Coke agrees to audit business practices abroad

updated 6:26 p.m. ET June 20, 2005

ANN ARBOR, Mich. - The Coca-Cola Co. says it is willing to examine its labor and business practices in India and Colombia to keep $1.3 million worth of contracts with the University of Michigan.

The university decided Friday that it would renew contracts with the world’s biggest beverage company only on a conditional basis until the company performs an independent audit and puts a corrective plan in place, said Frank Stafford, chairman of the school’s Vendor Code of Conduct Dispute Review Board.

Atlanta-based Coca-Cola for years has faced questions about its labor practices abroad, and college students have levied some of the most vocal complaints. The company repeatedly has denied allegations of environmental and human rights abuses, but officials said they would look into the matter.

“Although we believe the allegations that led to their decision will ultimately be proven to be untrue, we appreciate the manner in which the dispute review board has engaged with our company in researching the allegation,” Coca-Cola spokeswoman Kari Bjorhus said.

Michigan’s decision was prompted by a complaint last year by Students Organizing for Labor and Economic Equality.

The student group accused Coca-Cola of draining the water table in India, causing farmers’ crops to go dry, distributing bottling plant sludge containing contaminants to Indian farmers as fertilizer, selling products that contain pesticides in India and conspiring with paramilitary groups in Colombia to harass and harm union members.

“The main issue ... is that the university is pandering to corporate interests and not necessarily to its constituents, the students,” said Saamir Rahman, a 19-year-old junior and member of the group.

At Coke’s annual meeting in April, chief executive Neville Isdell promised to continue to listen to the critics, though he insisted there is no proof of their claims. Even so, Isdell conceded that the company’s best efforts to put the questions to rest have not been successful.

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