Online Extra: Inside Coke's Labor Struggles

BusinessWeek travels to Colombia to speak with labor leaders, politicians, workers and others who can shed light on the controversy

To shed more light on the conflicting claims in the Colombia Coca-Cola (KO ) controversy, BusinessWeek

sent Mexico City-based Latin America Correspondent Geri Smith to Colombia for a week in late October. She interviewed more than a dozen people, including labor unionists, academics, diplomats, economists, current and former Coke workers, and the country's vice-president in an effort to get to the bottom of the dispute.

She didn't expect to find a "smoking gun" -- many of the killings of Coke workers took place a decade or more ago, and Colombia's justice system is slow to investigate and prosecute crimes. But as these excerpts from her interviews indicate, Colombia's political violence makes it not only a dangerous place to be a union organizer but a complicated place to do business.

The national headquarters for SINALTRAINAL, a union representing Colombian food-industry workers, is in an old two-story house in Bogot&aacute. Its worn, creaking stairs reflect the ramshackle condition of the country's labor unions. Walls are plastered with photos of Che Guevara and international Coke boycott posters in several languages, including one showing the wrinkled feet of a cadaver with a morgue toe tag reading "Union Leader" and a headline saying "Killer Coke can't hide its crimes in Colombia."


  Edgar Paez, the union's international relations director, says the union tried for years to get Coke to admit some responsibility for the killings of at least eight workers employed by its Colombian bottlers or to pay indemnization to their families. Only when the union filed a U.S. lawsuit in 2001 and began an international boycott in 2003, he says, did Coke pay more attention to the problem.

"If, when the first of our colleagues was killed, Coca-Cola had issued a statement condemning the paramilitaries or the criminals and demanding that they stay out of worker-employer relations, we would definitely say that the company had distanced itself from what happened," says Paez. "But Coca-Cola doesn't say anything! We believe that if they don't condemn these killings, a multinational is encouraging impunity." A Coke spokesman told BusinessWeek that its bottlers had taken out advertisements in local newspapers protesting the killings.

Although SINALTRAINAL is making waves with its boycott in the U.S. and Europe, in Colombia it's a mere shadow of its former self. Today, it represents just 2,300 workers nationwide -- 314 of them from Coke, with the rest from other food companies, including Nestlé. That's down from 5,400 workers a decade ago, because many companies, like Coke, have restructured, replacing full-time employees with short-term contractors.


  One reason Coke's problems in Colombia seem so intractable is because the dialogue with SINALTRAINAL is nearly nonexistent. Union leaders are openly hostile: In an interview, Paez ticked off 27 demands including reparations to victims' families and promotion of fruit juices to replace consumption of carbonated beverages such as Coke.

While Paez places the blame for the deaths squarely on Coke, he acknowledges that lax law enforcement and a weak justice system, along with government hostility toward unions and the country's four-decade-old civil war, created the perfect environment for the killings to occur.

"If the Colombian government had not allowed this impunity from the beginning," he says, "all these crimes wouldn't have happened."


  Colombian Vice-President Francisco Santos knows something about the country's violence: The former editor of El Tiempo newspaper, Santos was kidnapped in 1990 by drug traffickers and held for eight months, along with 10 other journalists.

Santos is in charge of improving the government's human-rights record, including investigating cases of violence against unionists. In an interview with BusinessWeek, Santos didn't hide his disdain for SINALTRAINAL's boycott. "This [SINALTRAINAL vs. Coke] is not a labor union fight, it's a political fight. You can't justify the death of a union leader. [But] they took a myth and built a campaign out of it. They found a model that works, and they've been very successful at [promoting] it. They've been able to build this [martyrdom] image."

He says the government is making a good-faith effort to investigate killings of labor leaders. "We know there are problems, we're trying to solve them," he said. "It's not as easy to get away with killing a labor leader as it was five years ago. But we're [still] not satisfied at all with the results."

On Oct. 24-29, an International Labor Organization mission visited Colombia to assess the current state of labor rights. While the ILO applauded the government's efforts to improve investigation of labor-related crimes, it noted that "impunity prevails." Fewer than 1% of cases are ever resolved.


