Corporate Crimes

Nestlé SA


Corporate Crimes


Unethical Marketing of Artificial Baby Milk


Since 1977 (with a break from 1984-1988), Nestlé has been the subject of an international boycott for its dubious marketing strategies. The World Health Organisation (WHO) estimates that 1.5 million infants die each year because of inappropriate feeding, because children vulnerable to disease are being bottle-fed on breastmilk substitutes rather than breastfed whenever possible[Footnote: www.babymilkaction.org]. As the world's largest artificial baby milk producer controlling 40% of the market, Nestlé has been seen as a leading cause of this catastrophe, although other companies, such as Dutch company, Dumico and US company, Mead Johnson have also been implicated.

Artificial milk can harm babies because it does not contain the natural antibodies which a mother's milk provides. It is also extremely expensive, so that in many poor countries people dilute it too much to make it last longer, which causes malnutrition. In addition, the poor quality of water in many of these areas causes babies fed on substitutes to develop lethal diarrhoea and infections. Mothers who do not breastfeed will stop producing milk, making the bad choice to use artificial milk irreversible.

A WHO International Code governing the marketing of artificial baby milk, drawn up in 1981 and agreed by 118 countries, says breastfeeding should be promoted above all other products and that leaflets and labels relating to breast milk substitutes should do nothing to undermine this. But Nestlé and other companies have been accused of flouting the rules with advertising, free samples, promotions and sponsorships. The latest monitoring report from the International Baby Food Action Network (IBFAN) uncovered about 2,000 violations of the code in 69 countries, with Nestlé responsible for more violations than any other of the big 16 baby food companies and 14 bottle and teat companies. In Thailand, it gives out samples of its milk substitutes to mothers in a marketing scheme. It provides free products to health-care facilities from China to Armenia to Peru. In Egypt, packaging and advertising of Nestlé powders repeatedly use phrases such as “identical to breast-milk” or “as in breast-milk”. In Venezuela, it distributes aprons with the company logo to nurses and other workers at pediatric wards. An 8-page brochure found in a hospital in Botswana proclaims that “Growing up is Thirsty Work” and promotes Lactogen “for the hungry full-term infant”. [Footnote: Breaking the Rules. Stretching the Rules 2004 www.babymilkaction.org/CEM/compjune04.html]

For more information on this issue, see Baby Milk Action's website atwww.babymilkaction.org"> www.babymilkaction.org

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Exploiting Farmers

In 2001, Nestlé faced criticism for buying cocoa from the Ivory Coast and Ghana, which may have been produced using child slaves.[58] According to an investigative report by the BBC, hundreds of thousands of children in Mali, Burkina Faso and Togo were being purchased from their destitute parents and shipped to the Ivory Coast, to be sold as slaves to cocoa farms. The Ivory Coast is the biggest producer of cocoa worldwide. These children, ranging in age from 12 to14 years (and sometimes younger) were being forced to do hard manual labor 80 to 100 hours a week, paid nothing, barely fed and beaten regularly. In the widespread uproar caused by the reports, Nestlé expressed its 'concerns' over the use of child labour but could not confirm that none of its chocolate was derived from slave-labour sources. [Footnote: The Modern Face of Child Slavery. Tanya Thompson. The Scotsman 17/4/01]

In Colombia, social organizations, milk producers and politicians have denounced the fact that, in spite of sufficient domestic production, huge quantities of powdered milk of a lesser quality have been imported over the years. According to the SINALTRAINAL union, the share of Colombian milk used in production has dropped from 70% to 50%. Nestlé has organized a triangular market based in Colombia: it avails itself of preferential treatment by importing cheap powdered milk, claiming to transform it into export products. Often, this powdered milk is only repackaged in small packets or treated with a bit of fresh milk in order to be exported to Venezuela while benefiting from export subsidies. Thus, Nestlé pushes export support policies to an absurd extreme, creating almost no value added for Colombia and interfering with the Venezuelan dairy market.[footnote: Europe Third World Centre, Bulletin #18 – http://www.cetim.ch/en/documents/bul18eng.pdf]

