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. Last Updated: 07/27/2016

Pepsi Stops Cola Scam in Volgograd

Pepsi-Cola International is planning lots of expansion through local partners in Russia. But the Kola and K company in Volgograd was not one of the firms on their list.


Seeking to cash in on the American soft drink maker's international mark, an apparent scam outfit launched an advertising campaign in the southern Russian city this summer, promising investors fabulous dividends if they ponied up for a factory it said Pepsi would build.


"All over the press and on street stands was written that independent experts had estimated the Pepsi project's profits would be least 135 percent a year," Valentina Bukina, deputy head of the Volgograd Regional Anti-Monopoly Committee, said in a telephone interview Tuesday.


But Pepsi got wind of the scheme and brought a case to the regional committee, which put a stop to the fraud "before a single kopek could be transferred" to a Sberbank account Kola and K had set up to receive money from gullible investors, Bukina said.


Telephone calls to numbers given for Kola and K offices were unanswered Tuesday.


The attempted scam was squelched in June and came to light in a report in Izvestia on Tuesday.


Andrew Macleod, Pepsi's lawyer in Moscow, said the company did not want to lose time and money by trying to get compensation from the Kola and K company, knowing it probably had no money. But it went to the Anti-Monopoly Committee in Volgograd to force the perpetrators to give up their plot.


"We just wanted to make sure they would stop using our name to raise funds," Macleod said.


"We had no relation whatsoever with this company and never authorized them to use our franchise," he added, calling Kola and K's promises "very consistent with a pyramidal scheme."


Although some companies have complained that authorities in Russia's regions are not generally aware of, or sympathetic to, their business concerns, the anti-monopoly committee's Bukina said this was an open-and-shut case.


"By using their brand name in their ads, they have harmed Pepsi's reputation [and] violated production and intellectual property laws," she said.


Under the committee's ruling the swindlers are obliged to launch a counter-campaign Sept. 1 to inform the public that there was never any plan to build a Pepsi plant in Volgograd and that the Pepsi company had nothing to do with the claims, Bukina said. She estimated the campaign cost at $20,000.


According to Izvestia, however, Kola and K was founded with only 9 million rubles ($1,750) in charter capital. Bukina acknowledged that the firm's founders might already have skipped town.