VEVEY, Switzerland, Dec 23 (AFP) - The multinational food giant Nestle said Monday it would use an initial 1.6-million-dollar (1.55-million-euro) compensation payment from the Ethiopian government for famine relief.
The payment has been offered by famine-stricken Ethiopia as part of compensation for an 8.7 million dollar business owned by a German company -- since taken over by Nestle -- that was seized by Ethiopia's military dictatorship in 1975, according to the company.
In a statement, chief executive Peter Brabeck admitted he had been taken by surprise by a demonstration outside Nestle's British offices last Wednesday, prompting a scramble to find "an external Ethiopian lawyer engaged by a small German subsidiary of Nestle Germany who is handling the sporadic negotiations".
The claim for compensation from the impoverished east African country, which dates back to 1978, prompted an uproar in Britain led by the charity Oxfam.
Nestle turned a profit of 6.68 billion Swiss francs (3.92 billion dollars, 4.5 billion euros) in 2001 and its annual sales amount to about 85 billion Swiss francs.
During the first half of 2002, the group's net profit grew 79 percent to 5.65 billion Swiss francs compared to the same period a year earlier.
"As the Ethiopian government has already offered 1.6 million dollars, we will immediately make this sum available for famine relief in Ethiopia," Brabeck said.
"We will do the same with any additional sums resulting from a final settlement," he added, indicating that Nestle had not given up further compensation.
The initial compensation request from the Ethiopian authorities was for six million dollars.
"We do think it's important for the long-term welfare of the people of Africa that their governments demonstrate a capacity to comply with international law, but we are not interested in taking money from the country of Ethiopia when it is in such a desperate state of human need," Brabeck added.
Brabeck said Nestle had "recently initiated inquiries" the International Federation of the Red Cross and Red Crescent Societies on "how best to direct" additional funds.
The Red Cross confirmed that it had just been contacted by the Swiss multinational.
"It's up to the Africa department and they haven't been involved in any discussions yet. I think it's premature to say we have any response until we know what exactly the run of it is," Denis McLean, spokesman for the Federation said.
In June, Nestle gave two million euros (1.8 million dollars) to a Red Cross initiative aimed at fighting HIV/AIDS in Africa, prompting the Federation to call for more corporate support for health programmes in Africa.
But the Federation said it would examine corporate donations on a "case-by-case" basis.
Nestle's involvement in developing countries has been dogged by controversy, notably over the marketing and sale of breast milk substitutes in the 1970s and 1980s. Critics claim the company has been trying to smooth over its reputation.
Brabeck said on Monday that Nestle was "shocked and stung" by the campaign over the compensation talks with Ethiopia, adding that "actions which blindside others are not in keeping with the common good".
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