Nestle/Ethiopian Controversy Escalates

Dec 20, 2002

By George Anderson

Nestle is rethinking its demand that Ethiopia, the world’s poorest government, pay $6 million for a business unit nationalized by a former military government in 1975.

The international food manufacturer found itself besieged with protests from around the globe after its hard line stand for compensation was reported in the UK’s Guardian newspaper.

Nestle has promised to reinvest the money back into Ethiopia but this has done little to assuage those who see this as capitalism at its worst.

Oxfam International estimates that $6 million could feed a million Ethiopians for a month. More than 11 million in famine-stricken Ethiopia are facing starvation in the coming months, according to the group.

Nestle insists that it is seeking the compensation as a matter of principle. A Nestle spokesman, Francois Perroud, said, “It is in the Ethiopian government’s interest to reach a deal as a way to ensure continued flows of foreign direct investment in the country. We are flexible about the timing and the amount but we are not flexible about the principle.”

In a prepared statement from the company, Nestle said it plans on using the
$6 million as part of “a long-term viable investment in Ethiopia which will
contribute to the economic development of the country”. It also pledged “to
help alleviate the suffering of the population that is presently threatened
by the food shortage.”

Moderator’s Comment: What is your view on the
Nestle/Ethiopia controversy?

A Ken Blanchard quote from yesterday’s RetailWire news
story and discussion, Author Blanchard: No Right Way To Do Wrong Thing, seems
appropriate to restate in this case. “Sometimes when you make a decision that
is right, it may not make your company look good in the short run, and you’re
going to take a hit. It’s possible for something to be legal but unethical,
but always remember: there is no right way to do a wrong thing.”

Anderson – Moderator

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