NEW YORK (CNN/Money) -
Federal prosecutors have launched an investigation into allegations of fraud at Coca-Cola Co. raised by an ex-employee in a lawsuit in May, the world's largest soft drink maker said Friday.
"The company will cooperate with the inquiry,'' Coke said in a brief statement. A Justice Department spokesman declined to comment.
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The probe by the U.S. Attorney's office in Atlanta comes about a month after the Securities and Exchange Commission requested documents from Coke in an informal inquiry into the allegations by the former employee, Matthew Whitley.
Whitley, who was fired in March with hundreds of other employees during a restructuring of Coca-Cola's operations in North America, has alleged massive wrongdoing in the company's food services unit. He filed a $44.4 million wrongful dismissal lawsuit against his former employer in May.
His suit alleges, among other things, that Coke managers knew that malfunctioning machines making frozen Coke were allowing metal residue to enter some products.
Coca-Cola has dismissed most of Whitley's claims, including his allegations of product contamination, as baseless. The company has described Whitley as a disgruntled former employee and vowed to fight his lawsuit vigorously.
But last month the soft drink maker confirmed his accusation that Coke employees tried to rig a marketing test three years ago in a bid to win business with Burger King Corp. Coca-Cola has apologized to the Miami-based fast food chain.
At that time, Coca-Cola also said it would take a $9 million pretax charge in the second quarter as a result of accounting problems found during an audit triggered by Whitley's lawsuit. The company is scheduled to report its second-quarter results next week.
The increasing federal interest in Coca-Cola's practices comes while U.S. corporations are under pressure from regulators and investors to be more forthcoming about their operations and their finances.
The latest probe is also a setback to Coca-Cola CEO Doug Daft's efforts to improve the soft drink maker's image, which was tarnished in 1999 by a product contamination scare in Europe and a race-discrimination lawsuit in the United States.
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At the time, the soft drink maker also was being investigated by antitrust regulators in some of its more than 200 markets around the world.
Investors largely shrugged off news of the latest probe, and Coke (KO: down $0.10 to $43.91, Research, Estimates) shares edged lower in New York Stock Exchange trading.
Separately, Burger King Corp. said Friday it is phasing out frozen carbonated beverages, including Frozen Coke, at its U.S. restaurants, saying their performance had been "disappointing."
-- Reuters contributed to this report
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