Nestlé Takes a Beating on Social-Media Sites

By EMILY STEEL from Wall Street Journal

For nearly two weeks, environmental activists have been using social media to wage war against Nestlé over its purchases of palm oil for use in KitKat candy bars and other products, catching the Swiss food giant off guard.

Protesters have posted a negative video on YouTube, deluged Nestlé's Facebook page and peppered Twitter with claims that Nestlé is contributing to destruction of Indonesia's rain forest, potentially exacerbating global warming and endangering orangutans. The allegations stem from Nestlé's purchases of palm-oil from an Indonesian company that Greenpeace International says has cleared rain forest to establish palm plantations.

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Associated Press

Outside Nestlé's local offices in Jakarta last week, Greenpeace activists protest its purchases of palm oil from a firm they say destroys rain forests.

Nestlé says it had already decided to stop dealing with the firm, which supplied just 1.25% of the palm oil Nestlé used last year. It says it bought only a tiny fraction of the firm's output, so any impact was negligible, and that it is working toward buying only environmentally sustainable palm oil. (Though Nestlé makes KitKats in other markets, Hershey, which isn't involved in the battle with Greenpeace, makes the brand in the U.S.)

"We, like Greenpeace and many others, abhor destruction of the rain forests, and will not source from companies where there is verifiable evidence of environmental damage," says Nestlé spokeswoman Nina Backes.

Greenpeace, which is coordinating the protest, says Nestlé hasn't done enough, and is continuing to buy the disputed firm's oil in blended batches sold by third-party suppliers.

Nestlé says it is pressuring its providers to scrutinize their supply chains to keep that from happening, but it has had trouble making itself heard above the din. The difficulty with social media, says Ms. Backes, is "to show that we are listening, which we obviously are, while not getting involved in a shouting match."

Activist groups have long used Web sites, grass-roots email campaigns and videos to publicize their causes. But the attack on Nestlé is part of a new wave of digitally savvy protests, marketing experts say.

"This is the place where major corporations are very vulnerable," says Daniel Kessler, press officer at Greenpeace.

Indeed, some companies have already seen their images tarnished by digital media. Last year, two employees of Domino's Pizza posted a Web video of themselves blowing their noses on pizzas. The company responded within 24 hours with a statement on its Web site telling consumers it knew about the video and had found the pranksters.

The next day, J. Patrick Doyle, then the company's president and now its chief executive, made a video to apologize and say the employees had been fired and were facing criminal charges.

"We were honest. We were honest in our anger; we were honest in our approach. And I think people could sense that," says Tim McIntyre, Domino's vice president for communications. Mr. McIntyre says the company is now more vigilant in monitoring how consumers talk about its brand on social media, tries to be quicker in its response and has instituted a social-media code of conduct for employees.

For Nestlé, the trouble began March 17 when Greenpeace released a report on the company's palm-oil use. On the report's cover was an altered version of the KitKat logo, with the brand's name changed to "Killer."

The same day, Greenpeace protested outside the company's corporate headquarters in Switzerland and posted a mock KitKat commercial on the Web showing an office worker opening the candy's wrapper and snacking on a bloody orangutan finger.

Thousands of protesters swarmed onto Facebook and Twitter and shared the video across the Web. Some Facebook users replaced their profile pictures with the "Killer" logo and posted negative comments about Nestlé on its Facebook fan page. The postings continue, with many of them encouraging a boycott of Nestlé products, but the number peaked last week, according to Nielsen Co.

In the protest's first days, Nestlé asked Google's YouTube video site to remove the mock commercial, citing copyright infringement, Ms. Backes says. YouTube pulled the video, but it continued to spread on the Web.

Nestlé also told Facebook users it would delete their comments from its Facebook page if they included the altered logo. Social-media experts say that only incited the protesters. Nestlé's fan base on Facebook, now mostly protesters, swelled to more than 95,000.

Late last week, Ms. Backes says, Nestlé resumed posting information on Facebook to tell consumers about its palm-oil sourcing practices. She says it is too soon to judge whether sales of KitKats or other Nestlé products have been affected by the protests.

"Like all companies, we are learning about how best to use social media, particularly with such complex issues," Ms. Backes says. "What we take out of this is that you have to engage."

Marketing experts are split as to whether the company should simply shut down its Facebook page. Jeremiah Owyang, an analyst at Altimeter Group, a digital-media consulting firm, says that would close off all lines of communication. Ian Schafer, CEO of digital-marketing firm Deep Focus, sees it differently. "The damage has been so done, it might not be a bad idea to shut down the page and start over," Mr. Schafer says. "It is tough to turn that negativity around."

