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Coca-Cola involved in Tax Evasion Scandal in Mexico

Question Regarding a Scheme of Illegal Outsourcing and Tax Evasion in Mexico and Lawsuit by Former Coca-Cola Marketing Executive Turned Whistle-Blower

Question by Ray Rogers | Coca-Cola Annual Meeting | April 27, 2011

Mr. Chairman:

Ray Rogers

Ray Rogers Questioning Coca-Cola Chairman Muhtar Kent at the 2011 Shareholders Meeting

Do you and the Board understand the consequences of lying to investors and withholding information of potential liabilities that could cost the company billions of dollars in fines, restitution, damages and loss of brand value? A simple yes or no will do.

[Mr. Kent is silent for a number of seconds looking chagrined and perplexed about how to respond. See photo below.]

Kent: Continue, please, with your question. You have one minute to go.

Rogers: No. We have more time. Can you answer that with a Yes or No? If you and the Board don't agree with this, we really have some problems.

Kent: You've got to finish your whole question, Mr. Rogers.

Rogers: Well, I want some real answers, so I'll continue.

If the answer is Yes, which it should be, then why do I find nothing in the documents sent to shareholders alerting them to the festering lawsuit filed by Angel Alvarado, the former 16-year Coca-Cola employee and marketing executive, turned whistle-blower when the company pressured him to act illegally to destroy the competition at 700,000 mom and pop stores throughout Mexico where 80 percent of soft drinks are sold.

Coca-Cola CEO Muhtar Kent

Coca-Cola Chairman Muhtar Kent Attempting to Answer Ray Rogers' Questions

Unfortunately for Coke, the Alvarado case has drawn the attention of the Mexican government to even more serious charges. Preliminary investigations by Mexican authorities support allegations that The Coca-Cola Company and The Coca-Cola Export Corporation conspired to cheat Mexican workers and the government out of hundreds of millions of dollars through an illegal scheme of outsourcing and tax evasion. Are you, Mr. Kent and the Board, aware of this preliminary investigation?

On November 8, 2010, the Director-General of the Treasury Department sent a letter to the Administrator of Mexico's Fiscal Auditing Agency explaining that his department found evidence that Coca-Cola is defrauding the Treasury Department and requested further investigation and confirmation of his findings.

The ongoing investigation will require the return to Mexico of John Quincey, former President of Coca-Cola's Mexico division to testify in a Mexican court.

During last year's annual meeting, Mr. Kent, in response to my question, you lied about the existence of Alvarado's lawsuit and its potential ramifications and you were exposed as a liar by the Mexican press.

If Alvarado's allegations and preliminary investigations by the Treasury Department in Mexico are true, and there is plenty of supporting evidence on his website and on, the estimated cost to The Coca-Cola Company and its shareholders could well exceed a billion dollars. Then, one has to ask, in how many other countries is Coke involved in similar fraudulent activities?

I'll end here. But I could also talk about the $48 million I saw nothing about you are paying in India because of the lies and denying of what's going on there.

[Kent is trying to get Rogers to shut up and sit down.]

Rogers: With all due respect, you are not answering my questions.

[Kent started to describe what the Company does to improve lives of everyone all around the world.]

Rogers interrupted and said:

Are you going to answer the questions? Just say yes or no.

Kent would not answer. Instead, he went on to say; "We are one of the largest investors in Mexico. We received a letter from Pres. Calderon. We are one of the best social citizens in Mexico." And he added: "Mr. Rogers. All your allegations are false and have no merit. Your allegations are groundless and you have nothing to back them up."

"Mr. Rogers," continued Kent, "Please sit down or I'll have to ask Cobb Galleria to escort you out of this meeting."

Rogers said that he would sit down with the understanding that Kent's answer was that he would not answer the question and reiterated: "Mr. Kent. You are a liar!"

Watch Rogers ask the question and Muhtar Kent's behavior to avoid answering the question on YouTube