New Internationalist

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Issue 275

[image, unknown] New Internationalist Issue 275


The material that follows has been provided by New Internationalist

 

In The Dock

NAME : Helmut Maucher

POSITION: Chief Executive of Nestlé.

HISTORY:
Born on 9 December 1927 in Eisenharz/Allgäu in Germany, he joined Nestlé in 1948 as an apprentice in the local milk factory. He rose through the ranks to become Nestlé's head of operations in Germany and became chief executive of the whole company in 1982.

PROSECUTOR'S NOTES TO THE TEAM:
'Why go for Maucher?' some of you have been asking. 'Surely it's Nestlé as a company which should be in the dock?' Of course it is really Nestlé - the largest food company in the world - we're putting on trial. But in a world in which it is more and more difficult for governments to call multinational corporations to account, it is vital we establish the precedent that a chief executive can be put on trial for the wrongdoings of his (always 'his', I'm afraid) company. It stands to reason that managers are going to think longer and harder before taking an unethical decision if they know they might be personally prosecuted for it.

Considering the world of corporate sharks he now inhabits, it's really rather charming that Maucher is the archetypal one-company man. He's given his whole working life to Nestlé. By the late 1970s Nestlé was in dreary decline and at its nadir in 1980 it earned less than it had nine years earlier. Staff levels at head-office were bloated and inefficient: three levels of management approval were required just to issue a press release. Maucher at that time mocked the futuristic glass-and-chrome HQ on the banks of Lake Geneva as 'the Vatican'. On that basis in 1982 he became Pope and very quickly turned the whole company round - there's no doubting the guy's ability.

He's an extrovert who wears saddle shoes and whose ties always carry the Nestlé insignia. He loves aphorisms and is fond of exhorting his troops with the line: 'Let's have more pepper and less paper'. Lucky he didn't make a career as a stand-up comedian... But he did come up with a line that wasn't half bad about Nestlé's lack of winning chocolate bars until they swallowed up Rowntree in 1988: 'In chocolate Nestlé missed the part of the world that belongs to Coca-Cola and rock'n'roll.'

CHARGES:
[image, unknown] Aggressively pursuing sales of artificial babyfood - and so endangering the lives of children in developing countries. Babies given formula milk instead of breastmilk are in grave danger in the Majority World not least because of the difficulty of guaranteeing the safety of water supplies with which to mix the powder. Babies all too often contract diarrhoea, which is the single biggest killer of children worldwide. According to UNICEF one and a half million babies die every year because they are not breastfed.


These babies are twins. Their Pakistani mother was wrongly advised that she would not have enough breastmilk to feed both and so bottlefed her daughter while breastfeeding her son. The girl died the day after this photo was taken in Islamabad Children's Hospital. 'Use my picture, ' said the mother, 'if it will help others not to make the same mistake.'
(photo, right)

PROSECUTOR'S NOTES:
The way Maucher has played the babyfoods issue is instructive. Until he took over, Nestlé was trying to face down the international boycott which New Internationalist magazine helped launch in 1974. The vice-president responsible at the time was one Ernest Saunders, later to be imprisoned for fraud while chief executive of the Guinness corporation. He handled it badly. Maucher, in contrast, seemed very amenable at first, full of assurances about Nestlé's willingness to comply with critics. He so won people over that the boycott was called off in 1984 - only to be restarted in 1988 when it became clear Nestlé was reneging on many of its promises. But that not only gained the company four years, it also meant the boycott had to gather momentum from scratch. There's no question - he's a smooth operator.

[image, unknown] Repeated breaches of the 1981 World Health Organization International Code of Marketing of Breastmilk Substitutes. This proposes strict controls on the activities of manufacturers and calls for a ban on all promotion of breastmilk substitutes. The International Baby Food Action Network publication Breaking the Rules 1994 detailed hundreds of allegations against Nestlé for breaching the International Code:

[image, unknown] In 133 cases Nestlé admits having carried out no investigation

[image, unknown] In 91 cases of babymilk promotion and 64 cases of babyfood promotion, Nestlé admits the practices but tries to justify them

[image, unknown] In 5 cases Nestlé claims that the allegations refer to old promotional material (which is nevertheless still being distributed and used)

[image, unknown] In only 3 cases Nestlé admits the violation - but claims to have changed.

