BY KEVIN BEGLEY
Nestle corporation, which earned US$5.5 billion in profits in 2001, is demanding $6 million "compensation" from Ethiopia, a country in which more than 14 million people are in danger of dying of starvation. That doesn't seem to bother the world's largest food corporation. Business is business!
Nestle's total annual sales of $59.3 billion dwarf the GDP of poverty-stricken Ethiopia by a factor of eight. The corporation employs about 224,500 people in more than 470 factories around the world. It is Switzerland's largest industrial company.
In 1975, the Ethiopian government nationalised the Ethiopian Livestock Development Company (Elidco). At the time, Elidco was partially owned by the Schweisfurth Group, a German company which Nestle acquired in 1986. In all likelihood, Nestle purchased Schweisfurth at a price that reflected the loss of Elidco.
In 1998, the government of Ethiopia, in heavy debt to international creditors, sold Elidco to a local firm for $8.7 million. Last year, backed by the World Bank, Nestle demanded "compensation" for the loss of Elidco.
The tragic consequences of the latest Ethiopian famine, which has been triggered by the failure of the rains for the last three years, may be worse than the 1984 famine, in which 1 million people died. Today, more than a 10% of Ethiopia's children die before their first birthday, and almost half of all children are underweight. Ethiopia has the lowest per capita income in the world, with the average person surviving on $100 a year.
Despite the country's precarious situation, the Ethiopian government offered to pay Nestle $1.5 million — about half the value of the Elidco at the time of its nationalisation. The Swiss corporation rejected the offer "as a matter of principle". It defended its $6 million demand, claiming it is "in the interest of continued flows of foreign direct investment which is critical for developing countries, it is highly desirable that conflicts are resolved according to international law and in a spirit of fairness".
However, as outrage at Nestle's greed swept Europe, on December 19 the company sought to lessen the impact on its public relations disaster by announcing that it would reinvest in Ethiopia whatever money it receives.
According to Oxfam, $6 millions could do the following in drought-ravaged Ethiopia:
- buy food for a month for more than 1 million people in Ethiopia;
- build 6500 wells to provide clean water to more than 4 million people; and
- provide 650,000 people with medicine to fight diarrhea;
What would the cost be to Nestle? Six-million dollars is just 0.01% of its annual turnover.
This isn't the first time that Nestle has revealed its moral putridity. For years, Nestle has been the target of a boycott campaign in response to its peddling of baby formulas as a breast-milk substitute to mothers in the Third World. Breast milk is free, healthy and protects infants from infection, but is not very profitable for a maker of baby formula.
Practices such as sending sales reps into hospitals dressed as nurses to promote products to mothers were common. The pitch was that Nestle's formula was better than breast milk: the message was that a mother who really cared about her baby should use Nestle breast-milk substitute. Mothers were often given a free supply of formula designed to last for the length of time that it takes for mothers' breast milk to stop being produced. Third World mothers, lacking clean water, mixed the formula with the only water they had. The results were predictable.
According to the World Health Organisation, a child bottle-fed using unsafe water is up to 25 times more likely to die as a result of diarrhea than a breast-fed child; 1.5 million children die in this manner each year. Under pressure from the boycott campaign, Nestle finally agreed to abide by the WHO's International Code of Breast Milk Substitutes, but Nestle has continually violated the code.
At least 40 companies have made similar claims against Ethiopia.
From Â鶹´«Ã½ Weekly, January 22, 2003.
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