Corporate Instability and Anti-Filipino

Workers who do find jobs in the Philippines find that they face another big hurdle after being hired: contractualization.

Big businesses, whether foreign or local, have long mastered the fine art of labor flexibilization in employment, assisted no end by a President and a government that is thoroughly sold out on the scheme. Based on the 2003 admission of Donald Dee, President of Employers Confederation of the Philippines(ECOP), 7 out 10 firms in the country practice contractualization. Some of the worst “contractualizers” among companies are also among the biggest, such as Eduardo “Danding” Cojuangco’s San Miguel Corporation (SMC) conglomerate (1,100 regulars out of its 26,000 total workforce); Henry Sy’s SM Shoemart (1,300 regulars of 20,000); and Manny Pangilinan’s Philippine Long Distance Telephone Company (4,100 of 10,000). Such widespread destruction of tenurial security in labor has had a profound impact on Philippine workers’ freedom to exercise their trade union and other democratic rights. Most of all, massive contactualization has greatly reduced the variable capital for wages, with the monopoly capitalists seeking ever-increasing superprofits in the face of the current world capitalist crisis of overproduction.

A Failure to Communicate

Through informal channels and the encouraging results of the meeting with Shahab last December 2008, the Nestle distributor got the impression that Nestle is ready, able and willing to abide by its credo and “do the right thing” based on its Core Values of Honesty, Integrity and Fairness. The renewal on 9 February 2009 for another year of the distributor contract in spite of various identified sales, marketing and operating improvement needs continued the feeling of good will and high hopes for the amicable resolution of the FDI issues.

But in a meeting last 24 February 2009, instead of allowing the Finance and Risk Management guys to meet and “re-look” at the Forensics Audit findings and conclusions, as initially agreed to, Shahab merely restated that for NPI, “FDI is a closed case.”

Instead of acknowledging that some NPI managers might have acted unfairly and unethically and kept key information from senior management, Shahab merely pointed out the distributor's mistakes. He said his key learnings from his reading of the Audit Report were: FDI did not follow procedures defined in the extensive Distributor Agreement, failed to communicate and use the appropriate forum for grievances, delegated authority to employees without “check and balance” thus allowing the fraud and mismanagement to continue. Bill Borbe added that as key learning FDI should have done their “numbers crunching” and if the numbers did not make sense, then FDI should have resisted the “pressure” from the NPI managers. After patiently waiting for several months to find an amicable resolution to the FDI issues while the distributor kept on hold other options. The tough-luck distributor felt betrayed and manipulated when Shahab said that NPI cannot do anything about FDI because the case is already in the lawyers’ hands.

Oh, shit! Nandu, you should have resolved this before! Now we're fucked.

The Department of Trade and Industry has stepped into the picture of anti-trust perpetuated by the bullying Nestle and FDI, its much-maligned distributor.

Nestle wants to go to court for one simple reason – the courts of Makati are in their pockets! Yes, them judges from the financial capital are all corrupt. Why else do you think they’re rich? They can all be bought out. But the thing is - the distributor has not gone to court so how can it be a legal matter?

The other option for the Swiss cheats is to wait until the government of PGMA steps down then the DTI’s current head, Peter Favila, who believes that this is a case of anti-trust, moves elsewhere.

That is not in good faith, brothers. Fuck the mission statement, Jerry Maguire. It was just a mission statement.

DTI stepped in because they believe that it is something that is dangerous – all this corporate bullying. Nestle fears this because is they pony up the damages, every wronged distributor will declare open season on the Swiss. And hey! What war have these fuckers won? That’s why they are neutral. They are faggots. They try to buy out people with their money and Hershey’s bars, And Swedish porn. Oh wrong country.

But there is one rule that does make this a perfect reason for DTI to step in – M.O. No. 69 on the Unfair Trade Practices covered by the Revised Penal Code.

Take Action!

http://www.babymilkaction.org/action/nestlefairtrade.html

What do you stand for?

Marcee Tidwell (shouting to Jerry Maguire) What do you stand for?

Dorothy Boyd: How about a little piece of integrity in this world that is so full of greed and a lack of honorability that I don't know what to tell my son! Except, "Here. Have a look at a guy who isn't yelling 'Show me the money." Did you know he's broke? He is broke and working for you for free! Broke. Broke, broke, broke. I'm sorry I'm just not as good at the insults as she is.

Marcee Tidwell: No, that was pretty good.

The problem between Nestle and FDI is the multinational:

- Imposed unreasonable quotas under constant threat of termination

- Pulled out of its products from the market in an unreasonable and non-transparent manner

- Instigated and fueled a price war

- Condons tax evasion

- deliberately delayed just claims for reimbursement. Something that is highly oppressive and is done in total and abject bad faith

Is Nestle's word stronger than oak?