What really gets my goat is Nestlé's consistent promotion of itself as a caring, nurturing organization concerned about child health. The Annual Report for 1993, for example, is full of such smugness, talking about the company symbol of the mother bird feeding its babies in the nest. This 'personifies the business' , it says. 'The symbol, which is universally understood, simultaneously evokes security, maternity and affection, nature and nourishment, family and tradition. Today it is the central element in Nestlé's corporate identity.'

Contrast this with Maucher's words from 1987: 'We might say, somewhat provocatively, that in terms of its results for the human race, this economic system is ethical in and of itself and that businessmen (sic) who give and do their best in conformity with the system are by that very fact also acting morally and ethically from an objective point of view.' While in November 1995, Nestlé spokesperson Thad Jackson told a US conference on business ethics in a global economy of 'the necessity of looking at ethical issues outside of Western philosophy'. Another speaker at the Nestlé-sponsored conference was even more explicit: 'In many (if not all) emerging markets it is simply impossible to make money without overt violation of normal Western ethical principles.' Nature and nourishment indeedÉ

Lobbying to keep national legislation on breastmilk substitutes weak. Although over 70 governments have now taken action to stop free or low-cost supplies to healthcare facilities, only 11 or so countries have laws which cover the whole range of activities covered by the Code. In the 1980s Nestlé and other babyfood companies opposed strong national legislation, advocating 'voluntary agreements'. Yet Nestlé now excuses its own actions by saying governments have not legislated against them - and in countries such as Pakistan, Ghana and the Philippines it has lobbied governments to weaken legislation. In Chile, for example, Nestlé continues to give out free supplies in contravention of the International Code, excusing the practice by saying there is no local law against doing so.

In reality what Nestlé is about, like any other multinational, is maximizing its own profits. To that end it is keener than it has ever been to exploit the growing markets in the Majority World, especially in Asia. That's why they won't let infant feeding go and concentrate on chocolate instead. Maucher showed where he's really at when talking to shareholders in Lausanne in June 1995. 'The figures are clear: Asia will, within a few years, contribute about 50 per cent to [Nestlé's] global gross product growth while Europe's contribution will not be higher than about 11 per cent. We are already firmly anchored in Asia and today - through geographic extension and through the diversification of our product range - we are broadening the base of our global presence. This allows us to benefit from population growth and from the increase in purchasing powerÉ'

ANTICIPATED DEFENCE
'In spite of the fact that infant-formula sales in developing countries represent only one per cent of Nestlé's global turnover, the Company firmly believes it would be wrong to abandon these products as a result of what it considers to be misguided attacks. Infant formula is an absolute necessity, since it is the best possible alternative for mothers who cannot, or decide not to, breastfeed their babies. It is therefore the Company's responsibility to continue marketing infant formula.'

Helmut Maucher, April 1992

I think on some level Maucher really does believe this. He thinks people are criticizing Nestlé just for the sake of it now. In fact the International Code does not call for Nestlé to abandon babymilk - only for them to stop promoting it. In court Maucher will be a model of reasonableness, representing his critics as extremists with a vested interest in keeping a dead issue alive. And he will be very convincing. Be sure to keep your cool when you cross-examine him or you'll have lost the battle before it's even begun.

REQUESTED SENTENCE
Five years' imprisonment, suspended for five years. Any breach of the International Code in that period would activate the sentence.

As usual, we might privately prefer a more creative sentence. I'd go for five years in a slum district of Manila trying to keep his grandchildren alive by feeding them Nestlé milk powder diluted with local water - if it wasn't for the implications of that for the grandchildren.

[image, unknown]
[image, unknown]

A Nestlé ad from 1935. The caption translates as 'Nestlé motherhood as seen by Raphael.'
(picture, right)

Mike Aaronson, Director-General of Save the Children UK

The concern now strongly felt by many, including Save the Children and UNICEF, is that the babymilk manufacturers are behaving in ways which undermine the consensus and circumvent and violate the Code despite public claims to the contrary. Their interests are clear, however, as the global babyfoods market is enormous and growing. Vigilance and collaboration is essential if women who wish to breastfeed their babies are to retain the choice to do so.

A current cause for concern is a report on the use of Nestlé's formula Lactogen for infants in maternity hospitals in Kunming, Yunnan Province, China. The report was prepared by a Save the Children health-training adviser and staff of the Kunming Medical College. Based on data collected by hospital staff and the observation of trends in the city's hospitals, the report reveals a drop in breastfeeding and a large increase in the use of Lactogen due to the provision of free formula to mothers leaving hospital and the provision of formula to hospitals at less than the market price.

