Nestle, the Swiss-based multinational embroiled in controversy over its demand for $6m (£3.7m) from the famine-stricken government of Ethiopia, has promised to donate the money to hunger relief.
Facing a mounting public relations disaster over the company’s handling of the issue, the chief executive, Peter Brabeck, issued a statement last night pledging that the proceeds of its claim against Addis Ababa would be used to combat the famine threatening the lives of 11 million Ethiopians.
”We are not interested in taking money from Ethiopia when it is in such a desperate state of human need,” he said.
The company was taken by surprise by the public outrage that greeted the exposure of its demand in last week’s Guardian and is desperate to avoid a repeat of the consumer boycott that has dogged it for years over its aggressive marketing of babymilk formula in the developing world.
After a storm of criticism erupted, the company promised to invest the money in building new operations in Ethiopia. But yesterday’s further retreat suggests that Nestle realises it has failed to repair its tarnished corporate image.
Brabeck, who once warned that Nestle would be judged not just on its bottom line but on what it had done to fight hunger in developing countries, made it clear that the company has not abandoned its legal claim against Addis Ababa and intends to continue the complex and expensive negotiations.
”We do think it’s important for the long-term welfare of the people of Africa that their governments demonstrate a capacity to comply with international law,” he said.
Brabeck expressed hope that the publicity the controversy has generated could have a positive benefit by focusing attention on Ethiopia. ”We hope our commitment will bring the possibility of helping a significant number of people there,” he said.
The company will donate the $1.6m Ethiopia has offered to settle the case for famine relief and will do the same with any extra money resulting from the final deal.
Aid agencies stepped up their calls for Nestle to abandon its action against the Ethiopian government entirely.
”We don’t want any half measures from Nestle,” said Justin Forsyth, head of policy at Oxfam. ”We want them unambiguously to drop the claim and allow the Ethiopian government to spend the money on famine relief.”
Brabeck said the company had been ”shocked and surprised” by the demonstration organised by Oxfam outside its UK headquarters last week. ”Actions which blind-side others are not in keeping with the common good,” he said.
But Forsyth shrugged off the charge that the aid agency had ambushed Nestle by revealing the demand made by its German subsidiary to Addis Ababa.
The hardline stance taken by the company over the claim has surprised the World Bank, which is negotiating on behalf of the Ethiopian government.
”Nestle have had lots of opportunities to back down over the last year,” said Forsyth. ”Sadly it has taken Oxfam and the Ethiopian government exposing them to public outrage to make them see sense.” – Guardian Unlimited Â