There is often shock bordering on outrage in the rich First World, when, in spite of the grants and aids they give, many people in the Third World question their motives and commitment. Maybe the behavior of Swiss chocolate maker Nestle will help them understand why, on occasions, they are regarded as insincere, even hateful.
Nestle acquired a German company whose Ethiopian livestock interests had been nationalized, without compensation by the country’s then communist government in 1975. The economically illiterate soldiers who ousted Ethiopian ruler, Haile Selassie, seized dozens of foreign firms. There are currently over 40 claims against the present Ethiopian government for compensation. Nestle’s is one of them. Nestle calculates that it is owed $6 million. The Ethiopian government, hardly responsible for the lunacies of its predecessors 28 years ago, has nevertheless offered the Swiss-based international confectionery firm $1.5 million. Nestle has rejected the offer out of hand and warned that unless foreign investors see Ethiopia honor its international commitments, they will stay away.
Yet even the World Bank, part of the IMF and no friend of governments that try to welsh on their financial commitments, has said that the $1.5 million offer is fair. This, however, cuts no ice with Nestle, which avers that it must act in the best interests of its shareholders. It matters not that the uncompensated loss was incurred when Nestle did not actually own the German subsidiary, which had been operating in Ethiopia, and therefore Nestle itself suffered no direct loss.
Nestle enjoyed profits last year of $3.9 billion, a rise of 16 percent. The average annual income for the 64 million Ethiopians is just $100, making the country one of the world’s poorest. The current drought sweeping part of the country has destroyed the livelihoods and is threatening the lives of no less than 15 million peasants. The loss of some $5 million from Ethiopia facing Nestle’s shareholders is hardly likely to be as catastrophic. No Nestle shareholder is about to starve to death.
Nestle already has a poor Third World track record. It was one of the international companies that spent millions of dollars promoting its own dried milk products as an adequate substitute for mothers’ milk, when virtually every piece of medical advice stood against the practice. The World Health Organization has suggested 1.5 million babies die annually, because they have not been adequately breast-fed and have thus not acquired the natural immunities and benefits in their mother’s milk.
Nestle shareholders have, however, acquired the profits and benefits of this cynical trade. And if the company has its way over the post-nationalization compensation claim in Ethiopia, they will all be made a fraction of a cent richer again.
How sad it is that international executives think that their onerous responsibilities to shareholders rule out any gestures of magnanimity or generosity. In fact, they may be doing their shareholders a disservice by placing their company in such a publicly repugnant position. Were consumers around the world the boycott Nestle products in disgust, the loss to the shareholders would be significantly greater than $6 million.
