This Wall Street Journal ($) story reports on the continuing turmoil at the top executive levels of Coca-Cola Company as its general counsel, Deval L. Patrick, has resigned amid criticism from some company directors over his handling of government investigations and a shareholder class action lawsuit relating to allegations of accounting fraud. Here is the NY Times article on the resignation.
The company’s board is already conducting its first-ever outside search for a new chairman and chief executive to succeed Douglas Daft, who plans to retire later this year. Steven J. Heyer, Coke’s president and chief operating officer, probably will leave the company if isn’t named to replace Mr. Daft.
The U.S. attorney’s office in Atlanta and the Securities and Exchange Commission have been conducting wide-ranging investigations into Coke since last summer after a former company auditor made allegations of accounting fraud in a wrongful-termination lawsuit against the company. Mr. Patrick had no role in the alleged misconduct.
One of the most serious allegations is that Coke engaged in “channel stuffing” and overstated its financial results in recent years by shipping excessive beverage concentrate to bottlers in Japan, North America and elsewhere. On a related note, a federal district court in Atlanta denied Coke’s motion to dismiss a shareholder’s class-action lawsuit filed in 2000 and allowed the plaintiffs to pursue discovery on several parts of the lawsuit, including the channel stuffing allegations.