Nestlé has no fair trade policy to ensure that the producers of its cocoa and coffee are paid a living wage. As one of the four corporate giants dominating the coffee-roasting industry, along with Sara Lee, Kraft and Procter & Gamble, it is thus partially responsible for the plight of millions of coffee growers in the global south, who are being payed unfairly for their produce and face economic ruin due to collapsing world prices. According to Oxfam, coffee farmers are getting an average of 24 cents a pound while consumers in rich countries are paying roughly $3.60 a pound – a mark-up of 1500%. Meanwhile the global market is oversupplied by 540 million kilograms of coffee each year, and roasting companies are using more poorer quality coffee beans than ever before thanks to new technologies such as steam cleaning.[footnote: http://www.oxfam.org/eng/pr020918_coffee.htm]

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Union Busting


There have been several examples of Nestlé being involved in denying workers their right to collectively bargain. In Colombia, where trade unionists have been consistently targeted by right-wing paramilitiaries, eight Nestlé employees affiliated with the Food and Drink Workers Union SINALTRAINAL have been assassinated. No evidence links the company directly to the assassinations, but its own policy towards unionised labour has been extremely aggressive. In late 2001 management at Nestlé subsidiary 'Comestibles La Rosa' threatened workers that they must either renounce union membership or lose their jobs. In February 2002 the labor contract at Cicolac, Nestlé's milk processing subsidiary, was due to expire and SINALTRAINAL submitted to the company management a list of negotiating points. At the outset of the negotiations, Nestlé tried to force the signing of a completely new contract that would have eliminated substantial rights, sacking 96 workers and breaking the contracts of another 58 so their jobs could be contracted out through labour agencies.

When the negotiation deadline provided for by law had expired, the trade union planned a strike. It was canceled because of several murder threats made to union leaders. According to witnesses from the trade union, the origin of the threats were made because Nestlé had reduced the price of milk for cattle raisers and threatened to close the factory, blaming this on the SINALTRAINAL union. Believing Nestlé, the cattle raisers and paramilitary leaders made the threats against the union leaders at Valledupar5. Even now, Nestlé has refused to acknowledge publicly the work of the unions and to disassociate itself from any threat and use of force against their members. In October 2002 and March 2003, SINALTRAINAL tried, with the support of various Swiss trade unions and social movements, to make contact with the central management of Nestlé with a view to solving the problems in Colombia. Nestlé has twice refused such discussions on various pretexts. According to SINALTRAINAL, “Nestlé converts the factories into camps for the public security forces in order to create terror in the community, destroy the unity of the workers, and misinform the members of the union, with the goal of putting them against the leaders and destroying the movement”. [footnote: http://www.colombiasolidarity.org.uk/Solidarity%209/Nestléscandal.html]

At Tedaram, a sub-contracting manufacturer for Nestlé (Thailand), a union was organised in October 1998 for the first time within the Nestlé production network in Thailand. Thirteen workers formed the organising committee and became members of the executive board. Shortly afterwards, Nestlé wrote to Tedaram informing them that orders would decline between October and December and they should put 22 workers, who were specified, on indefinite leave on half pay. The list included all the executive committee members. Eventually all of them left Tedaram because of their growing financial difficulties to look for new jobs. The union collapsed [59].

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Promotion of GM Food
More recently, Nestlé has been under attack for its enthusiasm for GM foods, (see www.Nestlé.com/all_about/insight/index.html for Nestlé's views on gene technology). It has been repeatedly targeted by Greenpeace and has done the minimum amount to avoid more pressure from European consumers. [51] When Thailand’s Anti-GMO Network demanded that the company adopt a GM-free policy, Nestlé Thani responded that it “believes that ingredients derived from GM crops that comply with strict regulatory and safety evaluations are safe for use in food production”. [Footnote: http://www.just-food.com/news_detail.asp?art=53512] Nestlé spokespeople have frequently championed GM food in public, including Michael Garrett, who, unbelievably, having pointed out that the Chinese were planting crops over large areas and were eating GM food, said "You don't hear people in China complaining about it". [52] No, you don't hear people complaining much in China at all, Mr Garrett.

According to Greenpeace UK, although capitulating to consumer pressure in some areas over GM ingredients, they cannot provide assurances that the milk they use in their products does not come from GM-fed cattle. [Footnote: http://www.greenpeace.org.uk/Products/GM/index.cfm]

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The Ethiopia scandal
Just before Christmas 2002, Oxfam revealed that Nestlé was demanding millions of dollars in compensation from Ethiopia – precisely when the country was in the midst of an extreme drought that put over 11 million people at risk for starvation. [footnote: http://www.guardian.co.uk/debt/Story/0,2763,881353,00.html] The $6 million demand was issued for shares in the agricultural firm ELIDCO (Ethiopian Livestock Development Company), which was nationalised following the military a coup in 1975. Nestlé had acquired ELIDCO’s parent company, the Schweisfurth Group, only a decade later. Adding insult to injury, Nestlé refused the embattled Ethiopian government’s offer of a settlement worth around $1.5m - the value of the initial shareholding, with compound interest of 6%. Instead, it demanded that the compensation would be retroactively tied to the 1975 dollar exchange rate, giving it a much higher claim. The $6 million demanded by Nestlé could provide clean water to more than 4 million people in Ethiopia and fund the construction of 6,500 wells. Following the uproar Nestlé accepted the Ethiopian governments proposal.

