PAUL HOLMES: Nestle needs to consider the costly fallout of its demand for $6m repayment from Ethiopia

Just because you can, doesn't mean you should.

Just because you can, doesn't mean you should.

Yes, food giant Nestle was within its legal rights to demand repayment of $6 million from the government of Ethiopia. The money was compensation for losses Nestle suffered after a previous Ethiopian government nationalized back in 1975. But you have to question the company's timing, attempting to extract money - enough to feed a million people for a month, according to the charity Oxfam - from the world's poorest country at a time when it is facing the worst famine in 20 years. And when Nestle insisted on payment in full - the Ethiopian government had offered $1.5 million - as a "matter of principle," surely someone has lost sight of the human element in the equation. (A Nestle spokesman offered, "In the interest of continued flow of foreign direct investment, which is critical for developing countries, it's desirable that conflicts are resolved according to international law and in a spirit of fairness.") In the same spirit of fairness, it should be noted that after stinging criticism in the European media and demonstrations outside its UK headquarters, Nestle announced shortly before Christmas that it would donate any money it received as a settlement to famine relief. Perhaps mindful that many recall Nestle's aggressive marketing of infant formula in developing countries, and all the attendant problems, CEO Peter Brabeck told angry customers, "We are not interested in taking money from Ethiopia when it is in such a desperate state of human need." But now it appears that Ethiopia faces an additional $500 million in claims from creditors, many of them either wealthy individuals or smaller companies, less concerned about bad PR, and less vulnerable to the threat of boycott. Says one World Bank official, "These claims are surreal. They are laughable when you consider who the debtor is." Surely some mechanism must be found through which Ethiopia's debt can be forgiven, preferably one that also provides compensation to those who really need it. At a time when opposition to globalization gains strength and support by portraying Western capitalism as heartless and exploitative, why provide such compelling evidence that those charges are true? If major corporations truly want to invest in the future, help developing countries to one day become a source of talent and a market for their goods and services, and convince the rest of the world that people sometimes do come before profits, they may never get a better opportunity. There's no telling what the payoff will be if we demonstrate to the world that the bottom line is not the only value that matters to big business.
  • Paul Holmes has spent the past 15 years writing about the PR business for publications including PRWeek, Inside PR, and Reputation Management. He is currently president of The Holmes Group and editor of www.holmesreport.com.

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