  Luis Alejandro Pedraza is the representative in Bogotá of the Geneva-based International Union of Foodworkers (IUF). After violence forced SINALTRAINAL to abandon Coke's Carepa plant a decade ago, Pedraza helped organize a new union there. Some labor observers dismiss the IUF as pro-company, but many unionists in Colombia believe veteran unionist Pedraza is a straight shooter. Coke workers are represented by around a half-dozen unions nationwide.

At least 30 union leaders are killed in Colombia each year, making it the most violent country for union organizers. SINALTRAINAL is not the hardest-hit group. Many more union leaders in the teaching, farming, and health professions have fallen prey to violence. Yet, SINALTRAINAL has been more successful drawing attention to its plight. "The union sees multinationals as key vehicles for airing their point of view to the world," says Pedraza. "They want to engage Coke in a permanent debate because it gives them notoriety and recognition."

Pedraza says the IUF refused to join the boycott "because SINALTRAINAL did not present us with proof that Coke had ordered the killing of unionists." Of course, he acknowledges, "in this kind of thing there is never any written evidence" pointing to who may have ordered the killings.

He believes, however, that Coke could do more to lay the conflict to rest. "We have always maintained that Coke has a political seek peaceful labor relations and that it should sign an international agreement guaranteeing labor rights. Coke hasn't said yes yet, but it has been open to dialogue," he says. A model for that would be an agreement that the IUF signed with Chiquita Brands in 2002 to guarantee Colombian banana workers' rights, he says. After Chiquita signed that agreement, labor conflicts diminished significantly.


  Héctor Fajardo, a former top leader of Colombia's main labor confederation, the CUT, now is an academic and adviser to a Spanish labor confederation. Colombia, he says, "has always had a profound anti-union culture." Massacres of striking banana and cement workers in 1928 and 1965 set the tone decades ago. Most killings take place during strikes or when a union has just presented a list of demands in the collective bargaining process.

In the 1990s, labor laws were reformed to allow companies to replace full-time contract workers with part-time laborers or subcontractors, which further weakened the labor union movement. Today, only 4.8% of Colombia's 17 million workers belong to unions -- down from 9% in the 1960s.

Even though he thinks SINALTRAINAL should have pursued constructive dialogue rather than a boycott, he believes Coke hasn't handled the issue well either. "International campaigns are the Achilles' heel of the multinationals," he says. "I don't think that Coca-Cola has been able to prove that it was not responsible."


  Carlos Rodríguez, CUT's current president, is one of eight CUT officials who has government protection because of death threats. Yet he isn't satisfied. He says the government has failed to carry out serious, thorough investigations and rarely prosecutes anyone for the killings.

Unionists are caught in the middle of a country in extreme conflict. "If you're a union activist in an area where the paramilitaries are in charge, they say you're a guerrilla. If you're a union activist in an area controlled by the guerrillas, they'll say you're a paramilitary. And the army says you're one of the two, and goes after you," he says.

Still, CUT does not back the Coke boycott. "We respect what our colleagues think, but we don't share their views," says Rodríguez. "In today's globalized world we can't pretend that a boycott against multinationals is the solution."

He does, however, think labor unions must join together to ensure that multinationals follow worldwide codes of behavior. "A multinational should behave the same in a country where it invests as it does in its home country."


  Luis Hernán Manco, 59, was president of the local SINALTRAINAL union in Carepa when union board member Isidro Segundo Gil was gunned down on the premises of the Coke bottling facility there in 1996. Manco was working just a few yards away when the killing occurred. "When I heard the gunshot, I turned and saw him fall," he recalls. "Two men standing over him shot Gil several more times, and then they very calmly got on their motorcycle and rode off."

After paramilitaries warned him that he would be killed if he stayed in town, Manco fled to Bogotá, where he has lived in hiding for nearly a decade, leaving behind his three children with his ex-wife. Working sporadically as a night watchman, he had to borrow bus fare to come to an interview at SINALTRAINAL's headquarters.

Although Coke says its bottlers have compensated workers who were forced to flee their jobs, Manco says he never received any severance pay. The company, he says, paid for his bus ticket to Bogotá but refused any other compensation, arguing that he "abandoned" his job, where he earned about $160 a month. "God willing, I am still hoping the company will pay what they owe me," he says. He's still afraid to return to Carepa. "The people who killed Gil are still there."

By Geri Smith

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