NESTLÉ WANT $6m FROM STARVING ETHIOPIANS

An Oxfam campaign exposed how Nestlé, as if afraid its public image was getting too positive, has shot itself in the foot by demanding a compensation settlement of around $6m from the Ethiopian government for the 1975 nationalisation of a company they didn’t even own at the time. The Ethiopian government has offered a settlement worth around $1.5m, the value of the initial shareholding, with compound interest of 6%. The basis of Nestlé's claim against the Ethiopian Government is that it wants the settlement valued in US dollars at the exchange rate in force at the time of the nationalization, as this gives it a far greater sum.

As British Nestlé critics Baby Milk Action point out, why Nestlé should require payment in dollars rather than the Ethiopian currency is unclear, Nestlé operates in Ethiopia today and could presumably make use of the Ethiopian currency, the Birr, particularly as it claimed it would invest the money in Ethiopia. Nestlé's home country is Switzerland and its accounts are presented in Swiss Francs. The subsidiary more directly involved is German, operating in Euros. It appears that Nestlé is selecting a currency and a time to set the exchange rate to maximise its income.

Struggling desperately to drag itself out of the PR hole they’d dug for themselves, Nestlé suggested they would donate the money to famine relief, and the issue was ‘a matter of principle’. But what principle? The Schweisfurth Group’s Ethiopian holdings were nationalised by the totalitarian Dergue regime in 1975, the parent company was then taken over by Nestlé in 1986. After years of civil war and upheaval, Ethiopia emerged with a democratic government and, in the mid-1990s, on the orders of international creditors, started compensating for the nationalisations of the previous regime.

So the principle Nestlé speaks of is presumably the principle that the government of a starving and effectively bankrupt country should pay out for the actions of its despotic predecessor to one of the world’s richest companies, in ‘compensation’ for takeover of assets of a company which Nestlé did not then own, and which it presumably took over in the full understanding that the Ethiopian assets were effectively gone.

High principles indeed. Meanwhile, a report published by the British Medical Journal (BMJ) exposed serious malpractice in the marketing of breastmilk substitutes in the West African countries of Burkina Faso and Togo, where companies including Nestlé, Danone and Wyeth were found to be in breach of the International Code of Marketing of Breastmilk Substitutes.

Biased and misleading information (not mentioning the health benefits of breastfeeding and promoting substitutes as equivalent to breastmilk) was distributed to health professionals and mothers, free samples were being distributed to health professionals and breastmilk substitutes were advertised in pharmacies and other supply points in both countries and on billboards in Burkina Faso. Obviously the ‘principle’ of the superiority of breastfeeding is still rather hard for Nestlé to grasp. (Source: Corporate Watch)

Nestlé is again on top of the list for corporate violations around breast-milk substitutes, a UK report reveals. Meanwhile in Brazil, residents are opposing a Nestlé/Perrier bottling plant, which is drying up one of the country's historic sources of mineral water. The Serra da Mantiqueira region of Brazil is famous for its Circuito das Aguas, or “water circuits”, with high mineral content and medicinal properties. Four small towns, São Lourenço, Caxambu, Cambuquira, and Lambari, were built up around these water circuits in the 19th century. But now the mineral content of the water is being reduced by over-pumping by Nestle/Perrier for its Pure Life brand.

“Around 3 years ago, many people in São Lourenço, including myself, began to notice a change in the taste of the mineral waters inside the Water Park”, says Franklin Fredrick, of the Brazillian “Citizens for Water” movement. “One of the most famous water sources there, the Magnesiana, dried up and stopped flowing. Water usually needs hundreds of years inside the earth to be slowly enriched by minerals. If it is pumped in quantities greater than nature can replace it, its mineral content will gradually decrease, bringing the change in taste that we were noticing”.

The residents discovered that Nestlé/Perrier was pumping huge amounts of water in the park from a well 150 metres deep. The water was then demineralized and transformed into Pure Life table water. “As the Brazilian constitution does not allow mineral water to be demineralized, we brought our findings to the attention of the public prosecutor of the State Public Ministry in São Lourenço”, says Fredrick, “and this led to a federal investigation of Nestlé/Perrier and charges against the company at the end of 2001”. Although Nestlé lost the legal action, pumping continues as it gets through the appeal procedures, a legal process which could take ten years.

Meanwhile, Citizens for Water organised protests against the company and collected 3000 signatures for a petition. In June, Franklin was one of the speakers at a human rights seminar in Nestlé’s home town of Vevey, Switzerland. Last year the Swiss-owned company made profits of £2.65 billion on its products. Other speakers focused on the corporation's promotion of Genetically Modified Organisms, exploitation of producers, and labour-union busting. In Britain, Nestlé employs more than 6,000 workers and recently announced sales in the quarter to the end of March of £8.7 billion, up from £8.4 billion for the same period in 2003.

Nestlé has been subjected to a 20-year boycott campaign over allegations that it has persistently breached World Health Organisation rules over promoting formula milk in developing countries. The code, drawn up in 1981 and agreed by 118 countries, says breastfeeding should be promoted above all other products and that leaflets and labels relating to breast milk substitutes should do nothing to undermine this. In the developing world, the WHO estimates that some 1.5 million children die each year because they are not adequately breastfed. Breastfeeding has been shown to reduce a mother's risk of breast cancer by up to 4.3%.

But Nestlé and other companies have been accused of flouting the rules with advertising, free samples, promotions and sponsorships. Milk substitutes have been promoted as modern in developing countries, despite the fact that the lack of clean water means infection and death is rife because of contaminated milk. The latest monitoring report from the International Baby Food Action Network (IBFAN) profiles the aggressive marketing practices of the big 16 baby food companies and 14 bottle and teat companies. The report, “Breaking the Rules, Stretching the Rules”, checked some 3,000 complaints from monitors in 69 countries around the world.

After legal examination about 2,000 violations were reported, many with photos. Again Nestlé is found responsible for more violations than any other company. In Thailand, it gives out samples of its milk substitutes to mothers in a marketing scheme. It provides free products to health-care facilities from China to Armenia to Peru. In Egypt, packaging and advertising of Nestlé powders repeatedly use phrases such as “identical to breast-milk” or “as in breast-milk”. In Venezuela, it distributes aprons with the company logo to nurses and other workers at pediatric wards. An 8-page brochure found in a hospital in Botswana proclaims that “Growing up is Thirsty Work” and promotes Lactogen “for the hungry full-term infant”.

The launch of the report coincides with parliamentary efforts “calling for the UK government to take action to implement and support the International Code of Marketing of Breastmilk Substitutes and subsequent, relevant Resolutions in the UK and internationally”. In the week prior to the launch, Nestlé was in the news as the high-profile charity Breakthrough Breast Cancer refused a donation of £1 million from the company. An official reason wasn't given, but it is understood that the staff at the charity called the organisation to reject the money.

Nestlé (UK) CEO Alastair Sykes then blasted campaigners in letters to the press, claiming that Nestlé abides by the marketing requirements and is a force for good in the world. Among other things, he boasted of Nestlé’s involvement in the Brazilian government’s Zero Hunger initiative. The programme, which was intended to promote small-scale family agriculture, is now distributing Nestlé processed foods, including milk powder. (Source: Corporate Watch)