Sugar tax research funding scandal: Investigation exposes sickly Coca-Cola, IRR links

In a reminder of the importance of independent journalism as a check on powers across society, and not only government, Fin24 journalist Adiel Ismail has lifted the lid on secret corporate funding that underpins a report by a seemingly independent think tank. Coca-cola has paid for the research by the SA Institute for Race Relations on taxing sugar-sweetened beverages. The study is not in favour of the sugar tax; while Coca-cola stands to lose revenue if the cost of its beverage goes up. Are the research recommendations a happy coincidence for the funders or is there a more sinister reason the findings tally with Coca-cola’s corporate objectives? Unfortunately, having a funding source that so obviously has financial interests in certain outcomes calls into question the validity of the research. What’s more, the secrecy around the funder raises serious questions about the ethics of those who work for the SA Institute for Race Relations (IRR), not only on the sugar tax but across the organisation’s activities. It’s so easy to assume that institutions that claim the moral high ground in mission statements are above corruption and irregularity. This journalistic exposé is a reminder that it’s not just government players who need to be watched and called to account; even NGOs can lose their way. – Jackie Cameron

By Adiel Ismail

Cape Town – The Coca-Cola Company has funded research by the respected think tank the SA Institute for Race Relations (IRR) on taxing sugar-sweetened beverages (SSBs), Fin24 can reveal.

The IRRs policy paper, titled A stealth tax, not a health tax, has a clear message: The proposed SSB tax should be abandoned. Coca-Cola is the only beverage brand mentioned in the 34-page document.
The IRR used the Coke-funded paper to engage with National Treasury about the economic impact a sugary tax will have in South Africa should it be introduced.

coca-colaSouth Africa is the largest Coca-Cola market in Africa and consistently ranks among the best performing countries in the world, according to its website. It adds that consumers in more than 200 countries enjoy Coca-Cola’s range of beverages at a staggering rate of 1.9 billion servings a day.

As a global leader in the beverage industry who derives its profits from selling soft drinks, the bottom line of Coca-Cola in South Africa would in all likelihood be squeezed by a sugary tax.

It is for this reason that the IRR turned to the beverage giant for funding to do research on the subject. Neither the IRR nor Coca-Cola publicly disclosed the funding source until Fin24 queried it.

“The IRR actively sought out this project by approaching groups that were likely to be negatively affected and asking for funding to do this research,” media and public affairs officer Kelebogile Leepile told Fin24.

This was confirmed by Coca-Cola head of communications, Zipporah Maubane.

“In response to a proposal by the IRR, the Coca-Cola system agreed to fund a research study examining the socio-economic impact of a tax on sugar-sweetened beverages.”

Mystery over how much Coca-Cola poured into IRR research paper

However, the amount that Coca-Cola poured into the research is a mystery, with both parties refusing to loosen the cap on detailed questions posed by Fin24.

Although this is the first such incident in South Africa, Coca-Cola has been criticised over several similar incidents internationally.

It also comes hot on the heels of alleged leaked emails exposing the corporate giant’s worldwide war against sugary taxes. These included trying to influence reporters, infiltrating the World Health Organisation (WHO) and lobbying governments.

Also read: Frans Cronje: Stepping towards a ‘Nanny State'” Why sugar tax should be avoided.

“South Africans are fairly heavy consumers of sugar sweetened beverages,” said Nigel Sunley, a technical consultant to the food industry.

“I do not have actual consumption figures at hand, but while our consumption is, for example, not as heavy as that in Mexico or the US, we are probably fairly high up the global table,” he told Fin24.

In South Africa the beverage industry has desperately pushed against a tax on sugar-laden drinks – a proposal deriving from the Department of Health’s strategy to reduce obesity – arguing the poor will bear the brunt.

However, when poor people become ill they turn to the already creaking public healthcare system that is under severe strain because of infectious diseases, such as HIV/AIDS and Tuberculosis. This is further compounded by the burgeoning problem of non-communicable diseases (NCDs), including obesity and associated ailments like diabetes, heart disease and some cancers, which experts link to soft drink consumption. Sugar also has a negative impact on dental health and related costs.

The problem is so serious that the Second National Burden of Disease study released by the SA Medical Research Council (SAMRC) late in November urged for efforts to be scaled up in targeting prevention and management of NCDs. The study also showed concerning signs of an increase in diabetes mortality.

“In South Africa, NCDs account for a staggering 43% of recorded deaths,” Professor Laetitia Rispel, University of the Witwatersrand (Wits) head of School of Public Health, told Fin24. “Poor people are disproportionately affected by these conditions.”

She noted that the rates of overweight and obesity, which is a major risk factor for NCDs, have risen sharply and it is estimated that more than 45% of men and women above the age of 35 are either overweight or obese.

Should SA be introducing a sugar tax to deal with obesity? More gems available at
Should SA be introducing a sugar tax to deal with obesity? More gems available at

Reducing death & disease among the poorest

“The introduction of a tax in South Africa will decrease death and disease among the poorest, while providing much-needed finances to improve health,” Rispel said.

Dr Anuschka Coovadia, an economist at KPMG and a medical doctor who worked in the public health sector, told Fin24 the management of NCDs is an important part of improving the well-being of South Africans.

