Olympic Controversy Bubbles Over at Coca-Cola Shareholder Meeting

April 17, 2008 — -- At the annual Coca-Cola shareholders meeting Wednesday, CEO Neville Isdell was no doubt happy to report that the world's largest beverage company saw profit rise 19 percent in the first quarter from a year earlier.

But it wasn't just the profits that were up at the meeting. So too were the protests.

Coca-Cola, a sponsor of the Olympics since 1928, has recently been taking flak for its support of the Beijing games. As the torch travels around the world, the pressure is on sponsors from a variety of protesters calling attention to China's repression of the media, its violent crackdown on Tibet and its military and economic support of Sudan, which is responsible for the genocide in Darfur.

Reporters Without Borders representative Lucie Morillon took her protest inside the shareholders' meeting, held in Wilmington, Del.

Morillon, who gained access to the meeting as the owner of two shares of Coca-Cola, was given two minutes to speak.

"I asked Coca-Cola, with repression getting worse and people being sent to jail because of the Olympics, how can you defend your sponsorship of the games, knowing [the games are being held] in a repressive country, and it looks incompatible with your brand?" Morillon told ABCNEWS.com.

"I asked them, would increasing these violations of human rights in China result in the loss of value for Coca-Cola shares?"

Off to Jail

The people being sent to jail that Morillon referred to include AIDS activist and blogger Hu Jia, who was sentenced to 3½ years in jail for "inciting subversion of state power," and Wang Guilin, who was sentenced to 18 months of reeducation-through-work for participating in a campaign whose slogan was "We want human rights, not Olympics Games."

Morillon was not alone registering her protest at the shareholders' meeting. The New York Times reported that a Tibetan protester identified as Lobsang Choefel asked, "Will you tell the IOC [International Olympic Committee] to stop taking the Olympic torch relay into Tibet, because Tibet belongs to Tibetans?"

Isdell, according to The Associated Press, responded, "I don't believe that stopping the torch run is in any way over the long run going to be the right thing to do," and "We are not a political organization."

Petro Kacur, a spokesman for Coca-Cola, told ABC News that the company's "hope [is] that those who are using the Olympics to advance other agendas would use the Olympics to positively engage the world rather than tear down the Olympics. The Olympics and the Olympic values are very unifying global events, and to use that visibility for the cause of the moment is counterproductive."

"We don't involve ourselves in the political decisions of sovereign nations, that is not our role," he said, adding that Coca-Cola supports various journalists' organizations and has "committed more than $5 million to programs that address those who are victims of the conflict in Darfur and elsewhere in Sudan. That includes programs to address water needs, and donations to the Red Cross, which helps deliver relief supplies, health care services and mobile hospitals."

'Proud of Association'

Despite the protests, he said, "we still are proud of our association with the games."

Two weeks ago, in Beijing's Tiananmen Square, under blue skies, confetti, a portrait of Mao Zedong and heavy police presence, China's president, Hu Jintao, welcomed the 2008 Olympic torch to the capital city.

The ceremony went off without any disruptions like the one protesting press censorship and the Tibetan crackdown that marred the flame-lighting ceremony in Athens.

But the big-name corporations that have invested millions of dollars and a sizeable amount of marketing hopes in their Olympics ties know that the next few months could test their willingness to stand by their investment at the expense of their corporate image.

They will be watching closely as the torch continues on its 130-day Journey of Harmony — a route that includes Tibet, where Chinese security forces have tried to quell recent protests.

It was the protests by Tibetan monks and China's brutal crackdown that raised the tension for corporations and some governments as activists have called for boycotts of either the games or their opening ceremonies.

The Tibetan protests came after activists were already agitating for China to lean on Sudan, its trading partner and arms customer, to halt the violence in Darfur.

Pressure on Sponsors

Corporate sponsors -- not only Coca-Cola, but Samsung, General Electric and Johnson & Johnson -- are feeling the heat.

"The phrase 'genocide Olympics' is like the brand from hell," Ellen Freudenheim, a corporate outreach consultant with Dream for Darfur, told ABCNEWS.com.

The term "genocide Olympics" was made popular by actress Mia Farrow in a Wall Street Journal Op-Ed a year ago and is now emblazoned on T-shirts.

A crucial moment will be when the Olympic torch passes through Tibet.

Students for a Free Tibet has sent a letter to corporate sponsors, targeting the sponsors of the torch relay in particular -- Coca-Cola, electronics giant Samsung and computer maker Lenovo.

"If the torch is allowed to go through Tibet, China will crack down," Kate Woznow, the campaigns director for Students for a Free Tibet, told ABCNEWS.com. "We're essentially asking, does your company want to be associated with bloodshed in Tibet?"

"The issue is how much of a perfect storm develops," Jay Rosenstein, who teaches sports sponsorship at NYU's Tisch Center for Hospitality, Tourism and Sports Management, told ABCNEWS.com. "… Events can circle out of control. I don't know where the tipping point may be."

China, he said, is "a 1.3 billion person market. Each top sponsor pays about $80 million for the rights to use the Olympic rings, and probably another $80 million in terms of all the activation on site, worldwide advertising, campaigns tied to the Olympics, travel to Beijing, entertaining clients, rewarding employees."

"The Chinese have longer memories than any society in the world. They think in terms of 100 years," said David D'Alessandro, the former CEO of John Hancock Financial Services, who scaled back his company's sponsorship of the 2002 Winter Olympics in Salt Lake City amid allegations of bribery by the IOC.

"It takes a long time to get a license to do business in China, a long time to establish good relations and maintain them. Companies get brave when it's a small market, they don't get brave when it's a big market," he said. "If we were talking about Romania, they might say, we're not going to sponsor the games in Romania."

ABCNEWS.com contacted a dozen corporate sponsors and most declined to make any comment at all. Those who did respond said the Olympics and politics should be kept separate.

It's Not About Politics?

McDonald's said in a statement that it "believes in the spirit of the games and their unique ability to engage the world in a way that is constructive, positive and inspirational," while Johnson & Johnson said its appropriate role is to "influence change in areas where we can make a difference, such as health education, environmental improvements and the health and safety of our employees."

Deirdre Latour, director of public relations and marketing services at GE, said, "We definitely don't think it's our role as a sponsor to communicate with sovereign nations or tell governments how to conduct policy."

In the case of Darfur, she said, GE has "given $4 million" and "health-care equipment" to the refugee camps, through organizations such as CARE and UNICEF.

China is feeling the heat of the protests. "I think they're flabbergasted by the whole thing. The Chinese aren't particularly good at PR and media management," said Adam Segal, a senior fellow in China studies at the Council on Foreign Relations. "Their basic position is to fall back and say, 'This shouldn't be about politics. But that's already out of the bag.'"

Corporations, he said, are "going to take their directions from the U.S. government. They don't want to alienate the Chinese government."