Pepsi denies misrepresenting Irish exports

A FORMER US-based employee of cola maker Pepsi claims the company used its Irish operation to avoid import duties of $100 million (€76m).

In a lawsuit filed in New York last November, but only released in December, claims that Pepsi broke US duty laws by not paying duty on imports of concentrates from its plant in Cork.

Scott Winslow worked for Pepsi as a distribution analyst in the Concentrate Operations Office located in New York. He left the company following a poor service review.

In an affidavit filed in the US District Court in New York, Mr Winslow said that Pepsi applied the wrong classification to the concentrate it imported from Ireland. He said that Pepsi told US authorities that the concentrate was a “mixtures of odiferous substances used in the manufacturing of non-alcoholic beverages” which can be imported duty free. It should have listed the concentrate as “food preparations not elsewhere specified”, which carries a 6.4% duty.

Over a two-year period Pepsi imported concentrate worth around $1.5 billion.

The affidavit said: “Ireland was a premier concentrate production facility because it allowed for massive production tax advantages and duty free importation in the United States.”

Pepsi spokesman Dave DeCecco said the suit was a “totally frivolous lawsuit from a disgruntled employee”.

The spokesman said: “US Customs has reviewed our concentrate shipment classifications from Ireland on multiple occasions and has raised no objections. We’re absolutely confident we’ve classified these shipments properly since the very beginning.”

The complaint was filed under the federal False Claims Act, a law that allows whistleblowers to share in the money they help recover by exposing fraud against the US government.

Pepsi has invested heavily in its Ireland operations in recent years. In 2003 it announced a €90 million expansion of the Carrigaline concentrate facility and last October said it planned to establish a research and development centre-of-excellence at its Little Island facility.

Additional reporting by Bloomberg.