The issue of the compensation negotiations between the Ethiopian authorities, a unit of the World Bank and Nestlé has resulted in some ill-informed comment by the media.
Nestlé believes the issue should be put into context:
In 1975, the then government of Ethiopia expropriated all foreign owned corporations. Among them was ELIDCO (Ethiopian Livestock Development Company), in which the Schweisfurth Group (Germany) held a majority participation. Negotiations with the Ethiopian Compensation Commission were started in 1978. In August 1998, ELIDCO was sold by the Ethiopian government to a local private company for $8.73 million.
Nestlé acquired the Schweisfurth Group in 1986 and, as legal successor, also inherited the compensation claims against the Ethiopian government. In 2001, the authorities decided to settle the issue with the help of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank. Proposals for compensation of the expropriated companies were made and negotiations are on-going. These negotiations are presently concentrating on technical points, such as exchange rates.
In the interest of the continued flow of foreign direct investment, which is critical for developing countries, it is highly desirable that conflicts are resolved according to international law and in a spirit of fairness. A solution in this case will constitute an important step in re-establishing the confidence of potential foreign investors, which is clearly in the interest of the Ethiopian population and the country's economic development. Nestlé will therefore continue to cooperate with the World Bank and with the Ethiopian authorities in order to come to a solution.
Furthermore, Nestlé commits itself to invest the proceeds of the compensation negotiation in a long-term, viable investment in Ethiopia which will contribute to the economic development of the country.
As always, Nestlé will also respond to requests for help to alleviate the suffering of the population that is presently threatened by the food shortage.