Coca-Cola Company has added the U.S. Justice Department to its list of organizations conducting investigations into accounting fraud. The Securities and Exchange Commission is also investigating the beverage giant after two lawsuits were filed by a former Coke employee who raised the issue of improper and fraudulent accounting.
The Justice Department investigation is related to the same issue. "The company will cooperate with the inquiry," said Coca-Cola in a statement. Coca-Cola president and chief operating officer Steve Heyer used a conference call this week to announce that the company stands by its books. Mr. Heyer said that an "exhaustive investigation" within the company had found no inaccuracies in the financial statements.
Earlier this summer the company announced it would book a pretax charge associated with overvalued equipment used in a marketing campaign.
The disgruntled employee, former finance director Matthew Whitley, alleged that Coke inflated earnings in the past three years by incorrectly recording certain expenditures as marketing allowances. Coke, however, states that it was abiding by SEC rules in recording the expenditures. Mr. Whitley also accuses Coca-Cola of discrimination against minority employees and claims he was fired from his job for exposing the discrimination.
The Justice Department has not yet informed Coca-Cola of the exact nature of its investigation. The Justice Department has the right to bring criminal actions against the company as well as individual executives within the company.