Nestlé holds firm on Ethiopia claim

Swiss food giant, Nestlé, says it intends to push ahead with a claim for damages from the Ethiopian government over a company that was nationalised in 1975.

The Swiss firm has come under fierce criticism from British aid group, Oxfam, which says the country – facing a widespread famine – cannot afford to pay.

Oxfam spokeswoman Sophia Tickell said the Ethiopian government had offered to pay Nestlé $1.5 million to settle the claim, which was all it could afford.

But the company told swissinfo it was determined to press ahead with its case. “We are adamant on the principle that if property is expropriated, the state has to pay fair compensation for it,” spokesman François Perroud told swissinfo.

Nestlé is seeking $6 million in compensation for the firm – the Ethiopian Livestock Development Company – which was nationalised by the government in 1975.

Perroud said the figure of $6 million was being discussed, but was not necessarily the amount that would be settled on. He added that Nestlé was willing to “be flexible” and that the money it eventually received would be reinvested in Ethiopia.

Nationalised

Nestlé did not actually own the company at the time it was nationalised but bought its parent, the German Schweisfurth Group, in 1986 and inherited the claim.

The Ethiopian government sold the firm in 1978 to a local company for $8 million.

Aid workers say the country is facing a famine that could see as many as 11 million people facing starvation.

Oxfam’s Sophia Tickell said Nestlé didn’t need the money as much as Ethiopia – the company posted net profits of $3.8 billion for the first half of the year – and she hoped it would relent.

Nestlé said it was in the Ethiopian government’s “interests to reach a deal to ensure continued foreign direct investment to the country”.

swissinfo with agencies