Brewmaniac

Three charged with stealing Coca-Cola secrets
Suspects accused of trying to pass drink recipes to rival company PepsiCo
The Associated Press

Updated: 9:30 a.m. ET July 6, 2006

ATLANTA - Coca-Cola and Pepsi are usually bitter enemies, but when PepsiCo Inc. got a letter offering to sell Coke trade secrets, it went straight to its corporate rival.

Six weeks later, three people face federal charges of stealing confidential information, including a sample of a new drink, from The Coca-Cola Co. and trying to sell it to PepsiCo Inc.

“Competition can sometimes be fierce, but also must be fair and legal,” Pepsi spokesman Dave DeCecco said. “We’re pleased the authorities and the FBI have identified the people responsible for this.”

The suspects arrested Wednesday — the day a $1.5 million transaction was to occur — include a Coke executive’s administrative assistant, Joya Williams, who is accused of rifling through corporate files and stuffing documents and a new Coca-Cola product into a personal bag.

Williams, 41, of Norcross, Ga., and 30-year-old Ibrahim Dimson of New York and 43-year-old Edmund Duhaney of Decatur, Ga., were charged with wire fraud and unlawfully stealing and selling Coke trade secrets, federal prosecutors said.

They were expected to appear before a federal magistrate judge on Thursday in Atlanta, where Coca-Cola is based.

Coke thanked Pepsi for its assistance.

Chief executive Neville Isdell said in a memo to employees Wednesday that the company is cooperating with federal authorities.

“Sadly, today’s arrests include an individual within our company,” Isdell wrote. “While this breach of trust is difficult for all of us to accept, it underscores the responsibility we each have to be vigilant in protecting our trade secrets. Information is the lifeblood of the company.”

He said Coke will review its information protection policies, procedures and practices to make sure it safeguards intellectual property. Coke spokesman Ben Deutsch said the formula for trademark Coca-Cola was not stolen in the theft.

According to prosecutors, on May 19, Purchase, N.Y.-based PepsiCo provided Coke with a copy of a letter mailed to PepsiCo in an official Coca-Cola business envelope. The letter, postmarked from the Bronx in New York, was from an individual identifying himself as “Dirk,” who claimed to be employed at a high level with Coca-Cola and offered “very detailed and confidential information.” “Dirk” was later identified as Dimson, the FBI says.

Coca-Cola immediately contacted the FBI and an undercover FBI investigation began.

Prosecutors say Williams was the source of the information Dimson offered to provided Pepsi. They say that “Dirk” provided an FBI undercover agent 14 pages of Coca-Cola documents marked classified and confidential. The company confirmed that the documents were valid and highly confidential and were considered trade secrets. Williams works for a senior Coke manager, though the company would not identify which one. The company also would not say if Williams has been fired.

Prosecutors say “Dirk” requested $10,000 for the documents.

Later “Dirk” produced other documents that Coca-Cola confirmed were valid trade secrets of Coca-Cola and highly confidential. He also agreed to be paid $75,000 for the purchase of a highly confidential product sample from a new Coca Cola project, prosecutors said.

Then on June 27, an undercover FBI agent offered to buy other trade secret items for $1.5 million from “Dirk.” The same day a bank account was opened under the names of Duhaney and Dimson, and the address used on the account was that of Duhaney’s residence, prosecutors said.

Video surveillance showed Williams at her desk at Coke headquarters going through multiple files looking for documents and stuffing them into bags. She also was observed holding a liquid container with a white label, which resembled the description of a new Coca-Cola product sample, before placing it into her personal bag, prosecutors say, adding that Coca-Cola later verified the sample was genuine and is a product the company is developing.
© 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/13722797/
© 2006 MSNBC.com


How stupid would you have to be, to think you could get away with this? I couldn't turn on a company who gave me a job and intrusted me with certain confidences.

Is there any amount of money that would tempt you to risk something like this? Is it the fear of getting caught or the issue that it's just wrong?

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xepherys

No, this is just wrong. I believe in loyalty, and this type of betrayal of loyalty just stuns me. Kudos to PepsiCo, though!

Redlemon

I'm thinking it was a pretty easy call for Pepsi to make. I mean, the two companies seem to release the same product a few months apart anyway (vanilla cola, cola with lime, etc.). They probably already had a good idea of what was in plan.

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Blackthorn

The funniest part of the story is the undertone of the Pepsi news release..."Naaah we don't need that garbage...we're doing just fine on our own!".

