The article in Investigate magazine, refers to the country as the Coke Islands.
The article by Ian Wishart, an investigate reporter from New Zealand, goes into great detail on how the importation of Coca-Cola worked, whether it was illegal or simply sharp business practice, and examines the role of local officials who he says turned a blind eye to the practice.
Presenter: Bruce Hill
WISHART: What the story is about that the local importer of Coca-Cola into the Cook Islands print up a fantastic deal whereby they would reduce the amount of import duty they had to pay on Coca-Cola imports. This was back in the 80s and apparently it's gone unchecked ever since then, up till 2009. But the deal was not available under Cook Islands law to anybody else. No other importers of soft drinks knew about it.
HILL: Why is this story touched such a raw nerve in the Cook Islands?
WISHART: You've got to remember that the Cooks, they're a dependency of New Zealand in effect, they're self-governing nation, but they're dependent on New Zealand and Australia for aid money to the tune of around 20 odd million dollars a year. There are 22,000 people living in the Cook Islands and to put that in perspective, there are 78,000 Cook Islanders now living in New Zealand and Australia. So there's some strong ties between both New Zealand and Australia and the Cooks for obvious reasons.
So this story and the amount of money that may be involved in being sucked out of the Cook Islands taxpayers pockets through beneficial deals for big business. Obviously, it has an impact on the average Cook Islander, because they're looking at it and saying well, I've been paying taxes all these years, I'm not getting special breaks, I'm having to pay more for schools and health care and so forth and the government's telling me we've got no money, and here they are giving all this money to a particular business.
HILL: Why was it that people only really starting taking this seriously when you published an article about it in New Zealand?
WISHART: Well, there's an old saying that a prophet never has honour in its own home and I think the Cook Islands media could only say so much and as long as there was no international attention from New Zealand or Australia, people felt that perhaps they could get away with it and ride out the storm. When New Zealand and Australia media has started looking at this, and, of course, publicising it, that has an impact on how the nation is perceived.
HILL: One prominent Cook islands businessman says the article in Investigate magazine has caused a fair amount of soul searching among Cook Islanders. James Beer, who is a former parliamentary candidate of the opposition Democratic Party says the country had a poor reputation for unusual business practices some years ago, and this sort of thing affects the credibility of everyone concerned.
BEER: Well, it comes down to credibility of the government, it comes down to the credibility of the customs, it comes down to people saying well, if I'm going to have to pay my taxes, why can't the biggest trader in the country pay his taxes as well? Many people are saying, well, was it illegal or wasn't it illegal? And just because a government authority says that it was legal and I allowed it to happen, doesn't make it right.
HILL: Has this caused much of a reaction in Cook Islands? Is it important to local people? Is the government responded at all?
BEER: Judging by the number of letters to the editor about the number of phone calls that are being are ringing up to the local radio station. Yes, people are very, very angry. There's a lot of disquiet. I mean people are completely upset that this kind of concoction of different rules for different people applies in this country. Because we want to run our businesses, we want to be able to live our lives. Everyone has to pay their fair share. The last thing we want to do is end up saying, here we go, here's a guy here and that person is taking advantage of the situation and everyone now has to pay for it. Because essentially, what we're doing is we're ending up subsidising other businesses, and we're subsidising a monopoly business, when there's really no, there's really no room for it. But it's about credibility, Bruce. If you look at the situation as it stands now, we have small economy that makes very little money, every dollar, every cent is vital to the National Government to be able to do its roadworks, do its education, do its house programs and if we continue not to pay taxes, that area legally obliged to pay, then we have no business asking Australia and New Zealand for aid money.