The Coke Machine: The Dirty Truth Behind the World's Favorite Soft Drink

by Michael Blanding

  “I don’t think necessarily someone from Atlanta said do this,” he says, “but it seemed like a combination of complicity and turning the other way and allowing things to happen.” Whether it was a sin of commission by giving tacit approval for violent tactics to its bottlers, or a sin of omission by not taking stronger action to condemn the violence with the full weight of Coke’s corporate power, it amounted to the same thing in Kovalik’s mind. What was less clear to him was how the Coca-Cola Company could be held accountable for actions that were at best taken by a foreign bottler, if not the managers of a foreign bottler, in a foreign country, with its own set of laws and system of justice. Only months before, the Fiscalía had officially ended its own investigation into Gil’s murder without even staging a trial.

  Talking it over with SINALTRAINAL leadership, Kovalik hatched a new idea. If the union couldn’t get a fair trial in Colombia, he would try Coca-Cola in the United States. And Kovalik knew just the person to talk to—a Washington, D.C.-based lawyer named Terry Collingsworth, who had made a career out of holding corporations accountable for not just freedom of association, but also things like murder, slavery, torture, and imprisonment in far-flung places around the world—the exact kinds of crimes that Coke had been accused of by SINALTRAINAL.

  Together Kovalik and Collingsworth crafted a case in order to determine exactly how much Coke knew about the violent activities at its bottling plants in Colombia—and hold it responsible for any actions it had played in profiting from that violence. Just a few months after Kovalik’s first trip to Colombia, in July 2001, the lawyers filed suit in U.S. District Court in Miami on the basis of a little-used law dating from the eighteenth century called the Alien Tort Claims Act. That law, they contended, gave them the right to sue Coke for crimes committed in a completely different country.

  The road that took Collingsworth to court that month began in Malaysia nearly two decades before. After graduating from Duke Law School in 1982 and paying off his law school debts, Collingsworth set off on a back-packing trip across Asia. Arriving in Kuala Lumpur, he ran upon a protest of workers fighting for their right to unionize at their company, U.S.-based Harris Semiconductor, which had been exempted from collective bargaining by the Malaysian government. Impulsively, he offered to help them when he returned to the United States, even though it had little to do with his own dreams of becoming a lawyer who, like Kovalik, would defend the rights of American workers to unionize.

  Although he now looks like the very picture of a buttoned-up lawyer, Collingsworth grew up in unions himself, following his father and uncle into a copper plant near his hometown of Cleveland. His job was to operate a crane dumping copper ore into a molten furnace, and he admits the union made it a cushy one. “My total collective work time was probably like an hour and a half a night,” he says. “Looking back it’s almost outrageous.” He used his free time to get a college degree, attending Cleveland State by day and studying books in the crane cab by night with the goal of helping people like his father and his uncle who were getting increasingly squeezed.

  By the early 1980s, it was clear that manufacturing was in trouble. The same shareholder value movement pushed by Jack Welch and Robert Goizueta was leading to massive downsizing of employee rolls and reliance on temporary workers or relocation of plants overseas in search of cheap labor. (Collingsworth’s own plant eventually was moved to South Korea.) The protest he saw in Malaysia was the flipside of the equation—whereby developing countries were easing up on human rights and environmental standards in order to attract companies from the United States and Europe.

  The question Collingsworth faced then—and the one that he and Kovalik would face two decades later—was how to impose morality on multinational corporations driven by economic factors that were inherently amoral. As long as competitors were doing everything they could to increase their own profits, taking moral questions into account in their business plans was a sure way of going out of business. At the same time, developing countries were in effect competing against one another to attract foreign investment to lift themselves out of poverty, giving them even less incentive on their side to push for more stringent labor requirements.

