The Truth about the Real Thing

Millions of people around the world find Coca-Cola to be enticingly sweet, but the University of Michigan’s recent behavior in dealing with Coke should leave a sickeningly bitter taste in the mouths of more responsible institutions.

Two groups, Corporate Accountability International and the Campaign to Stop Killer Coke have accused the company of complicity in the deaths of eight union leaders and the continuing harassment of union workers in Colombia. According to the Campaign to Stop Killer Coke, which is run by the International Labor Rights Fund (ILRF) and the Colombian labor union SINALTRAINAL, among other trade unions, Coca-Cola’s bottlers in Colombia have used paramilitary groups in the country to kill at least eight union leaders since 1989. In India, different groups of activists in rural communities have accused Coke of depleting groundwater in drought regions and polluting soil and groundwater in these areas, as well as distributing heavy-metal laced bio-solids to farmers in the area. Also, they claimed that Coke did not install adequate systems to filter pesticides out of the groundwater used to manufacture Coca-Cola products.

In response to these allegations, the University of Michigan Dispute Review Board (DRB), which enforces Michigan’s Vendor Compliance Code on its contractors, asked Coke in June, 2005 to appoint independent auditors to determine the truth of the Indian pesticide and Colombian labor accusations. The DRB rejected the bio-solids and groundwater depletion accusations.

Coke dragged its feet on appointing independent auditors to investigate its Colombian operations, citing the fact that evidence uncovered could be shunted into an ongoing Miami lawsuit between the ILRF and two of Coke’s bottlers. The ILRF would not agree to allow evidence uncovered by the investigation to be excluded from the trial proceedings. In response, the DRB cited Coke for its slowness in responding to requests for a third-party investigation and recommended that Michigan not renew its contracts with the company, which expired on Jan. 1.

We can’t help but express skepticism about the logic used by Michigan to end its contract with Coke. Both its process and its weighting of the burden of proof appear suspect.

From a process standpoint, without the power to conduct independent investigations on its own, the DRB was reduced to entertaining the accusations and counter-arguments from all parties in order to divine the truth about allegations. The very difficulty of this method of establishing facts is why the DRB demanded Coke’s assistance in conducting independent investigations of the Indian pesticide and Colombian labor violations in the first place. Instead of punishing Coke for its inability to appoint these independent auditors within the timeline prescribed by the board, the DRB should have extended its timelines to mesh with the realities of conducting such investigations. By recommending that the university not renew its contract with Coke without giving Coke a reasonable chance to exonerate itself, the DRB effectively let unproven accusations hold an entire company’s reputation hostage. The University of Michigan has the right to control its own contracts as it wishes. But in light of the wide-ranging effects on public opinion that Michigan’s decision not to renew its contract have had, it’s hard to argue that the punishment fits the alleged violations that Coke can’t even defend itself from.

Clearly, Michigan’s DRB did its homework on Coke. It published a 911-page report calling on Coke to appoint an independent auditor in June. But the board dismissed multiple efforts on the part of Coke to exonerate itself with its own sponsored studies. One of these, conducted by the Central Science Laboratory, a respected food-safety lab, showed Coke’s bottled drinks conformed to international safety norms vis-à-vis pesticides. Another, conducted by Cal Safety Compliance Commission, one of the largest compliance investigators in the U.S., found no evidence of labor violations at Coke’s plants in Columbia. Granted, both of these studies were paid for by Coca-Cola (and the Cal Safety study was apparently altered in some small way by Coke), but the companies that conducted them have reputations just as Coca-Cola does. It is doubtful that Coke could have somehow “paid them off” to receive a good report, as activists have claimed. The DRB should have done more to assess the accuracy of existing data gathered through these investigations while awaiting independent authentication.

Our real concern with Michigan’s Dispute Review Board is not with its process, however, so much as it is with the DRB’s weighting of the burden of proof. When the barriers to levying accusations against large corporations are so low, but the stakes for those corporations’ reputations are so high, it seems only fair to put the burden of proof on the accusers, not the defendants. The DRB acted otherwise. From our perspective, it privileged the sketchy accounts of activists and overwhelming pressure from student groups on campus to move towards recommending a non-renewal of Michigan’s contract with Coca-Cola. The timelines it set and the actions it required of Coca-Cola were not compromises in search of the truth but ultimatums at least partially calculated to be impossible for Coke to meet.

In a letter to Coke following the decision not to renew Michigan’s contract with the company, university officials wrote that they thought Coke was “sincere in its desire to ensure fair labor practices and a safe working environment in Colombia and sustainable environmental practices in India.” This sincerity is something the DRB should have considered, especially in light of Coke’s inability to approve an independent audit into its Columbian bottlers because of unrelated legal proceedings.

The DRB may have made the decision with political momentum behind it, but it didn’t necessarily make the correct one. It is interesting to note that Pepsi Co. was charged with the same pesticide violations in India as Coke was, but its products remain firmly on Michigan’s shelves. Whether Pepsi will come before the DRB seems likely to depend on whether Pepsi bashing becomes a similar cause celebre for activists on Michigan’s campus. One thing is for sure, though: whatever decision the DRB does make about Pepsi will be no less arbitrary and no more fact-based than the one it made about Coke. We can only hope other universities will exercise more restraint.