Jerry Maguire: I'm still sort of moved by your "My word is stronger than oak" thing.

After FDI complained about the illicit affair of Nestle’s employee affected their business, instead of helping out, Nestle’s Boy Ceballos, the Regional Sales Manager, informed its aggrieved distributor that the company was severing ties with them.

Is this the way Nestle treats its partners who they allegedly deal with in a fair manner? Or is affair matters the more accurate term?

Jerry Maguire: I'm still sort of moved by your "My word is stronger than oak" thing.

The oak is corporate drivel. You know – people like the sound of platitudes. Makes them sound true, human, reasonable, responsible, and most especially, like real corporate bullshit.

Whenever a distributor is forced to max-out its bank credit lines, any further delay in collections of trade receivables is disastrous.

But NESTLE progressively imposes stretched sales volumes, it leaves the distributor with a choice of two evils: 1) to ignore the sales results imposed by NESTLE, and 2) to grant substantial discounts to customer.

The first option leaves to the termination of the distributorship contract while the second sinks the distributor deeper in debt.

So it is not a win situation for the distributor. Only NESTLE.

The Philippines lacks anti-trust laws to protect small businessmen. But what is an anti-trust law?

The definition of an ANTI-TRUST LAW:

Legislation enacted by the federal and various state governments to regulate trade and commerce by preventing unlawful restraints, price-fixing, and monopolies, to promote competition, and to encourage the production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by the manufacture and sale of goods at reasonable prices.

Antitrust law seeks to make businesses compete fairly. It has had a serious effect on business practices and the organization of U.S. industry. Premised on the belief that free trade benefits the economy, businesses, and consumers alike, the law forbids several types of restraint of trade and monopolization. These fall into four main areas: agreements between competitors, contractual arrangements between sellers and buyers, the pursuit or maintenance of monopoly power, and mergers.

Why aren’t there any anti-trust laws in the Philippines?

To date, the Philippines do not have a comprehensive and developed legislation relating to anti-trust and monopoly activities. However, there are several anti-trust bills pending before the Twelfth Philippine Congress. They are as follows:

1. Senate Bill (“S.B.”) No. 175 - An Act creating the Fair Trade Commission, prescribing its powers and functions in regulating trade competition, and monopolies and for other purposes;

2. S.B. No. 1361 - An Act providing for more effective implementation of the Constitutional mandate against monopolies, combination and restraint of trade and unfair competition by redefining and strengthening existing laws, processes and structure regulating the same, and for other purposes;

3. S.B. No. 1600 - An Act prohibiting monopolies, attempt to monopolize industry or line of commerce, manipulation of prices of commodities, asset acquisition and interlocking membership in the board of directors of competing corporate bodies and price discrimination among customers, providing penalties therefore, and for other purposes;

4. House Bill (“H.B.”) 1906 - An Act declaring unfair trade practices as acts of economic sabotage. HB 1906 declares the following acts as economic sabotage and provides criminal sanctions for the same: (i) smuggling; (ii) technical smuggling; (iii) misclassification of importation; (iv) dumping, and (v) other forms of unfair trade practices.

5. H.B. No. 198 - An Act creating a special body that shall regulate and exercise authority over monopolistic practices, combination in restraint of trade and unfair competition and appropriating funds therefore; and

6. H.B. No. 2439 - An Act penalizing unfair trade practices and combinations in restraint of trade, creating the Fair Trade Commission, appropriating funds therefore, and for other purposes.

The most significant of these bills is S.B. No. 175, proposing the passage of the “Fair Trade Act” or an Act Creating the Fair Trade Commission, Prescribing Its Powers and Functions in Regulating Trade Competition and Monopolies and For Other Purposes. This bill consolidates all anti-trust laws into one law and establishes a Fair Trade Commission (“Commission”), an executive body that will enforce the Fair Trade Act. Generally, the bill seeks to prohibit monopolies and cartels and other practices which diminish, impair or prevent competition and free trade. It defines absolute monopolies, relative monopolies and trusts which may constitute prima facie violations of the law.

Anti-trust is defined as a merger, acquisition of control or any act whereby companies, partnerships, shares, equity, trusts or assets are concentrated among competitors, suppliers, customers or any other business entity. Under enumerated circumstances, the bill, if passed into law would require prior notification to the Commission before trusts are formed.

There are also laws of general application that are relevant to the regulation of anti-trust and monopoly activities.

The Philippine Constitution outlines the state policy of regulating or prohibiting monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition are to be allowed.