  As it happened, when Collingsworth returned from his Asia trip he found a representative from his home state of Ohio, Don Pease, who was working on legislation to deal with this very issue. Pease’s idea was to give those incentives in the form of preferential trading status to countries “taking steps to afford internationally recognized workers’ rights” such as collective bargaining and a minimum wage. After it was passed, Collingsworth partnered with one of Pease’s staffers, William Gould, to form the International Labor Rights Fund (ILRF) in an attempt to enforce the new law by filing petitions on behalf of workers around the world. Their very first petition dealt with the computer workers in Malaysia. Unfortunately for them, however, the law’s language that a country could retain benefits as long as it was “taking steps” to change provided enormous wiggle room to companies and to the panel appointed by the Reagan administration to interpret the new law.

  After years of getting nowhere with the countries, Collingsworth and his colleagues eventually gave up, and began to work on companies instead. With the second wave of corporate social responsibility rolling over corporate America in the mid-1990s, companies were eager to present themselves as responsible to the needs of the less fortunate around the world—as long as it didn’t cut into their profits by disadvantaging them against their competitors. Collingsworth and other labor and environmental activists reasoned that if everyone could agree to the same standards, then companies could “do the right thing” without worrying about losing ground to competitors. At the same time, they could earn that much-sought-after boost to their brands by showing sensitivity to the social concerns their consumers cared about.

  The idea emerged as a voluntary “code of conduct” that companies would commit to following for their factories and suppliers overseas. The idea especially caught on after university students began criticizing apparel companies such as Nike for using sweatshop labor to create campus athletic gear. In a short time, the issue was national news, shaming everyone from Liz Claiborne to Kathy Lee Gifford. As he would several years later with the soda companies over obesity, Bill Clinton mediated a compromise in 1999. Then president, Clinton brought apparel companies and unions together to agree on a new voluntary set of standards similar to those of Pease’s law a decade before, along with a new nonprofit organization called the Fair Labor Association, to monitor them.

  While Coke was not a signer to that agreement, it did participate more broadly in the “code of conduct” movement of which it was a part through other means, including the Sullivan Principles, a set of standards first established by a Pennsylvania minister in the 1970s in an effort to commit companies to racial equality in their doing business with apartheid-era South Africa. After the principles were ineffective in dealing with the issue (and, according to some critics, even counterproductive since they stalled the more powerful divestment campaign), their creator abandoned the principles. But in the midst of the Nike debate, they were reconstituted in 1999 through the United Nations as the brand-new Global Sullivan Principles, which committed companies to respecting freedom of association, paying workers enough to at least make basic needs, and providing a “safe and healthy workplace.”

  Around the same time, Coke took the lead in working with the United Nation’s International Labour Organization (ILO) to create a set of principles against the use of child labor overseas and established its own “code of conduct” for bottlers that went further than either of the United Nations codes that it had signed. But these codes had problems. In addition to the fact that they were completely voluntary, Coke also interpreted them to apply only to companies in which it held a majority ownership. And thanks to Ivester’s “49 percent” solution, Coke intentionally held minority owner-ships in nearly all of its “anchor bottlers,” which made up most of the Coca-Cola sy
stem overseas, and certainly most of the employees in places like Colombia who might benefit from those worker protections. With the increasing use of contract workers, many of those employees weren’t even employed by companies in which Coke had a minority share.

  Similarly, Collingsworth found the Fair Labor Association to be a bust. Whatever good intentions those signing the agreement might have had, the mechanism to enforce it was underfunded and weak. Nike reaped gobs of positive publicity, yet a 2005 report by the company found that workers in up to half of its factories were still forced to work sixty-hour weeks, made less than minimum wage, or were denied use of bathrooms and drinking water. “At the end of the day, it turned out to be a real whitewash,” sighs Collingsworth, who admits to being at a loose end in the late 1990s, no closer to holding corporations accountable for their sins overseas than he had been during that trip through Asia.

