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Nestlé, Corporate Blackmail and the Arrogance of Power

Posted to the IUF website 16-Sep-2009

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Nestlé Chairman Peter Brabeck has publicly, pointedly threatened to pull the world's largest food company out of Switzerland in response to discussions within the government on legislation to cap executive pay. Interviewed by the weekend Sonntag on September 13, Brabeck said Switzerland "may not be the right location for us", calling legislation on pay "the beginning of the end".

Nestlé's boss earned nearly 14 million Swiss francs in 2008, and over 3 million more (thanks to stock options) the previous year when markets were booming. Pay at the Nestlé top comes under what the company ingeniously calls "creating shared value" (while for workers and their unions it's a continuous fight for the right to a share of that value). Brabeck's concern, of course, is for the rule of law, not his pocketbook, Switzerland, he said, was known for "not ceding to such demands". As he explained to the annual meeting of the Swiss Business Federation one week earlier, "Populism shapes legislation in banana republics."

In the age of the stock option, Switzerland's absence of capital gains tax and minimal regulation have made it an attractive place in which to headquarter financial and even manufacturing and service companies. The real issue here is the arrogance - and the abuse - of power. "I don't feel powerful at all", Brabeck told the Austrian Kurier on August 20. Yet mere discussion of legislative limits on obscene pay packets elicits threats to pack up and leave.

Nestlé has never refrained from exercising its clout at home and abroad. The company's arrogant performance in the Supreme Court of the US state of Maine, where the Nestlé attorney notoriously argued that community resistance to granting Nestlé commercial access to public water resources infringed their right to maximize market share - shocked even the judge. The videotaped performance has passed into legend. Less well known are the countless instances in which Nestlé globally has utilized to the full every available legal mechanism to limit workers' rights at Nestlé workplaces. No question of over-regulation when it comes to reining in workers…

Enormous profits at Nestlé not only fund enormous pay for top management - they sustain a battery of lawyers around the world dedicated to protecting the company's right to restrict the rights of the workers who make their famous Nestlé products. This is what sustains Nestlé's contention that wages are a "commercial secret" and not subject to collective bargaining, allowing it, for example, to continue to deny the right of Nescafé workers in Indonesia to negotiate their pay rates and have them included in the collective agreement.

In India, Nestlé lawyers have utilized no less than 54 court adjournments in 8 years to prevent bargaining with the union at its Ponda plant. Not a single Nestlé worker in India is covered by a collective agreement; Nestlé says workers have no need to negotiate their wages, because management has made a "scientific study" of the issue.

Threatening to pull up shop is also nothing new for Nestlé - in a 2003 dispute with the union at the Nestlé Korea Nescafé factory, Nestlé locked out the workers - and threatened to move production to China if the union didn't submit to each and every management demand.

Crude blackmail to stop a long overdue discussion on executive salaries comes as no surprise - private power is always the first to denounce and seek to thwart the exercise of public power in the general interest. Nestlé has again distinguished itself in this regard.