Nestle Resolves Compensation Claim Against Ethiopia
24 January 2003
Addis Ababa, Ethiopia - Ethiopia, a nation currently facing massive famine due to severe drought and the collapse of the global coffee market, reached an agreement today with the Nestle Corporation to settle a compensation claim that had become a source of public embarrassment. Nestle, the world's largest coffee company, claimed that Ethiopia owed it more than $6 million.
Oxfam disclosed in December that Nestle had turned down Ethiopia's initial $1.5 million offer to compensate for shares in a Nestle subsidiary, Elidco. Elidco was nationalized during the 1975 takeover of Ethiopia by a socialist regime called the Derg. In 1991, the current, more moderate government took power.
When efforts by the World Bank to mediate the dispute stalled, the Ethiopian government approached Oxfam to help with the situation. Under today's agreement, Nestle will accept the initial offer of $1.5 million from Ethiopia, drop any further claims to compensation, and immediately give that money to famine relief efforts in Ethiopia.
"Oxfam is pleased that Nestle has accepted the terms put forward by the Ethiopian government and has heard loud and clear that consumers care about how it treats the developing world," said Abera Tola, Oxfam America's representative in Addis Ababa. Tola added, "Nestle's actions demonstrate that the concerns of business do not have to be at odds with the needs of starving people."
In December, Oxfam initiated a popular campaign that inspired 40,000 people to contact Nestle to demand that it abandon its claim against Ethiopia, which is facing a drastic humanitarian crisis, and give the amount of the settlement to emergency feeding programs in Ethiopia.
Nestle, which failed to produce credible evidence demonstrating a legal right to compensation, boasted $5.5 billion in profits in the last fiscal year. According to the 1999 World Development Report, the average Ethiopian earns less than $100 a year, making Ethiopia one of the world's poorest countries. The World Food Program estimates that 11-14 million Ethiopians are currently at risk of starvation, a number nearly double the population affected by the 1984 famine in Ethiopia that inspired the celebrity "Live Aid" and "We Are the World" benefits.
Oxfam has been working with communities on the Horn of Africa since the famine in 1984, and is currently working in Ethiopia on several programs: emergency food distribution, connecting relief strategies to long-term development, conflict prevention, the current coffee crisis, and improved livelihoods for poor communities.
For More Information on this story:
Oxfam Uncovers Nestle Demandart3917.html
Drought Spreading Through Ethiopiaart4257.html