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Illegal extraction of groundwater
Nestlé production of mineral water involves the abuse of vulnerable water resources. In the Serra da Mantiqueira region of Brazil, home to the “circuit of waters” park whose groundwater has a high mineral content and medicinal properties, over-pumping has resulted in depletion and long-term damage. In 2001, residents investigating changes in the taste of the water and the complete dry-out of one of the springs discovered that Nestlé/Perrier was pumping huge amounts of water in the park from a well 150 meters deep. The water was then demineralized and transformed into table water for the “Pure Life” brand. Water usually needs hundreds of years inside the earth to be slowly enriched by minerals, and overpumping decreases its mineral content for years to come. Demineralisation is illegal in Brazil, and after the “Citizens for Water” movement [footnote: see http://www.cidadaniapelasaguas.net/ (in Portuguese)] turned to the authorities, a federal investigation was opened which resulted in charges against Nestlé/Perrier. Although Nestlé lost the legal action, pumping continues as it gets through the appeal procedures, a legal process which could take ten years.

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Pollution
Nestlé has been involved in a number of pollution incidents, including one at a pumpkin processing plant [55]. Incidents of this kind show the hazardous nature of industrial food production: even apparently benign materials like pumpkin can turn into a serious hazard in large enough quantities. Nestlé has also been involved in water pollution incidents in Britain [56].

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Pyres of Burning Animals
Nestlé has recently been exposed regarding its part in persuading the British government not to vaccinate livestock during the Foot and Mouth disease crisis. The then Chief Executive of Nestlé UK, Peter Blackburn, who is also president of the Food and Drink Federation, lobbied the government, which was apparently about to introduce a vaccination programme, and, along with the National Farmers' Union, who also opposed vaccination, managed to force a complete turnaround in policy [53]. This is thought to be because Nestlé's profit's would be damaged by the loss of exports of powdered milk. It would probably have meant the closure of Nestlé's factory in Dalston, Cumbria, which employs 500 people and is a major producer of powdered milk to developing countries. [Footnote: see Corporate Watch profile of 'The Food and Drink Federation' http://www.corporatewatch.org.uk/profiles/food_drink/food4.htm for more details]

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Fraudulent Labeling
In November 2002, police ordered Nestlé Colombia to decommission 200 tons of imported powdered milk. The milk had come from Uruguay under the brand name Conaprole, but the sacks had been repackaged with labels stating they had come from a local Nestlé factory, and stamped with false production dates of 20th September and 6th October 2002. The real production dates were between August 2001 and February 2002. [footnote http://www.colombiasolidarity.org.uk/Solidarity%209/Nestléscandal.html] A month later another 120 tons with similarly false country of origin and production dates were discovered, pointing to systematic fraud. The discoveries caused a stir, with senators insisting the Attorney General conduct a full inquiry leading to prosecutions. Senator Jorge Enrique Robledo charged Nestlé with using sub-standard, contaminated milk, “a serious attack on the health of our people, especially the children”.

Perpetuating Sexism
Nestlé has been sponsoring beauty contests, for example Miss Philippines 2001 [54], encouraging the view that women are objects for looking at.

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Promoting unhealthy food
A recent report by the UK Consumers Association claims that 7 out of the 15 breakfast cereals with the highest levels of sugar, fat and salt were Nestlé products.[footnote: Articles about the Consumers Association report on cereals can be found on the following links: http://www.timesonline.co.uk/article/0,,1-1057892,00.html , http://www.which.net/campaigns/food/nutrition/index.html] Unsuprisingly, Nestlé dismisses the role of corporate responsibility in promoting healthy food. In a Daily Telegraph interview (2/3/04) Mr Brabeck claimed that he is not obese yet 'every morning I have a tablet of dark chocolate as my breakfast' and that it is the perfect balance and contains everything he needs for the day.