  That’s when a man with the felicitous name of U Maung Maung walked into his life. General secretary of trade unions in Burma—a country taken over by a military junta in 1962, and known also as Myanmar since 1989—he told Collingsworth about an alarming new trend. Refugees crossing over into Thailand told horrific stories about being forced by the army to clear the jungle with machetes or search for land mines; those who refused were tortured, raped, or murdered. More shockingly, the work was being done for the benefit of two foreign companies—French-based Total and California-based Unocal. Maung appealed for help. “You’re a smart lawyer,” he told Collingsworth. “Here’s a case where you can show there’s slave labor, there’s brutality, and it’s being done on behalf of a U.S. multinational company.”

  However much he wanted to help, Collingsworth was stymied. The favored-nation legislation created by Pease had failed to create any meaningful changes in company operations, and the code of conduct movement had turned out to be a weak Band-Aid on the problem. And here Maung wasn’t talking just about poor working conditions or subsistence wages, but about rape, torture, and murder. Obviously, the ILRF couldn’t file suit in Burma. And ironically, given that Unocal was just six miles away from his office at Loyola Law School in Los Angeles, he didn’t see any way he could sue in the United States either.6 The problem was discussed with other lawyers for months, and it was finally a summer associate named Doug Steele who came up with the solution: the Alien Tort Claims Act.

  The law is ancient to say the least, going back to the 1789 Judiciary Act that set up the U.S. federal justice system. In its entirety, it reads: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” Translated into common speech, that essentially means a foreigner can sue in U.S. courts providing it is over a violation of international law. The law’s history is murky; apparently passed to protect American diplomats or possibly American ships from piracy on the high seas, it had been used exactly twice before 1980.

  That’s when a Paraguayan by the name of Joel Filártiga used it to sue the policeman who had tortured and murdered his son after the policeman had moved to Brooklyn, eventually winning $10 million in a wrongful death suit. Filártiga was never able to collect, and the policeman was shortly deported back to Paraguay. But the floodgate had been opened. Soon Ethiopian prisoners were using it to sue their torturers, Guatemalan peasants to sue their foreign defense minister, and a group of Bosnian rape victims to sue Bosnian Serb leader Radovan Karadžić, in the last case leading to $4.5 billion in damages in 2000.

  While no one had ever used the law against a corporation, there was nothing in theory stopping them. The same legal precedent that established a corporation as a “person” for the purposes of owning property more than a hundred years ago in the Southern Pacific Railroad case could also be used against them to drag them into court like any other person who committed human rights abuses.

  Not that it wasn’t a stretch. To sue Unocal under the ATCA statute, the lawyers with the ILRF had to prove that the actions rose to a violation of international law, and that the Burmese villagers couldn’t get adequate relief in their own country. Furthermore, no one was saying that Unocal directly raped and tortured anyone—only that they willingly aided and abetted the military in performing those acts. First filed in 1996 in California, the case was thrown out of court by a judge who argued that the company had no control over the Burmese military. That decision was overturned in 2002 by an appeals court that ruled it could go forward. Rather than proceed with a trial, Unocal settled for an undisclosed amount, without admitting any wrongdoing.

  Nevertheless, the case was a huge victory for the human rights lawyers, giving them a new tool in their arsenal to hold corporations accountable. Collingsworth was elated. “We had tried negotiating with companies, but now we finally had a real tool to get their attention,” he says. “Believe me, this is what got them to care about this stuff.” The group giddily went about bringing cases against corporations for a grab bag of injustices around the world—among other cases, suing ExxonMobil for funneling money to brutal Indonesian dictator Suharto to protect its oil pipeline and a Del Monte subsidiary in Guatemala for meeting with paramilitaries before beginning a campaign of torture and intimidation of union members.

