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Berry May Choose Soda Today

Decision Will Take Into Account PepsiCo's Involvement in Burma

By Colleen T. Gaard

What was once a simple taste test has now become an issue of morality.

Michael P. Berry, director of Harvard Dining Services (HDS), is expected to decide this morning whether to transfer Harvard's beverage contract, currently with CocaCola, to PepsiCo.

Years of less-than-adequate service and non-competitive prices are strong incentive for HDS to switch from Coke to Pepsi, Berry said.

But PepsiCo's support of the military regime in Burma, a South Asian government notorious for human right violations, raises concern among undergraduates and HDS officials.

Earlier this year, Berry decided to install PepsiCo products in Annenberg Hall and at Loker Commons. He said at the time that the choice was made with strictly economic and service considerations in mind.

But in making this latest decision, Berry said he has had to consider more than just monetary concerns.

Berry's decision has received attention from many who oppose PepsiCo's involvement in Burma, including the Burmese exiled finance minister, who urged Berry to reject the contract, and some of PepsiCo's shareholders, who are concerned that HDS's choice may affect future PepsiCo business.

Involvement in Burma

PepsiCo's bottling plant in Burma, also known as Myanmar, lies at the heart of Harvard's concern.

Since Burma's money is virtually worthless, according to the February 16 issue of the Far Eastern Economic Review, the profit PepsiCo makes through their sales in the country must be reinvested in Burmese produce which is then sold on the international market.

American human rights activist groups like Amnesty International and a Harvard student group, Burma Action Group, accuse PepsiCo of buying produce grown on farms which utilize forced labor.

PepsiCo refuses to specify the farms from which it purchases produce.

Labor in Burma is tightly controlled by the military regime currently in power, the State Law and Order Restoration Council (SLORC), which ousted the democratically elected government in 1990. According to SLCO official policy, any business employing more than five workers must select workers from a list of candidates provided by the Labor Office.

Thus, activists argue that Pepsi-Co's compliance with the government legitimizes the SLCO.

Upping the Ante

On March 12, Berry received a letter from the Minister of Finance for the exiled democratic government, the National Coalition Government of the Union of Burma (NCGUB), citing the recent withdrawal of corporations like Liz Claiborne and Levi Strauss and Co. In the letter, the minister urges HDS not to sign a contract with PepsiCo.

"The more effective we are in dissuading investors, like Pepsi, from backing the military regime, the quicker we will be able to restore democracy peacefully," Minister of Finance Bo Hla-Tint wrote.

HDS's response to the pleas of Hla-Tint and activist groups may have more than economic clout with PepsiCo.

According to Simon Billinguess, a senior research analyst at Franklin Research, Inc., Harvard's decision may be used by PepsiCo shareholders to show that Burma is having an effect on the company's ability to strike business deals in the U.S.

Though the monetary value of Harvard's account is not large in comparison to PepsiCo's net earnings, Berry says he believes that "Harvard has a little bit of bully pulpit and we might be able to use that to get Pepsi to pull out of Burma."

But despite continued negotiations with HDS, PepsiCo has made no move to concede any part of its involvement with Burma.

Shareholders

Shareholders of PepsiCo, upset by the company's involvement in Burma, drafted a resolution to be voted on at a May shareholder's meeting.

The proposal, submitted by Maryknoll Fathers and Brothers in New York State, requested that "PepsiCo and its subsidiaries shall terminate operation in Burma until political prisoners are released and political power transferred to the democratically-elected government of Burma."

But the Securities and Exchange Commission (SEC) excluded the proposal as a voting issue from the May shareholders meeting after PepsiCo applied for an exemption on the grounds that its sales in Burma were less than five percent of net earnings and gross sales.

As a result, the shareholders group added another proposal to the agenda, asking PepsiCo to "review and update the PepsiCo Code of Conduct and report their revisions to shareholders."

The board of directors responded on the proxy shareholders' ballot, saying, "Due to the long-term nature of PepsiCo's businesses and the inevitability of political and social change, we long ago concluded that it is neither prudent nor appropriate for us to establish our own country-by-country policy."

"The filers' proposal would put PepsiCo in the untenable position of having to assess and respond to any number of political and ideological disagreements which may arise wherever we do business," the response continued.

Billinguess, who works for the company representing Maryknoll's interests, said, "It is very clear with what is going on at Harvard that Pepsi is the target of a growing consumer boycott."

Campus Reaction

Noah R. Freeman'98, a member of the Progressive Undergraduate Council Coalition, an organization within the Undergraduate Council, said he believes PepsiCo has an obligation to deal with human rights issues.

"The way the government is set up, foreign investment profits only the military government and in no way profits the people of Burma," Freeman said.

He also stressed that a fundamental problem with international business was that it places profit before ethics.

Freeman said he believes that by signing with PepsiCo "a large part of the Harvard community will be deeply saddened and extremely angry."

Marco B. Simons'97, a member of the Burma Action Group and chair of the council's Student Affairs Committee, said Harvard should not back a company that directly supports a military regime.

"Entering into a contract with PepsiCo would be against the principles that Harvard ostensibly believes in," said Simons.

Berry said the students' concerns are very important for him because his department is run for students' benefit.

At the same time, Berry is eager to switch to PepsiCo because HDS's relationship with Coca-Cola has been problematic.

"They have taken advantage of their relationship with this University," Berry said.

PepsiCo, according to Berry, has offered HDS a better deal on beverage service than Coca-Cola. But Berry was quick to add that the situation in Burma will play a role in his final decision.

By rejecting PepsiCo's contract, Harvard would become one more example of how the company's involvement in Burma is really affecting more than five percent of their business, according to Billinguess.

