Trade secrets: Coca-Cola’s hidden formula for avoiding taxes

by KHADIJA SHARIFE

Believed to be the first coupon ever, this ticket for a free glass of Coca-Cola was first distributed in 1888 to help promote the drink. By 1913, the company had redeemed 8.5 million tickets.
IMAGE/Wikipedia

The hotel door was the dividing line: inside, a first world fantasy of starched uniforms, low voices, and crisp cool air; outside, color and heat, vendors selling knickers, groundnuts and sunglasses along cracked sidewalks. I sat atop my father’s shoulders, holding his ears, taking in this snapshot of Lusaka in the late 1980s. Zambia was a country in the throes of hunger riots caused by massive reduction in the public budget, a chain reaction that engulfed most of Africa during a period known as the “lost decade.” One country toppled after another like a game of dominos playing to the rules of the Washington Consensus. My father was on the board of a Gulf development bank, assisting–or so they were under the impression–efforts to alleviate poverty in various African countries. The doors between the inside and outside of the Lusaka hotel where we stayed were as much symbolic as they were tangible; made of money, race and social class. But the inside and outside had something in common: Coca-Cola, whether dragged by vendors on small carts or poured with a flourish in swanky restaurants.

Back in South Africa, my home country, Coke was a household name since the 1940s. South Africa’s insider and outsider divide, apartheid, seemed an even more impenetrable barrier. Companies like Coke financed the makings of the regime, investing in its earlier legitimacy by sponsoring landmarks like the Voortrekker Monument, commemorating European pioneers. Historically, the country was a key supplier of cheap labor, critical resources like gold and platinum, and a bastion in the rhetorical anti-communist foreign policy of countries like the US and UK. For companies like Coke, South Africa was a market others were less willing to enter. Prime Minister John Vorster singled out these multinationals as “bricks in the walls of the regime’s continued existence.” But a vocal portion of American and European citizens took the struggle inside to the doorsteps of power abroad. By 1978, the pressure was enough for the US Senate’s Foreign Relations Subcommittee, assessing 250 companies active in South Africa, to specifically rebuke Coca-Cola for perpetuating the apartheid system. The company refused to disclose, on several occasions, key information about hiring, pay scales and other critical issues, citing confidentiality. At the time, Coke controlled more than 75 percent of the South African market and 10 cents of every 80-cent bottle sold was claimed by the regime as tax.

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