Coke Bribery Probe Story Rocks Atlanta

Dismay, disbelief and worry abound here over allegations that Coca-Cola Co., perhaps this city’s leading corporate citizen and certainly its most famous corporate resident, may have paid bribes to get its flagship soft drink into the Soviet market.

“Nothing like this ever shadowed Coca-Cola before,” Jerald J. Rucker, professor of marketing at the University of Georgia in Athens, said Monday. “They have the image of being a good guy, honest and ethical and moral in all their dealings. This could tarnish that shield a bit, and it could end up hurting brand loyalty.”

The company itself labeled as “ridiculous” any suggestion of wrongdoing in its relationship with the Soviet Union, where it has sold its Fanta Orange brand soft drink since 1979 and Coca-Cola itself since 1985. “It does not even warrant a denial,” the company said in a statement.

In a copyrighted story, the Atlanta Journal & Constitution reported over the weekend that a federal grand jury here has subpoenaed all the company’s documents relating to the agreement under which it sells Coke in the Soviet Union. The newspaper reported that the goal is to determine whether the firm, which forecast retail sales there of $1 billion over the first six years of the pact, paid bribes to obtain the deal.

U.S. Atty. Robert Barr said his office does not “confirm or deny any grand jury investigation.” However, the Post was able to confirm that a grand jury has issued such a subpoena to the company.

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A source familiar with the investigation cautioned that the matter is “at a preliminary stage of just taking an initial look at the records.” The source, who spoke on condition that he not be identified, said news of the probe may “give an aura of something that may not be. If there is information from whatever source that a company has paid bribes, the only responsible thing to do is to check it out.”

The U.S. Foreign Corrupt Practices Act of 1977 makes it illegal to offer or make payments to high officials of a foreign government for purposes of obtaining or retaining business. Here in Atlanta, the newspaper’s report provoked a variety of musings about whether the company this town has known and loved for a century has changed and what it all might mean.

The company is seen here “as very much a public institution in which the only thing more important than honesty is Coke itself,” Steve Suitts, executive director of the Southern Regional Council, an Atlanta think tank, said. “Coke is seen in personal terms. I don’t think Atlantans believe that corruption is one of the things that go better with Coke.”