Either contract would include beverage dispensers at all undergraduate dining halls, facilities at graduate schools and campus restaurants. Berry estimates HDS pays more than one million dollars per year for beverage service.

Since this issue has arisen, Coca-Cola has made a better offer than their current contract but PepsiCo's contract retains the more competitive edge.

Widespread Concern

Other universities are facing similar decisions as well.

Stanford University is attempting to make a similar choice, as they are deciding whether to accept or reject Taco Bell, a PepsiCo subsidiary.

"In my opinion Burma has the worst human rights record in the world," Simons said, explaining his involvement in the issue.

Freeman said he that it is impossible for a company to be in Burma without directly supporting the illegal government and thus the human rights violations there.

"If you asked a Harvard student on the street to give $10 to have an innocent person thrown in jail and have his face beaten in, no student would do it," Freeman said. "But that is exactly what HDS would have us do if they signed the Pepsi contract.

Thus, activists argue that Pepsi-Co's compliance with the government legitimizes the SLCO.

Upping the Ante

On March 12, Berry received a letter from the Minister of Finance for the exiled democratic government, the National Coalition Government of the Union of Burma (NCGUB), citing the recent withdrawal of corporations like Liz Claiborne and Levi Strauss and Co. In the letter, the minister urges HDS not to sign a contract with PepsiCo.

"The more effective we are in dissuading investors, like Pepsi, from backing the military regime, the quicker we will be able to restore democracy peacefully," Minister of Finance Bo Hla-Tint wrote.

HDS's response to the pleas of Hla-Tint and activist groups may have more than economic clout with PepsiCo.

According to Simon Billinguess, a senior research analyst at Franklin Research, Inc., Harvard's decision may be used by PepsiCo shareholders to show that Burma is having an effect on the company's ability to strike business deals in the U.S.

Though the monetary value of Harvard's account is not large in comparison to PepsiCo's net earnings, Berry says he believes that "Harvard has a little bit of bully pulpit and we might be able to use that to get Pepsi to pull out of Burma."

But despite continued negotiations with HDS, PepsiCo has made no move to concede any part of its involvement with Burma.

Shareholders

Shareholders of PepsiCo, upset by the company's involvement in Burma, drafted a resolution to be voted on at a May shareholder's meeting.

The proposal, submitted by Maryknoll Fathers and Brothers in New York State, requested that "PepsiCo and its subsidiaries shall terminate operation in Burma until political prisoners are released and political power transferred to the democratically-elected government of Burma."

But the Securities and Exchange Commission (SEC) excluded the proposal as a voting issue from the May shareholders meeting after PepsiCo applied for an exemption on the grounds that its sales in Burma were less than five percent of net earnings and gross sales.

As a result, the shareholders group added another proposal to the agenda, asking PepsiCo to "review and update the PepsiCo Code of Conduct and report their revisions to shareholders."

The board of directors responded on the proxy shareholders' ballot, saying, "Due to the long-term nature of PepsiCo's businesses and the inevitability of political and social change, we long ago concluded that it is neither prudent nor appropriate for us to establish our own country-by-country policy."

"The filers' proposal would put PepsiCo in the untenable position of having to assess and respond to any number of political and ideological disagreements which may arise wherever we do business," the response continued.

Billinguess, who works for the company representing Maryknoll's interests, said, "It is very clear with what is going on at Harvard that Pepsi is the target of a growing consumer boycott."

Campus Reaction

Noah R. Freeman'98, a member of the Progressive Undergraduate Council Coalition, an organization within the Undergraduate Council, said he believes PepsiCo has an obligation to deal with human rights issues.

"The way the government is set up, foreign investment profits only the military government and in no way profits the people of Burma," Freeman said.

He also stressed that a fundamental problem with international business was that it places profit before ethics.

Freeman said he believes that by signing with PepsiCo "a large part of the Harvard community will be deeply saddened and extremely angry."

Marco B. Simons'97, a member of the Burma Action Group and chair of the council's Student Affairs Committee, said Harvard should not back a company that directly supports a military regime.

"Entering into a contract with PepsiCo would be against the principles that Harvard ostensibly believes in," said Simons.

Berry said the students' concerns are very important for him because his department is run for students' benefit.

At the same time, Berry is eager to switch to PepsiCo because HDS's relationship with Coca-Cola has been problematic.

"They have taken advantage of their relationship with this University," Berry said.

PepsiCo, according to Berry, has offered HDS a better deal on beverage service than Coca-Cola. But Berry was quick to add that the situation in Burma will play a role in his final decision.

By rejecting PepsiCo's contract, Harvard would become one more example of how the company's involvement in Burma is really affecting more than five percent of their business, according to Billinguess.

Either contract would include beverage dispensers at all undergraduate dining halls, facilities at graduate schools and campus restaurants. Berry estimates HDS pays more than one million dollars per year for beverage service.

Since this issue has arisen, Coca-Cola has made a better offer than their current contract but PepsiCo's contract retains the more competitive edge.

Widespread Concern

Other universities are facing similar decisions as well.

Stanford University is attempting to make a similar choice, as they are deciding whether to accept or reject Taco Bell, a PepsiCo subsidiary.

"In my opinion Burma has the worst human rights record in the world," Simons said, explaining his involvement in the issue.

Freeman said he that it is impossible for a company to be in Burma without directly supporting the illegal government and thus the human rights violations there.

"If you asked a Harvard student on the street to give $10 to have an innocent person thrown in jail and have his face beaten in, no student would do it," Freeman said. "But that is exactly what HDS would have us do if they signed the Pepsi contract.

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