLION SHELL GAME," by David Evan," Bloomberg Markets, August 2004
"More than 150 U.S. companies, including Coca-Cola and Intel, have subsidiaries in the Cayman Islands. That costs the U.S. billions in lost taxes

Download Article in .PDF

c. Philippines

This was reported in our newsletter on June 30, 2011

Tax evasion, smuggling & worker abuse in The Philippines

The Campaign to Stop Killer Coke has been contacted by two groups in The Philippines. First, we were contacted by a group of Coke workers who have documented Coke's labor abuses and corruption in the workplace. Their website, which is discussed below is http://www.wix.com/albukarki/cocacolainthephilippines. The other group, Batang Negros, is involved in a province-wide boycott of Coca-Cola because of the company's smuggling and tax evasion schemes which is destroying the local economy, local jobs and local businesses. We put the groups in touch with each other and Batang Negros responded:

"I already talked with the head of the group and he is very optimistic to the alliance between your group and our group here...we are just about to launch our Internet campaign but we have also prepared for ground mobilization."

"Coke's Crimes in The Philippines": http://www.killercoke.org/crimes_philippines.php

Facebook page for "Coke-Free Negros": http://www.facebook.com/pages/Coke-FREE-Negros/231682936848525
Facebook Page for "Coke-FREE Establishments": http://www.facebook.com/notes/batang-negros/coke-free-establishments/106331036126806.

"Negros folks press Coca-Cola to use local sugar [instead of smuggled sugar]" By Carla P. Gomes, Inquirer Visayas, June 22, 2011
Read Article

"About 4,000 Negrenses staged a protest in front of the Coca Cola Bottlers Philippines Inc. bottling plant in Barangay (village) Mansilingan, Bacolod City, Wednesday morning to protest the company's use of imported [smuggled] instead of locally grown sugar."

2. Upcoming Events

a. Campaign Returns to Protest at School of the Americas

On November 18th, 2011, the Campaign to Stop Killer Coke will once again return to Fort Benning and the nearby Convention Center in Columbus, Georgia to support the protest to shut down the School of the Americas (SOA). The SOA is synonymous with torture and military repression in Latin America. Its graduates have long been associated with paramilitary death squads and killing of innocents.

Last year at the School of Americas protest, close to 1,000 people attended a showing of "The Coca-Cola Case." Thousands more saw the ever-popular Killer Coke mobile billboard as it traveled from Atlanta to the gates at Fort Benning. The Killer Coke mobile billboard has become a fixture at the School of the Americas protest. In order to bring the mobile billboard back this year, we are asking for contributions to raise $2,000. You can go to "Contributions" on the menu at the top and make a contribution through PayPal by clicking on one of the images of the credit cards.

The Stop Killer Coke Mobile Billboards

The Campaign to Stop Killer Coke Movement Erupts at last year's SOA Protest!
Watch on YouTube

The film showing of "The Coca-Cola Case" during the SOA 2010 protest

This year the Campaign to Stop Killer Coke will be hosting a 90 minute workshop on Saturday, Nov. 19, at 9 pm in Room #213 in the Columbus Convention Center.

As in recent years, we are looking to distribute thousands of pieces of literature and "Stop Killer Coke, Shut Down SOA" posters. We will have two tables in the Convention Center and we'd appreciate you dropping by. We can use help in distributing our Stop Killer Coke literature to every participant at the conference. Please contact us beforehand (info@KillerCoke.org) or see us at our tables at the conference center if you are able to join us.

The Campaign to Stop Killer Coke supports the School of the Americas Watch and we urge our sisters and brothers to visit http://www.soaw.org..

We look forward to seeing you in Georgia on November 18 to 20 to shut down the SOA.

Who: School of the Americas Watch and The Campaign to Stop Killer Coke

What: SOA Vigil at the gates of Fort Benning, Georgia

Where: Gates of Fort Benning, Columbus, Georgia and the Columbus Convention Center (801 Front Avenue, Columbus, GA 31901)

When: November 18-20, 2011

The Killer Coke Workshop will take place on Saturday, November 19, at 9 pm in Room #213 at the Columbus Convention Center. SOA Weekend Schedule of Events.

Why: To shut down the School of the Americas, better known as the School of the Assassins.

b. "The Coca-Cola Case" Arrives in Taiwan

The 2011 Taiwan International Labor Film Festival kicked off with "The Coca Cola Case" on Oct. 20th. The film has been translated into Mandarin.

The film festival will last about three months, beginning in Taoyuan. Films will also be shown in Taipei, Hsinchu, and other counties in Taiwan.

There are going to be more showings of the film in Taiwan. We will post future showings at Upcoming Events.

The Campaign to Stop Killer Coke is thrilled to be a part of the 2011 Taiwan International Labor Film Festival and looks forward to working with our sisters and brothers in Taiwan on this important campaign.

For more information on the festival, please visit: http://labormovie.blogspot.com/http://labormovie.blogspot.com.

And check out the festival on Facebook at: http://www.facebook.com/2011TaiwanInternationalLaborMovieFestival

c. "The Coca-Cola Case" Showing in London

A showing of the film at the London Socialist Film Co-op at the Renoir Cinema
Brunswick Square, London WC1

11 am, Sunday, December 11, 2011
Discussion led by Tony Benn
Phone: 020-7278 5764
Download the flyer in .PDF

d. Help Us Plan for the April 2012 Coca-Cola Co. Annual Meeting!

The next Annual Meeting of Shareowners of The Coca-Cola Company will mostly likely be held in the latter part of April 2012 in Atlanta, Georgia.

We need STOCK PROXIES and SPEAKERS to have a strong presence and to raise issues inside the meeting

The annual meeting is the only place we can challenge Coke's chief policymakers — the top executives and members of the company's board of directors -- face-to-face. By having a visible presence at the meeting, no stockholder, creditor, other potential investors or stock analysts can say they were not forewarned about the increasing risk in investing heavily in Coke since Coke is facing hundreds of millions of dollars or more in lost sales, fines, settlements and brand name value. At the 2010 and 2011 annual meetings, Coke CEO and Chair Muhtar Kent responded to our questions with lies. That led to our filing a complaint with the SEC.

The Campaign to Stop Killer Coke is working with individuals, other organizations and stockholders to hold Coke accountable around serious labor, human rights, health and environmental abuses. If you or your organization would like to participate in activities around the annual meeting, contact us at (718) 852-2808 or e-mail us at info@killercoke.org.

In early March 2012, stockholders should be receiving their notice of the annual meeting and proxy card from The Coca-Cola Co. If you are not able to attend the annual meeting and would like to help the Campaign, we would like your proxy assigned to us so that others can attend. You can contact us at (718) 852-2808 or info@killercoke.org and we will explain how to transfer your proxy. If proxyholders plan to attend the shareholders' meeting and would like to join us in the activities, please contact us.

3. Support & Educate

a. Contribute to the Campaign

Please make a donation via PayPal from our website to help the Campaign. You can go to "Contributions" on the menu at the top and make a contribution through PayPal by clicking on one of the images of the credit cards. Contributions made by check or money order should be made payable to "The Campaign to Stop Killer Coke" and sent to Campaign to Stop Killer Coke; 20 Jay Street #317; Brooklyn, NY 11215.

b. See Past Newsletters

To read past newsletters, go to: http://www.killercoke.org/newsletters.php

c. Special Sections of Stop Killer Coke Website

Coke's Crimes (By Country); Reports, Sensitive Issues & Exposes; Campus Activism, and Labor Union Solidarity are sections of our website that are filled with information for organizers. You can find links to these sections and much more at http://www.killercoke.org.