ETHIOPIA: The multinational coffee corporation, Nestle, is demanding a $6 million payment from the government of the world's poorest state, Ethiopia, as the country struggles to combat its worst famine for nearly 20 years.
The money is compensation for an Ethiopian business which the previous military government nationalised in 1975. It could feed one million people for a month, according to Oxfam.
The cash-strapped Ethiopian government has offered to pay $1.5 million to settle the claim, but yesterday Nestle, which bought the Ethiopian firm's German parent company, the Schweisfurth Group, in 1986, was standing by its demand, insisting it was a "matter of principle".
"In the interest of continued flows of foreign direct investment which is critical for developing countries, it is highly desirable that conflicts are resolved according to international law and in a spirit of fairness," a spokesman for the company said.
Nestle's chief executive, Mr Peter Brabeck-Letmathe, acknowledged three years ago that the company had responsibilities beyond its bottom line. "We are going to be asked: what have you done to fight hunger in developing countries?" he said.
Last month Ethiopia's prime minister Mr Meles Zenawi said that six million people in his country needed emergency food aid and that the number could rise to 15 million within months.
Nestle, the world's largest coffee processor made $5.5 billion in profits last year.
In 1986 Nestle bought a German company, Schweisfurth Group which had a majority share in the Ethiopian Livestock Development Company (Elidco) seized by the Ethiopian government more than 25 years ago. The government sold Elidco to a local firm for $8.7 million four years ago.
Although the exact size of Schweisfurth's share in Elidco is uncertain, the Ethiopian government is willing to pay $1.5 million - just over half the value of the company at the time of nationalisation including interest. But Nestle is insisting it convert the payment at 1975 exchange rates, adding a further $4.5 million to the bill.
- (Guardian Service)