Nestle is demanding compensation from Ethiopia’s government for the seizure of assets carried out by the previous regime.
Ethiopia has accepted this responsibility, but asked the World Bank to help negotiate reasonable settlements with companies that make claims. After all, Ethiopia is a poor country facing an extremely severe food crisis at the moment. They simply can’t make good on all the sins the previous government has carried out.
The World Bank determined that $1 million would be reasonable in the case between Nestle and Ethiopia. Nestle said no. Nestle, the billion-dollar company, isn’t accepting the World Bank’s number.
Nestle is getting raked over the coals for this in thge court of public opinion, so they’ve reminded everyone that they promise to reinvest the money, and their case will demonstrate to the world that it’s safe to invest in this cash-strapped country-- because companies will know they can be compensated for government wrongs.
Well, goody for you, Nestle.
This story really irks me. Nestle is a shitty world citizen anyway. This doesn’t exactly warm my heart to them.
Ne$tle suck even more than I used to think they sucked. They’re appallingly difficult to boycott here in Australia as well as they seem to own every last food company. I mean, I know that a boycott isn’t all that effective but it makes me feel better if I don’t buy things from the arseholes.
That’s not a bad point, but as I understand it Ethiopia didn’t ask to default on everything. It just asked to have the figure negotiated by a third party who was knowledgable about the situation. The World Bank came up with a solution that showed that Ethiopia was going to compensate for the crimes of the communist regime that ruled in the 70’s, yet didn’t bankrupt a needy struggling country. Nestle said no, not good enough.
I understand why Nestle might not forgive their legal claim altogether. I do not understand why they can’t accept this offer in good faith under the circumstances.
Um, Cranky, I think you’re a bit unclear on the concept here. Nestle is a corporation. How corporations work is that a bunch of people with money put all that money in a big pile, then they hire someone who knows how to run a business to use that money to run said business to (hopefully) make more money.
The managers of Nestle are agents of the shareholders. They must therefore take care of the money the shareholder put into the company, and if someone takes that money they must try to get it back. They have no choice in the matter; if you gave your money to me to manage for you, I’m sure you’d be pissed if I told you that someone stole some of it and I wasn’t doing a damn thing about it. This does not make them “bad world citizens.”
Now, there is a more subtle argument you could make–that the bad press Nestle is getting (and i haven’t seen much of it at all) will hurt the company to the tune of more than they could recover from Ethiopa–but you don’t seem to be making that argument. You do elude to it (the bad press), but it is clear what irks you is that Nestle is a billion dollar company and a “bad citizen.”
Dude, thanks, but I have an economics degree. I know how the thing works.
That’s exactly it–that Nestle is being an asshole over a miniscule legal issue. Yes, it’s bad press, and if I were a shareholder (god help me, I probably almost am thanks to my retirement funds) I’d be peeved that they were engendered bad will over this. But really, many companies write off certain losses. It’s a part of their business plan, for whatever reason. Maybe it’s not worth going after the money. Maybe it’s not worth the ill will.
I call Nestle a bad world citizen because of the WHO guidelines that they’ve ignored for years. Fuck the economics of the corporation; there are some things corporations shouldn’t do, no matter how much they are “good for business.” Nestle hasn’t grasped that concept for awhile. This is just the icing on the cake.
Well, maybe so, Cranky. And I do respect your erudition on the matter. But isn’t that just a bit of a genetic fallacy? I mean, what if the same thing had happened to a company that you do like? Would you still feel the same way?
Well, this is where you and I part ways, I guess Cranky. Call me a hearltess bastard (many others have and will), but to me the bottom line is the bottom line. Corporations have no business doing anything that doesn’t make shareholders money in SOME way.
Also, though, I don’t know anything about Nestle’s trouble with the WHO guidelines.
Well, okay. I won’t berate you over it. But please consider that not all shareholders are wealthy people who can afford to lose money. I feel for the Ethiopians, but I don’t see the justification in making arbitrarily selected people pay.
Well, I am not being my clearest here so the confusion is my fault. I don’t feel that a corporation should do things that ultimately don’t make money. I do feel, however, that there are ethical ways to do business. And there are also certain activites that corporations shouldn’t do, regardless of how proftable they might seem to be. For example, I don’t think they should employ children–even if they could do so in secret so they’d never suffer bad press for it. It’s not just because they might lose money if the soft-hearted busybodies of the world might get wind of it and start a boycott and make the company look bad…it’s because it just isn’t right (IMHO).
I know corporation aren’t moral entities, but the people who run them do have souls. Or ought to.
What I’ve been really unclear about (because I ranted before I thought about this) is that this hits a nerve with me because of the locale. The bulk of Nestle’s sins have occurred in Africa. This is a place I expect them to tread lightly. Not rational, perhaps. I admit it.
The WHO trouble, by the way, involves Nestle’s aggressive marketing of artificial baby milk products in third-world countries. They’re also in violation of guidelines in the U.S. (Carnation advertises in national markets), but I don’t care so much about that. It’s not a life-or-death issue in developed countries. It is in other places. Nestle has been violating WHO guidelines since the 1970’s.
Did we disagree in another thread? I don’t remember if we did, dude (and I think I would cuz I remember your anme from my lurking days ).
BTW, I usually describe myself as “fiscally conservative but socially liberal” instead of “libertarian” because I’m not 100% sure I wanna align myself with the Libertarian Party (not for any one specific reason though, really).
No, we haven’t met. The irony is in the user names: Libertarian versus TaxGuy. I’m not a member of the Libertarian Party — I’m an actual Libertarian. Naturally, I advocate the elimination of all involuntary tax.
I don’t have an economics degree, and I’m really bad with money and numbers. But after reading the link, I’m on Nestle’s side–they’re getting screwed.
They say they’re owed 6 mil. The world bank is arbitrating about one sixth of that. I know Ethopia has problems, but the way I see it, Nestle did a good thing by investing in the country to begin with. Unfortunately, it didn’t pan out, and now they may lose a chunk of change there. With their yearly net, I doubt it matters to them financially whether they get all 6 mil or just one, so I can understand why they’d decline the arbitrator’s offer on principle.
CAAOM:Nestle has been violating WHO guidelines since the 1970’s.
What’s more, they’re screwing Ethiopian coffee producers with reduced, below-production-cost prices to farmers who are already barely maintaining subsistence level, on account of the current coffee surplus—but they’re not cutting the price of the coffee products they sell to consumers. Well, that’s how ya make money.
I know corporation aren’t moral entities, but the people who run them do have souls. Or ought to.
Trouble is, there’s nowhere to list souls on the balance sheet. We will just have to respond with well-publicized outrage until the bad PR affects something that actually is on the balance sheet. Then they may respond.
Well no shit they’re saying 6 mil. That doesn’t mean it’s even close to what the actual figure is/should be. Trusting a company about how much money you owe them is…well…stupid.
Wait, so if I get burned investing in the stock market, I can then demand my money back? They made an investment, it went south. Tough shit. I don’t see why they should get any money back at all. 1 million sounds pretty generous to me, especially given that their losses were the result of a previous government, and came about in 19-fucking-75.
).
Naturally, I advocate the elimination of all involuntary tax.