No. I would not turn on the company that pays me in this manner. Obviously the person in question has no shred of personal integrity.

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lindalove

In all honesty, I wouldn't do it just because of the high likelihood of being caught, and then the high stakes that would come with that. Of course I have some dedication to my company, but when it comes to millions and millions of dollars, I could probably bring myself to break a small amount of trust... but again, no amount of money is worth time behind bars, so unless there were some risk-free method of completing the transaction, I definitely wouldn't risk it.

Glory's Sun

Even if Pepsi did take the recipe,there's no way they could begin to compare with Coke. Coke is wayyyyy better.

Anyway, I'm pretty big on loyalty so I don't think any amount of money would really tempt me to do something like this. Of course a job offer is different. If you go to a rival company for a better position, pay etc, I don't really see that as a loyalty problem; I see that as making sure you and your's are better off.

deri

Given the recent deceptions (Enron, Worldcom, etc.) in corporate america, I wouldn't have been surprised if I read that Pepsi was caught accepting stolen trade secrets. Kudos to the higher ups at Pepsi Co. for doing the right thing.

Glory's Sun

oh yeah, just because Pepsi reported the incident, doesn't mean that someone in their corporation didn't take a "sneak" peek at what was being offered

Bill O'Rights

Loyalty.

It's a nice concept. An admirable one, even. A lofty concept.

I, however, see less and less of it these days, despite what I see I see written on these boards.

I'm not just talking about employee loyalty, either. As little employee loyalty as I see, I also see an extremely short supply of employer loyalty.
Outsourced jobs. massive layoffs, reduced benefits, payraises that aren't keeping up with the COL, and so on and so forth.

It's increasingly more difficult to expect employee loyalty, when the companies that they work for treats them as little more than an entry in a spreadsheet.

My guess is that what we have here is a severely disafected employee. (Duh) And while I do not in any fashion endorse the actions that they took...I can to some degree, understand why they did it. There are some executives at Coca-Cola that should probably be glad that selling proprietary information is all that this employee attempted.

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Gatorade Frost

Personally I doubt that PepsiCo would need to look at the coke recipe to know what was in it. If you make soda professionally, chances are you can easily recreate the other sodas out there in addition to being able to make your own brand.

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Emo Philips

The_Jazz

If you ever want to see an example of loyalty in action, let me know when you'll be in Chicago and I'll walk you around my office. All 3 of my assistants laugh openly about some of the job offers they've received, several of which would pay them more on the front end but require that they lose most (if not all) of the freedom they enjoy on my team. One of my competitors tried to hire all 3 of them as a group as support for a new broker while I was on my honeymoon a couple of years ago, and they told my boss about it. Suffice it to say, it's been my personal mission to put that particular broker out of business for 2 years, and I can happily report that she's currently got her name in with 2 headhunters that I know of to go back to the underwriting side of the business.

As for me, if my boss came in the office right now and told me to write a letter of resignation because we were defecting en masse to a competitor, I'd only ask him if he wanted it faxed, mailed or emailed. I'll follow that guy to the Gates of Hell if he asks.

These disaffected employees weren't very smart. Why would Pepsi want Coke's formula? They've worked very hard creating a taste and identity very different from Coke's. People tend to feel strongly about their drinks and switching can be difficult.

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snowy

Yes, you could reproduce it, but chances are you wouldn't end up with the same product. Coca-Cola has a notoriously complex flavor profile, with over 200 flavor notes. That is why the knockoff brands don't compare--they can't seem to imitate that flavor profile. Pepsi comes close.

I drink a lot of caffeinated cola product, but I'll tell you one thing--I never drink anything outside of the three name brands, Coca-Cola, Pepsi, and Royal Crown, because the rest of it is crap.

Furthermore, about the secrecy of Coke's recipe: that's partially myth in action. Most of the supposed secrecy surrounding the recipe is done for publicity's sake.

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Gatorade Frost

Well, I think that because Pepsi's such a large company tt's not necessarily that it can't compare, I suspect they're just going for a different product. Something to differentiate themselves from Coke. If they were too much the same there wouldn't be as much marketability and there would be no reason to buy pepsi.

__________________
I got in a fight one time with a really big guy, and he said, "I'm going to mop the floor with your face." I said, "You'll be sorry." He said, "Oh, yeah? Why?" I said, "Well, you won't be able to get into the corners very well."
Emo Philips

snowy

The flavor profile of Pepsi is similar--except one small difference: it's sweeter. 10 calories sweeter, to be precise.

