Pepsi Cola allegedly evaded $100 million in US tariff duties owed on concentrates imported from its Cork plant, according to a "whistleblower" lawsuit revealed in New York yesterday.
Former Pepsi Cola distribution analyst Scott Winslow alleged in court documents that the company deliberately mislabelled concentrate coming from Cork and told employees not to interfere.
In the lawsuit, taken by Mr Winslow on behalf of the US government, Mr Winslow alleges that Pepsi's Global Concentrate Solution (PCS) programme in Cork was jokingly referred to some US distribution managers as the "Global concentrate scam".
However, Pepsi's US headquarters strongly denied the allegations yesterday, saying that Mr Winslow was a "disgruntled former employee" who had been fired by the company. It said that US customs was aware of the allegations and had not intervened.
Mr Winslow is taking the case under a provision of the US False Claims Act that allows alleged whistleblowers to take a case on behalf of the US government if the government has been harmed by fraud.
If proved correct, the case could result in fines of up to $300 million against Pepsi.
In the lawsuit unveiled in White Plains, New York, yesterday, Mr Winslow claims that $100 million is owed to the US government on huge amounts of concentrate that was sent from the Pepsi plant in Little Island, Cork, in 2003 and 2004 to ports in Charleston, South Carolina; Galveston, Texas; Newark, New Jersey, and other sites in the US.
Mr Winslow agreed in court documents that he was fired by the company but said this was because he had knew of the tariff scam. He knew the company was deliberately using the wrong customs labelling on the concentrate for Pepsi Cola and related drinks, using a classification that was duty free from Ireland when it should have been paying a 6.4 per cent tariff.
The lawsuit claims that PepsiCo labelled the concentrate as "mixtures of odoriferous substances used in the manufacturing of non-alcoholic beverages" when it should have the concentrate as much more distinct products which simply need carbonated water added to make a full beverage.
"The total amount of duties avoided by PepsiCo during the period from January 20, 2004, to March 9, 2005, is $101,968,529.03," the lawsuit claims.
The 60-page lawsuit also states that four US managers went to see the Cork plant being manufactured and told distribution analysts when they returned that Ireland was a very "big deal" and that they had to "get it done" for the sake of the company.
PepsiCo US spokesman David DeCecco, released a statement last night in which he said that the lawsuit was "totally frivolous".
"US customs has reviewed our concentrate shipment classifications from Ireland on multiple occasions and has raised no objections," he said.
