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Monday, 23 December, 2002, 09:29 GMT
How can multinationals balance ethics with profits?
The world's biggest food corporation has been condemned for wrangling with Ethiopia for a $6m compensation payment.
The controversy is over a livestock firm, once owned by a Nestle subsidiary, which was taken into ownership and nationalised by the Ethiopian Government back in 1975.
Ethiopia is said to be offering about $1.5m in compensation in line with the current exchange rate between the dollar and the Ethiopian birr.
But Nestle are pressing for a possible $6m based on the exchange rate at the time of the nationalisation 27 years ago.
Government money should never be diverted to a great profit-making multinational when Ethiopia is nearing dire famine, according to Oxfam.
How far should the rest of the world make allowances for poorer countries? Should corporations always take local conditions into account when making business decisions? Can multinationals balance ethics with profit making?
This Talking Point has now closed. Read a selection of your comments below.
Allan B, USA
The 3000 employees of Rowntrees in the UK who were put out of work by Nestle when their company was taken over know all about the moral values of that company. Bigger profits for them, misery for people who had invested their lives in Rowntree. The Tory government of the time did nothing to stop them but then governments are terrified of multinationals because they can just move jobs (if there are any left) to another country if anyone attempts to control them.
This case is about capitalism in its ugliest form. Bad timing and a PR disaster for Nestle. Nestle perfectly has ground legally and in principle as well. But where is good old common sense? Would you ask for the $10 your dying friend owes you in his/her dying bed?
Alan Kirby, U.S.
Nestle is one of the rare corporation who invest significantly in poor countries and unlike others does not simply sell its products to those countries. It builds factories in those poor countries. It trains people in those countries. It used as input local materials from those countries. It helps farmers to increase their crops by supplying them with much needed education and information - most of the time at no charge. It builds strong links with its suppliers and does not abandon them at the whim of the markets. It does sustainable development. The transfer of knowledge and expertise that Nestle provides to such as country is priceless.
The real horror here is the despicable conduct of the Ethiopian government. To believe that the Ethiopian government will be able to use the nationalised assets in a more efficient way than Nestle is ludicrous: it almost certainly will drive down the business to zero by diverting its profit from reinvestment in the business to the purchase of arms.
Why are we shocked at Nestle's actions - this is the sort of behaviour to be expected of a company who repeatedly flout international guidelines on promotion of baby milks in developing countries, and have been involved in union busting activities in Central America to protect their coffee profits at the expense of the struggling farmers and plantation workers. Nestle have proved time and again that they don't HAVE any ethics. Why do they deserve any of our money?
The dictator, Mengstu Hailemariam, responsible for the death of millions of Ethiopians and the nationalization foreign as well as Ethiopian companies is a multimillionaire and is enjoying his life in Harare, Zimbabwe.
I believe Nestle should go after the dictator and his money, not the Ethiopian people or its current government.
If Nestle continues to insist on getting paid $6 million from the Ethiopian people, I will boycott buying Nestle products. I would also recommend Ethiopians inside and outside the country to boycott Nestle products unless the company reverses its decision. Thank you, BBC for bringing this story.
It's amazing that everyone seems to blame multinationals for people starving. Here was a multinational producing food in the world's most famously famine ridden country. The socialist government, seeing the terrible exploitation of people's hunger in the name of profit (ie by selling food) nationalised the company. A few years later, such exploitation was so comprehensively stamped out that no one was selling food in Ethiopia at all, and there was a famine, and it's blamed on capitalism!
Yes Nestle made a bad investment decision and I don't think they have an automatic right to be compensated for that, but it is one very good way in which the Ethiopian government could show that they now respect the idea of private property which makes all production and human advancement possible.
How about compensation for all the victims of nationalisation in this country? Capitalism raging beyond the control of governments? Good!
If Nestle want to come out of this smelling of roses, they should take the money and immediately donate it to Oxfam or a similar organisation for them to give aid directly to the people of Ethiopia, any other solution is unacceptable; the starving people get food, the government learns its lesson and Nestle get good PR into the bargain.
The best voice that we have is to speak with our cash. if you want to perpetuate these actions you can continue to buy their products, or we can all pick a different brand, or even fairly traded goods where the money actually goes to the people not the multinational. Every purchase can make a difference
Guy Hammond, England
This is an example of all that's wrong with the arrogance of many multinational companies.
It's typical of our hysterical age that the people bleating away on both sides can't see the obvious solution. The Ethiopian government should pay up, to avoid setting a precedent that companies can have their assets seized with no redress, and then Nestle should immediately donate the money to famine relief in Ethiopia. Why is it that people prefer self-righteous preaching to a practical solution?
The only "ethic" capitalism understands is making the rich richer and the poor poorer. The location of a multi-national operation in the world is irrelevant.
Anyone who believes that Nestle have a point in asking for $6m really needs their head examined.
I believe what Nestle is doing is legally correct but morally wrong. I was also astonished to find out that the Ethiopian government is willing to pay $1.5m back. I am not sure what is taking place here. It is not only foreign corporations but so many Ethiopians who lost their life savings when the government at the time nationalized the land, factories, housing etc. Does it mean that this government is willing to pay back its citizens who lost millions? I am sure that is not going to happen.
Ethiopia will not spend that money on food either way. The $6 million could of been spent at the start of this crisis but it wasn't and you can bet they're still buying arms.
This is yet another manifestation of the unethical profit-driven policy of multi-nationals. Another manifestation of how inhumane and rude people can be to their fellow starving people. The ordinary people do not usually see this ugly hidden face of the Trans-national companies. I am glad that every one can now see that the driving motor of those corporations is not to help anyone but increase their profits, even if it comes at the cost of the lives of other people.
I shall never buy another Nestle product again. The company that the Ethiopian government nationalized was in no way undeserving of this. To rob a poor country to feed your already fat belly is the most despicable trait of the human race. It's a pure animalistic instinct. Just goes to prove that most of us haven't yet got passed the evolutionary stage of a maggot.
If you operate in a country you are subject to the laws of that country. If you don't like the laws then you move somewhere else. What Ethiopia did is effectively impose a 100% taxation, something which our own government sometimes seems to be heading for.
Nestle doesn't need this money and Ethiopia is in too bad a shape to be expected to cough up. I'm sure multinationals could balance ethics and earnings, but why bother when exploitation is so much more profitable. The IMF, WTO etc. needs to be utilised in a determined way to clean up global corporate lawlessness, but I can't see that happening any time soon.
There is no word for such a paradox. Millions are dying without food, yet a food giant such as Nestle wants to snatch a little of what they have. Oh! mercy! Who should save this world?
Since when did profits have anything to do with ethics?
This is capitalism out of control. Some multinationals appear to be hellbent on making a profit regardless of its effect on people and the environment. The UN should be given powers to stop this sort of thing from happening.
I've no idea if Nestlé have a strong case, but for $4.5m, you'd think they'd be happy to escape further attention to their poor record in developing countries. Like many others, I avoid buying Nestlé products.
If corporations don't like the laws in one country, they can move operations to another more favourable place. Because of their enormous financial resources, they can influence governments in their home countries to punish other governments who do not serve their interests. There is always a danger that the senior management of these corporations will become arrogant outlaws flouting fairness, decency, and respect for the rights of ordinary citizens all in the name of profits.
I hope people will remember this hypocrisy when Nestle give a couple of grand to a charity or show kids in their adverts, how selfish and greedy they really are.
Mark M. Newdick, US/UK
18 Dec 02 | Business
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