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Grand jury to probe Coca-Cola

A federal probe of Coca-Cola Co. has intensified as a federal grand jury was scheduled and regulators subpoenaed employees, The Wall Street Journal said on Monday.
/ Source: Reuters

A federal probe of Coca-Cola Co. has intensified as a federal grand jury was scheduled and regulators subpoenaed employees, The Wall Street Journal said on Monday.

The grand jury will begin to hear testimony in the case around May 25, the Journal said, citing people familiar with the probe.

The U.S. attorney's office and the Securities and Exchange Commission are examining whether Coca-Cola overshipped drink concentrate to distributors in some markets including Japan — called "channel-stuffing" — thereby possibly inflating financial results.

Three former finance officials of the world's largest soft drink maker have told federal investigators they witnessed the company engaging in the channel stuffing in Japan in recent years, the Journal reported in January.

Channel-stuffing refers to a legally murky practice in which a company convinces clients to accept unwanted or early deliveries of a product. It can be used to pad revenue and help a firm meet quarterly financial targets.

Rebates, extended payment terms and other incentives are often provided to clients in exchange for their complicity.

A Coca-Cola representative was not immediately available to comment to Reuters.