ID NEWS: Coke takes write-down following foodservices audit; SEC requests documents

Coca-Cola Co., Atlanta, says it will take a $9 million pretax charge as a result of accounting problems discovered during an investigation of alleged fraud at its foodservices unit, Reuters reports.

Coke also has received a request from the Securities and Exchange Commission (SEC) for documents related to the unit, the article says. The audit and informal SEC inquiry stem from a $44.4-million wrongful dismissal suit filed last month by a former Coke employee, Matthew Whitley. Whitley said the soft drink giant engaged in "massive marketing deception and accounting fraud."

In a statement released earlier this week, Coke said a probe by accounting firm Deloitte & Touche and an independent law firm found no evidence to support many of Whitley's claims of fraud at the foodservices unit, formerly called the Fountain Div. However, auditors did find Coke had overestimated by several million dollars the carrying value of frozen non-carbonated drink machines used in a Burger King (BK) promotional program. Also, Coke acknowledged that some employees involved in a BK-related frozen drinks promotion in Richmond, VA, had been disciplined in 2001 for "tainting" results of a Frozen Coke marketing test.

Steve Heyer, Coca-Cola president and coo, wrote a letter of apology to Brad Blum, BK ceo, for the actions of those employees. Heyer said the actions were "not consistent" with Coke's values.


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