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Gatorade Frost

Right. Don't you think the makers at Pepsi could concoct a less sweet version of pepsi that tastes a lot closer to Coke? If they did that, though, why would people drink Coke when they could get Pepsi? They wouldn't, which is why Pepsi is made sweeter, so that it tastes differently and people can tell a difference between it.

__________________
I got in a fight one time with a really big guy, and he said, "I'm going to mop the floor with your face." I said, "You'll be sorry." He said, "Oh, yeah? Why?" I said, "Well, you won't be able to get into the corners very well."
Emo Philips

Glory's Sun

Gatorade, I see your point about marketing and agree completely with it. What I can't figure out is why anyone would drink that horrid Pepsi stuff to begin with. Bleh!

Gatorade Frost

Because on a scale of 1-10 it ranks a "Really @#$%ing delicious"

Though, you know, neither one's better than the other. For me it depends on my mood at the time.

__________________
I got in a fight one time with a really big guy, and he said, "I'm going to mop the floor with your face." I said, "You'll be sorry." He said, "Oh, yeah? Why?" I said, "Well, you won't be able to get into the corners very well."
Emo Philips

xepherys

Hmmm, Coke > Pepsi for sure! :-p

But aside from the zealotous debate, it's true that's it difficult to mimic flavors. If it was so easy, all the store brands would taste JUST like Coke/Pepsi/Mountain Dew. It's certainly not because they don't WANT to.

stevie667

I think its a good move by pepsi, they're covering their asses incase someone tries to do the same to them.

10 points says they took a peak at the mix, laughed, then called coke.

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Gatorade Frost

That's true, but you also have to consider how much more money Coke and Pepsi make on each drink as opposed to store brand sodas. Coke and Pepsi are billion dollar companies devoted solely to creating drinks.

Plus I suspect if you mimicced another brand exactly you'd have a law suit on your hands. Not sure how that kind of law works aside from just knowing "Copying=Bad" but I'm guessing that it would be highly likely to happen.

Edit - And not that I have faith in pepsi any more than other companies, but I wouldn't think that pepsi would have had the chance to take a peak at the coke recipe without paying big money to the snitches, and by that point Pepsi would have lost their higher ground in the situation when turning them in.

__________________
I got in a fight one time with a really big guy, and he said, "I'm going to mop the floor with your face." I said, "You'll be sorry." He said, "Oh, yeah? Why?" I said, "Well, you won't be able to get into the corners very well."
Emo Philips

biznatch

Pepsi probably knew they'd get in trouble if they went with the deal. When you don't need something that bad, the best option is always the legal one.
I don't think they were exceptionally righteous, just smart.

TexanAvenger

The preference for coke or pepsi aside, there's something to be said for Pepsi not buying up the recipe. By making this instance a big deal, they send a message to their employees: "We even punish disloyalty from other companies. Do you really want to try selling our stuff to them?"

*cough*coke*cough*

krwlz

I just wonder which one of the former employees is telling the other two "I Fuckin TOLD you this was a bad idea!"

TexanAvenger

The one who gets sentenced to the most time.

Gatorade Frost

I'd guess the one who had doubts about it first...

I'm having trouble concentrating this morning for some reason and I tried to find it in the article but couldn't, does it mention what the penalty for that is? The fraud and the stealing of trade secrets and all that?

__________________
I got in a fight one time with a really big guy, and he said, "I'm going to mop the floor with your face." I said, "You'll be sorry." He said, "Oh, yeah? Why?" I said, "Well, you won't be able to get into the corners very well."
Emo Philips

DJ Happy

Did the article say anything about them trying to sell Pepsi the Coke "secret formula?" 'Cos if it did, then I missed it.

Back when I used to work for Coke I was told that there is not one person on the face of the planet that knows the whole formula - the CEO knows half and the Head of Operations knows the other half. This was apparently done to ensure that competitors would not be able to merely buy the formula from the guy in the know. And it's no secret that Pepsi was trying to replicate Coke for a long time. I don't know if they still are though. They've probably given up since blind taste tests prove that most people prefer Pepsi over Coke (I'm not one of them though - Pepsi tastes like sewerage to me).

I was also told that there is only one plant in the world that manufactures Coke syrup. This is then transported to the bottling plants all over the world where it is diluted with water to make the soft drink.

All very interesting, don't you know?