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Article

3 Jul 2015

Author:
Eryn Schornik & Juman Kubba, Global Witness

Coca-Cola’s partner ties with jade industry show limitations of due diligence, says Global Witness

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"Who are you really doing business with? Learning lessons from Coca-Cola's experiences in Myanmar", 1 July 2015

The Coca Cola Company has just come face to face with the limitations of private due diligence in Myanmar. After deciding to re-start operations in the country in 2012, the conglomerate did the right things, hiring big name due diligence companies and spending substantial sums on checks and vetting procedures before setting up local business ventures. Despite these efforts, it wasn’t until Global Witness alerted Coke earlier this year that the company realised that its only local director also had interests in a jade business called Xie Family. Involvement in jade should be a red flag, given that Myanmar’s jade sector is notorious for corruption, military involvement and environmental and human rights abuses, and that Myanmar jade is still subject to US sanctions. Global Witness research shows that, over the past two decades, Xie Family has been a key jade mining subcontractor of army company Myanmar Economic Holdings Limited (MEHL). Subject to US sanctions, MEHL has been embroiled in controversy over allegations of land-grabbing, environmental abuse and the use of violence against protestors at its Letpadaung mining project. Xie Family and MEHL have told Global Witness that they have not worked together since 2012, but figures from last year’s jade auction show that they jointly marketed jade that sold for over 5 million euros at that time. That doesn’t meant that the Coca Cola local director or Xie Family have committed any wrongdoings, but these connections are ones that due diligence should be picking up, in order that incoming companies can make an informed decision on their partners.

 

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