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Promoting untested nano-technology
Food and cosmetic companies are now collaborating to develop “cosmetic nutritional supplements.” L’Oréal and Nestlé recently formed Laboratoires Innéov, a 50/50 joint venture. Innéov’s first product, called “Innéov Firmness,” contains lycopene. The supplement is taken orally and is marketed to women over 40 who are concerned about lost skin elasticity. Shortly after Nestlé cemented its collaboration with L’Oréal, Procter & Gamble and Olay announced they would be creating two lines of nutritional supplements together – one for “Beauty” and one for “Wellness.” While these particular supplements are not advertised as using nano-scale technologies, it is difficult to be sure since there are no labelling requirements. In any case, the food and cosmetic alliances illustrate the tendency to blur boundaries between food, medicine and cosmetics, a trend that nanotech will likely accelerate.

L’Oréal, the world’s leading cosmetics firm, already markets skin care products containing nano-scale particles. (Nestlé holds a 49% stake in L’Oréal.) The company’'s "“nanosomes"” are tiny intercellular delivery systems that penetrate the skin and then release Vitamin E. According to L’Oréal, “Given that the interstices of the outer layer of skin measure about 100 nanometers, nanovectors offer the best solution to the problem of transporting and concentrating active ingredients in the skin.”

Cosmetics containing invisible nanoparticles have not escaped notice in recent European reports on potential risks associated with manufactured nanoparticles. A Royal Society (UK) report released in July 2004 notes the dearth of toxicological data on manufactured nanoparticles. Because they are used in some cosmetics and sunscreens, the report recommends further studies of skin penetration by manufactured nanoparticles and that studies conducted by industry be placed in the public domain no doubt causing some wrinkles for L’Oréal.

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Backlashing against Fairtrade

Over the last 10 years, sales of 'fairly traded' products have risen massively, with many supermarkets not only stocking Fair trade products, but also introducing Fairtrade lines amongst their own brands in products such as coffee, tea and chocolate. Similarly, some major branded food companies, both processors and food service, offer the consumer a fair trade choice, from Starbucks to Procter and Gamble.

The Fairtrade Labelling Organisation stipulates standards for both smallholders organised into co-operatives and for organised workers, whose employers pay decent wages, guarantee the right to join trade unions and provide good housing where relevant. In the trading relationship, they stipulate that traders have to pay a price to producers that covers the cost of sustainable production and living, pay a premium that producers can invest in development, partially pay in advance when producers ask for it, and sign contracts that allow for long-term planning and sustainable production practices.

With coffee production in deep crisis due to overproduction, the collapse of the International Coffee Agreement and a highly concentrated industry and the prices paid to producers massively declining, some have seen mainstreaming fairtrade coffee as a possible solution. Nestlé disagree. Nestlé 'do not believe that the fair-trade approach is a solution for the present coffee crisis' because it would 'encourage those farmers to increase coffee production, further distorting the imbalance between supply and demand and, therefore, depressing prices for green coffee'. Nestlé claim that their purchase of 14% of beans directly from farmers 'enables the farmer to retain a greater portion of the price paid by Nestlé, therefore improving his income'.

This is not necessarily the case, however. With prices so low at the moment, many coffee farmers have responded by increasing production to compensate for lost income. If farmers received a fair price for their coffee they would be more likely to reduce production than increase it.

Footnote: See Nestlé SA (2003)
What can be done?

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References
There is also an account of a strike at a Nestlé factory in the Philippines in The Prism, September 1998, which is at www.ibiblio.org/prism/sep98/philippines.html
[50] www.babymilkaction.org/resources/yqsanswered/yqasindex.html
[51] www.sustdev.org/agriculture/news/01/05/29.01.shtml
[52] The Age, Thursday 14th September 2000, www.theage.com.au/news/20000914/A64319-2000Sep13.html
[53] The Guardian, Saturday 8th September 2001.
[54] www.geocities.com/binibinis/missphil_earth_cov.html
[55] www.ag.state.il.us/pressrelease/111400.htm
[56] www.foe.co.uk/pubsinfo/infoteam/pressrel/1997/19970916014419.html
[57] http://biz.yahoo.com/prnews/010725/dcw009.html
[58] www.jsonline.com/bym/news/jun01/response24062301.asp
www.commondreams.org/headlines01/0801-03.htm
[59] www.icftu.org/displaydocument.asp?Index=991017083&Language=EN
 
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