“This management includes prevention of drivers of disease such as obesity, education, screening, early diagnosis and integrated management of care.”

She said South Africa needs to assess all levers which can be pulled to motivate, incentivise and penalise poor choices.

Also read: Anthea Jeffery: Proposed sugar tax – no silver bullet for rising obesity

“As such, as sugar tax is one of the tools that we have in our toolkit. Other tools are important to assess in conjunction, as a single modality is unlikely to produce the outcomes we require.”
The WHO, which just last month urged for global action to curtail the consumption of sugary drinks, issued a report entitled Fiscal policies for Diet and Prevention of NCDs, stating that fiscal policies that lead to an increase of at least 20% in the retail price of sugary drinks would result in a proportional reduction in the consumption of these products.

In Sunley’s view, the direct effect in South Africa of a tax on SSBs alone will be negligible.

“The actual reduction in sugar consumption will be extremely small, mainly because soft drinks only constitute a fairly small proportion of total sugar consumption.”

Sunley said it is acknowledged that only a relatively small reduction in per capita consumption of soft drinks will result from the introduction of the sugary tax.

“The studies used by certain public health academics to motivate the proposed tax conveniently brush this over,” Sunley claimed.

This begs the question: Why was the funding not disclosed? There is no disclaimer in the research document or the media releases that was sent out on the policy paper. Furthermore, the IRRs website, which includes logos of other funders, doesn’t include one of Coca-Cola or its associates.

The failure to disclose the source of funding can only fuel the debate on whether the source of funding influences the outcome of research, despite researchers advocating their impartiality.

Marion Nestle, a renowned US consumer advocate, nutritionist, acclaimed author and academic, told Fin24 a serious strategy of the beverage industry has been to fund research that comes out with results that favour the industry’s interests.

“If you see a study funded by a soda company or trade association, you can be almost 100% sure that its results will please its funder,” said the professor of nutrition, food studies and public health at New York University.

Funding from the food industry is not uncommon even in scientific research. However, financial conflicts of interest may bias research conclusions, suggests a systematic review of studies between 2006-2013 by open access journal PLOS Medicine.

The authors found that scientists receiving research funding from food or beverage companies such as Coca-Cola were five times more likely to conclude that there is no link between soft drinks and weight gain than those reporting having no industry sponsorship or conflicts of interest.

Also read: A rational response to asinine sugar tax proposal

This despite mounting evidence identifying sweetened drinks as a primary contributor to the obesity and diabetes epidemics.

Granted that there are plausible arguments made in the Coca-Cola-funded IRR policy paper, it essentially seeks to poke holes in a peer reviewed scientific study that the National Treasury partly relied on to inform its decision to introduce a sugary tax.

The study entitled The Potential Impact of a 20% Tax on Sugar-Sweetened Beverages on Obesity in South African Adults: A Mathematical Model, was published in October 2014 and was supported by a grant from the International Development Research Centre in Canada.

Known as the Manyema paper, it was conducted by among others Mercy Manyema, a researcher at Wits, and Professor Karen Hofman, director of Priceless SA (Priority Cost Effective Lessons for Systems Strengthening). Priceless SA is a policy unit based at the Wits School of Public Health.

The study suggests that a 20% tax on SSBs could lead to a reduction in obesity of 3.8% in adult males and 2.4% in females.

“I think it is an inherent conflict of interest when the beverage industry funds research that is designed to refute information or evidence that shows the negative impact of sugar on the health of people,” Rispel said.

The IRR policy paper further casts doubt on the Manyema paper through citing the arguments of a columnist that appeared in a respected publication. However, on closer inspection it appears the columnist was commissioned by the IRR.

Also read: Bloomberg View: Sweet and sour notes on ‘sugar tax’

In another column, also drawing on work commissioned by the IRR, the same columnist takes on AfricaCheck and Health-e News. AfricaCheck called out the beverage industry for making misleading claims on the impact the sugary tax could have on job losses, while the latter’s report highlighted the deep pockets of the beverage industry. – Fin24


The Institute for Race Relations: What We Do

The IRR produces, disseminates, and promotes the new ideas that South African policy makers need in order to promote the investment and economic growth that will draw poor people into jobs and build a more prosperous South Africa.

Ideas are the most powerful influence on any society. Apartheid policy was, for example, only abandoned after its dominant idea of racial separateness was undermined. In the very same way South African policy makers need new ideas with which to promote the investment and economic activity that will draw poor people into jobs and build a more prosperous South Africa.

The ideas we promote are the pillars of freedom in all successful societies. They include:

  • That the State should be small but effective in carrying out its core functions
  • That people should be treated as individuals and not as members of groups
  • That property rights should be protected so that the poor can accumulate wealth and assets
  • That strong independent institutions in the media, judiciary, and civil society should be empowered to hold powerful interest groups in business and government to account
  • That economic freedom is as important as political freedom and that people should be empowered to stand on their own feet to work, start businesses, invest, and own property in order to improve their lives.

Urgency is paramount. Without much higher levels of investment and growth, South Africa will not defeat its triple challenges of unemployment, poverty, and inequality. Yet failure to do so could open the door to radical and populist policies that erode property rights, destroy political freedoms, and impoverish the country.

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