In Kunming at least, Save the Children believes that Nestlé's actions have undermined the principles and aim of the International Code and all relevant resolutions. Save the Children has made these concerns known to Nestlé and is pressing for a satisfactory response. (A statement to the NI)

Rubina Gupta, Bombay, India

Rubina Gupta has bottle-fed Nestlé's Cerelac to her son, Ishrat, since he was two months old. She saw a picture of a bonny baby on a tin in a chemist and thought Cerelac would be good for Ishrat. But Rubina is illiterate. She couldn't read the instructions on the tin that said it was weaning food - only suitable for those over four months old. Trying her best for Ishrat has resulted in his being undernourished and prone to diarrhoea. With customers like Rubina does Nestlé believe it has a responsibility to do more than just stay within the law? Nestlé told 3D that in poor countries infant formula is mainly used by mothers who can afford it and use it correctly.
(As reported by Yorkshire TV's 3D, 1995)

Dr Raj Anand, Indian paediatrician

In 1992 India passed one of the world's strictest laws controlling the promotion and distribution of infant-food products.

All the [babyfood] companies are violating the Act. For example, see this [he holds up a tin of Nestlé's Lactogen 1]. Now, Nestlé says throughout the world that they like to follow the laws and they are following the laws especially in developing countries where the laws are elected. But now our law demands that there should be a prominent notice on the tin of babyfoods which should say 'mother's milk is best for your baby', not only in English but also in Hindi in the script. But look here... they say 'breast milk is best' and it is in English, nothing in Hindi. So this is a definite violation of our Act.

Studies have shown that in developing countries like India a baby who is not breastfed is 14 times more likely to die from diarrhoea, 4 times more likely to die from pneumonia and 2.5 times more likely to die from other infectious diseases. A bottle is a passport to death for the majority of our babies.
(From Yorkshire TV's 3D, 1995)

Susan Cruz, a health worker from Baguio City, the Philippines

When I left the hospital, every service and product was itemized on the bill. I was charged for each cotton bud they used to clean my baby Chisan's eyes and for the single teaspoon of sugar put in the water they gave her. But the Nestlé milk they gave Chisan - against my wishes - was absolutely free.
(Susan Cruz's testimony from 1988 was one reason why the Nestlé boycott was relaunched. The pressure of the new international campaign has led Nestlé and other companies to reduce free supplies. But promotion through free gifts continues by other means, as the next testimony shows.)

Ines Av Fernandez, Arugaan Women's Health Campaign, Quezon City, the Philippines

We are furious with Nestlé's latest aggression having received reports from government doctors and non-governmental organizations in the provinces of Pampanga, Lucena, Quezon, Tacloban and Davao representing the three big islands of Luzon, Visayas and Mindanao. The alarming reports showed that Nestlé gave incentives of gifts and cash to community-based health volunteers called Barangay Health Workers (BHW) who help implement primary healthcare programs. Each trained BHW covers about 20 neighbours in their community and Nestlé offers them gifts of umbrella, medical bag, T-shirts whenever they sell a discounted Nestogen infant formula to their neighbors. The more Nestogen they sell, the bigger the incentives. Example: if a box full was sold, cash pesos will be paid. All these marketing tricks destroy the spirit of voluntarism!

In fact it corrupts the value of the grassroots concern to alleviate poverty and generate self-reliance and put health in the hands of the people. I'm at a loss for harsh enough words to describe our reactions to this...
(Letter to the International Babyfood Action Network)

Leah Margulies, former legal adviser at UNICEF

The fact that Nestlé says that only three of the charges [made against it by the International Babyfood Action Network] were accurate doesn't make it so.

For example, the IBFAN report included violations that I found in a hospital in Bangkok which I monitored while I was legal adviser to the UNICEF Baby Friendly Hospital Initiative. Nestlé's response was that these free supplies were donated for the purposes of a scientific study and of course Nestlé didn't consider this among its three violations.

The reality is that I went to the ward, interviewed nurses, and was told of the regular donations of Nestlé infant formula. When I asked for proof, I was given copies of invoices marked 'complimentary'. The invoice didn't indicate that the donations were for a study, and neither did the nurses - they just told me about the regular visits and showed me where the donations were kept - in the wards, alongside of the donations given by other companies.
(Letter to an organizer of the 1995 Nestlé-sponsored conference on business ethics)

©Copyright: New Internationalist 1996


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