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Arrests Made in Coca Cola Corporate Spying Case

U.S. federal prosecutors have charged three people, including a former employee, in connection with an alleged plot to steal trade secrets from the Coca-Cola Company, and sell the information to Coke's chief rival, PepsiCo.

Federal prosecutors in the southern U.S. city of Atlanta say Coca-Cola executives learned of the plot from Pepsi. The rival soft drink company provided Coke officials with a letter from an individual purporting to be a senior Coca-Cola employee.

The letter offered Pepsi access to "very detailed and confidential information." That information might have provided Pepsi with competitive advantages, says corporate security analyst Ira Winkler. "Pepsi turned away the potential to save hundreds of millions of dollars easily."

Coke contacted the FBI several weeks ago. Agents began a detailed undercover operation. The suspects were picked up this week (Wednesday) at their homes. They have been charged with fraud as well as with stealing and selling trade secrets. Federal prosecutors say the suspects peddled their stolen information, and a sample of a new soft drink, in the hope of raising as much as $1.5 million.

The potential damage to Coke is incalculable, said United States Attorney David Nahmias. "Some of this information is as important to its holder -- in this case Coca Cola Company -- as classified information is to the government."

Pepsi says it simply did what any responsible company would do.