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EDITIONS
 Monday, 23 December, 2002, 09:29 GMT
How can multinationals balance ethics with profits?
Children in village of Dir Sakar in Ethiopia which is facing famine
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.

The Ethiopian government must apologise

Allan B, USA
Even though the timing was bad l think Nestle has the right to claim the money stolen by the previous government 27 years ago. To attract foregn investers, the Ethiopian government must apologise to Nestle and pay back the money.
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.
Kevin, England

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?
Solomon Abebe, Ethiopia

It makes me very angry

Alan Kirby, US
I am a German teacher in St. Louis and my students have been busy raising money to send to the World Food Programme to aid in its efforts to stave off this massive famine in Africa. We have raised about $1200. It makes me very angry to think that Nestle will try to bilk 6 million out of the mouths of the starving. If karma is real, those that made this decision will have hell to pay. I too will now always avoid nestle products.
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.
Frank, Canada

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?
dunc, UK

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.
Haile, USA

The Ethiopian government is not short of money

Bernard, UK
The Ethiopian government is not short of money and is spending much more than this on fancy new buildings for themselves. Nestle are completely right to claim what is legitimately theirs from a government easily able to pay. This will not have any effect on the famine, as that is caused by bureaucratic incompetence, not lack of funds. Nestle makes large charitable donations and development investments to the developing world, and if Ethiopia refuse to pay what they owe it just reduces Nestle's ability to help others in the region and the willingness of other multinationals to invest. It is Ethiopia who are being selfish, damaging international investment in their neighbours by their greed.
Bernard, UK

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!
Alex, England

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.
Gary, UK

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
Jason , UK

The real losers are the ordinary people of Ethiopia

Guy Hammond, England
Isn't it strange how you all blame Nestle, but say nothing about the Ethiopian government who by nationalisation have destroyed jobs in their own country? Nestle must win this case to show governments that they cannot destroy their own economies for short-term political gain. The real losers are the ordinary people of Ethiopia.
Guy Hammond, England

This is an example of all that's wrong with the arrogance of many multinational companies.
Jeremy Rogers, Spain

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?
Jon Livesey, USA

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.
Alan Hall, UK

Anyone who believes that Nestle have a point in asking for $6m really needs their head examined.
Dan, England

The negative PR has now probably cost them far more that the $$$'s they've lost

Richard, USA
Nestle chose to invest in a rather unstable and extremely poor foreign country for the purpose of making money. It was a business risk and they lost. Tough. Move on. The negative PR has now probably cost them far more that the $$$'s they've lost.
Richard, USA

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.
Noah Eyobe, Canada

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.
Paul, Ireland

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.
Mukhtar Amin, Ethiopia

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.
Mick, UK

If someone I knew took my property, I am able to claim compensation from them for the loss

Caron, England
If someone I knew took my property, I am able to claim compensation from them for the loss. This law would apply regardless of the situation of the person; admittedly I might have to wait for the money to be paid over a few years. The situation we have with Nestle is the same but on a larger scale.
Caron, England

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.
John B, UK

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.
Pete, UK

A totally sickening display of heartless greed

Ania, UK
Not even Ebenezer Scrooge would have had the nerve to collect this debt. Nestle made a profit of $22,000,000 A DAY this year, do they really have the lack of morality to demand this broken country's meagre capital? A totally sickening display of heartless greed.
Ania, UK

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?
Purna Chhetri, Austria

Since when did profits have anything to do with ethics?
Chris B, England

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.
G, UK

The starving will never see any of that money

George, UK
As the majority of African governments are corrupt, I don't think it will make a bit of difference to the starving millions. That money would not be spent on them either way - the government would spend it on their life of luxury, private jets, and arms. Let them fight it out, but the starving will never see any of that money.
George, UK

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.
Michael, UK

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.
Mark, USA

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.
Vish, UK

The real loser will be Ethiopia

Mark M. Newdick, US/UK
Although it's difficult to have sympathy for a multi-national company like Nestle, the fact remains that they are the victim of outright theft! More importantly, it is nationalisation efforts like these that discourage the very investment that these poor countries seek in the first place. Nestle will probably lose, or drop, their case... but the real loser will be Ethiopia and all African countries who follow similar short-sighted policies.
Mark M. Newdick, US/UK

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18 Dec 02 | Business
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