LONDON: Nestle, the world’s largest coffee company, was forced into a humiliating U-turn on Thursday night, after public outrage forced it to drop its US dollars six million claim against the famine-stricken Ethiopian government.
After being deluged by 40,000 letters inspired by the London- based Guardian newspaper’s revelation of its demand for compensation over assets seized in the 1970s, Nestle will today announce that it has decided to back down.
Talks between the company and the Ethiopian government this week resulted in Nestle accepting Addis Ababa’s offer of a US dollars 1.5 million settlement, which will be handed straight over to the famine relief effort.
The Guardian’s editor, Alan Rusbridger, said it was a triumph for the power of public opinion.
“After the Guardian first exposed the company’s plans, over 40,000 people wrote to Nestle outraged at their claim on the Ethiopian government,” he said. “Corporate greed has buckled in the face of adverse publicity and direct action.”
In a statement, the giant food and beverages company said it was not interested in taking money out of a country confronted with famine and that it was exploring other ways it could be of assistance to the Ethiopian government.
Today’s move represents a considerable climbdown for the company, which had initially dismissed the Guardian story when it was first published.
Nestle insisted the compensation issue was “a matter of principle” and that it was in the best interest of Addis Ababa to settle the demand for six billion dollars so as to repair its record with foreign investors.
The company’s top executives were forced to rethink their strategy after assessing the public relations damage from the claim, which represents one hour’s turnover for the firm.
It posted sales of nearly US dollars 60 billion last year.
Oxfam, which led the campaign to get Nestle to back down, said it was a victory for Ethiopia and the public.
“This is a welcome result because it shows that Nestle is not immune to public pressure,” said Phil Bloomer, a senior policy analyst.
The aid agency said that the company, which makes profits of up to 40 per cent on its brand of instant coffee, should now consider paying Ethiopia’s farmers a better price for their coffee.
“Now Nestle has got another challenge to prove today’s decision was not just a face-saving exercise: it must demonstrate a commitment to ethical purchasing by eliminating the misery at the bottom of its supply chain,” said Mr Bloomer.
Oxfam blames the 50 per cent fall in world coffee prices over the last three years for some of the strains on Ethiopia’s economy, which have brought nearly 11 million people to the brink of starvation. Coffee accounts for two-thirds of the country’s export earnings.
Ethiopia is one of the world’s poorest countries, with an average income of less than two US dollars a day.
Several years of poor rains have left it facing its worst drought in 20 years and some aid agencies have warned that the situation could be even worse than the 1984 famine, which prompted Live Aid.
Nestle’s claim dates back to the 1970s when the military regime in Addis Ababa seized the assets of foreign companies.
Ethiopia’s current government is trying to settle all its dues with foreign business, but faces demands for up to US dollars 500 million from 40 claimants.—Dawn/The Guardian News Service.