  Back in Pittsburgh, Dan Kovalik had closely followed the burgeoning use of ATCA, contacting Collingsworth in 2001 to ask for his help in bringing a case against Coke. Collingsworth was enthusiastic about the prospect, accompanying Kovalik to Colombia in May 2001 to gather testimony. The two filed suit almost immediately afterward, on July 20, 2001, against the two bottlers, Bebidas y Alimientos and Panamco, as well as Richard Kirby and his son Richard Kirby Kielland, Coca-Cola Colombia, and finally the Coca-Cola Company itself. All of them, it argued, had “hired, contracted with or otherwise directed paramilitary security forces that utilized extreme violence and murdered, tortured, unlawfully detained or otherwise silenced trade union leaders.”

  The case was similar to those involving Unocal and ExxonMobil, Collingsworth and Kovalik argued, in that a U.S. company had aided and abetted violence for its own monetary gain—with one important twist. According to the union lawyers, even though Coke didn’t directly conspire with the paramilitary forces that perpetrated the violence, the company worked through its bottlers to do so, which—given the tight control Coke had over the bottlers in other areas—they argued amounted to the same thing.

  “There is no way that Coke didn’t know that paramilitaries were infesting their bottling plants down there and killing union leaders,” says Collingsworth. “When the first guy is killed, you could say, ‘Oh my, what a surprise.’ When the second guy is killed, you say, ‘Oh geez, I hope that doesn’t happen again.’ Number three, number four, number eight. At some point you’ve got to say they knew it and they were willing to accept it as the cost of doing business.”

  In addition to the bottlers’ agreements that spelled out in detail how they should produce and sell Coke products, the lawyers argued that the Coca-Cola Company’s quarter share in Panamco, and two seats on its board of directors, gave it direct control over the company. As for Bebidas, Coke had so much control it could block the Kirbys from selling it. A year after Gil’s murder, Kirby and his son Kirby Kielland told Colombian investigators, they had tried to sell, even lining up a potential buyer. There was only one problem. “I sought the permission from the international Coca-Cola Company to sell that company,” said Kirby Kielland, “a request that was denied. . . . We could sell the bottling plant, land, trucks, installation, etc., of the bottling plant in Urabá, but we could not guarantee that the franchise contract we have with Coca-Cola would be transferred.”

  With that level of control over its bottlers, Collingsworth and Kovalik argued that the situation in Colombia was essentially no different from the one in Guatemala in the 1980s, when Coke intervened directly in Trotter’s franchise agreement after political pressure from the nuns when workers were murdered there. In this case, the lawyers argued that
Coke could have curtailed the violence, or, in an extreme case, severed its bottling contract with any company in Colombia it felt was violating its international labor standards. If it didn’t, it was for the same reason that Chiquita stayed in the country for years while paying off the murderous AUC—it was simply making too much profit.

  The Coca-Cola Company, of course, vehemently disagreed with that logic. As soon as the suit was filed, a spokesperson in Atlanta dismissed it out of hand, saying that “wherever we operate, we adhere to the highest ethical standards” (a somewhat empty statement, since the same spokesperson then averred that “the Coca-Cola Company does not . . . operate any bottling plants in Colombia”). Panamco and the Kirbys, meanwhile, didn’t deny that paramilitaries targeted workers but vehemently denied any association with them. “You don’t use them, they use you,” said Richard Kirby. “One day they showed up at the plant. They shut it down, put everybody up against the wall, and started shooting. Now it has been turned around so that it’s our fault.”

  The two sides first appeared in Miami for a hearing on June 6, 2002. Coke’s lawyer, Marco Jiménez, began by arguing that the acts of violence allegedly committed by the company were not war crimes, and therefore had no business being hauled into U.S. courts as violations of international law. “For all we know [the paramilitaries were] moonlighting to go and take violence or action against union members not for any purpose related to the war, but for a corporate campaign of terror in order to get rid of a union.” It hardly made a difference, responded Collingsworth, whether the paramilitaries were furthering their war against guerrillas or whether the company was simply taking advantage of the war to get rid of the union. “The fact that this war is going on and that leftist trade union leaders can be killed with impunity allowed this to happen, and Coke and Panamco and the Kirby defendants stepped in to take advantage of that.”