In relation to this policy, the Revised Penal Code of the Philippines penalizes parties entering into any contract or agreement or taking part in any conspiracy or combination in the form of a trust or otherwise, in restraint of trade or commerce, as well as penalizes those who prevent, by artificial means, free competition in the market. It also imposes penalties on parties who monopolize any merchandise or object of trade or commerce, or who combine with any other persons to monopolize said merchandise or object in order to alter the prices thereof or who spread false rumors or make use of any other artifice to restrain free competition in the market.

The Civil Code allows the recovery of damages in cases of unfair competition in agricultural, commercial or industrial enterprises. There are also other laws on unfair competition pertaining to the protection of intellectual property rights.

An octopus in the garden (with apologies to the Beatles)

Part 2 Million Dollar Baby

It’s Just a Mission Statement

(or in Nestle’s own words, “ a Code of Ethics”)

Part 2 Million Dollar Baby

Dicky Fox in Jerry Maguire: “The key to this business is personal relationships.”

Indeed. Not only were Nestle Area Sales Manager Elisa Lupena and FDI 2 Operations Manager Mark de Vega screwing each other illicitly but they were also screwing the distributor.

De Vega couldn’t begin to tell top from bottom let alone where his duties to his company started and where his obligations to his FUBU ended.

In a text message sent by Lupena to De Vega, she said: “Baby which one do you like better, me on top or you on top.”

The illicit affair between aggravated the growing financial problems of FDI 2. The distributor, claimed over PhP 11 million from Nestle to cover its increasing debt, unpaid wages, 13^th month pay, and separation benefits for around 80 employees who were laid off in Christmastime of 2007. The Swiss multinational ignored the request for help at first then dilly-dallied. It was one black Christmas for the distributor.

By the end of January 2008, Nestle gave FDI 2 owners a call. The check for PhP 11 million was ready for pick up.

What had happened was the wife of de Vega, a respected lawyer, found even more damning evidence of her philandering husband’s activities – a printed copy of an ultrasound test.

The ultrasound showed a fetus. De Vega and Lupena were going to have a baby. De Vega’s Atty. wife sent a letter of complaint to Nestle and they had to act posthaste because they had one huge mess on their hands. Hell hath no fury like a woman scorned. And a legal eagle too!

In her letter January 31, 2008, she wrote:

“This sexual relationship may be personal in nature but the fact of the matter is that it occurred at a time when Ms. Lupena was the Area Sales Manager directly in-charge of the account of FDI which was then being operated by my husband as its Operations Manager/President. The very nature of this relationship strongly indicates that a violation of the conflict of interest clause, under Nestle’s Corporate Business Principles and/or Code of Conduct, may have likely occurred. Given certain documentary and testimonial information I have gathered substantiating the nature and extent of this relationship, it is reasonably easy and logical to conclude that Ms. Lupena may have given accommodations, extended favors and concessions beyond the scope of her authority and functions, as well as made misrepresentations or covered up for the actual state of the sales operations of FDI 2 by virtue of the said relationship.”

Within two days, the check was ready.

They only moved when another aggrieved party spoke out.

Being a huge corporation, they are used to using their battery of liars, er, lawyers to fend off distributors. Usually they bully them.

But against FDI 2, they found a pitbull who wouldn’t let go.

Nestle, in their Code of Conduct states: “Nestle personnel will maintain the highest standards of integrity and professional competence in all business relationships (bullshit we say). Sanctions will be applied in the event of misconduct or abuse of corporate standards (even more bullshit here).”

Incidentally, rumor has it that Lupena is now employed at another milk company located somewhere in Makati that competes with Nestle under the name which abbreviates her given names of Maria Elisa.

Was she given an honorable discharge? If so, in exchange for what ? What the fuck happened here? And why the change of names?

In the movie Jerry Maguire, Marcy Tidwell, played by Regina King, asks Tom Cruise’s Maguire character when they are shown a lousy contract for Rod Tidwell: What do you stand for?”

Let us jump to actress Kelly Preston who plays Maguire’s erstwhile girlfriend who yells at the start of the movie, “Don’t stop fucking me!!!”

Part I Sleeping with the Enemy

It’s Just a Mission Statement

(or in Nestle’s own words, “ a Code of Ethics”)

Part I Sleeping with the Enemy

In the movie Jerry Maguire, actor Tom Cruise who plays the main character of the super sports agent suddenly develops a conscience with regards to the representation business of sports athletes.

Little did he know that his manifesto for more ethical business dealings would backfire on him as he is fired from the company he helped turn into a industry giant.

As his world turns upside down, Maguire in a fit of depression mutters, “It was just a mission statement.”

What is a mission statement?

It is supposed to be a formal purpose or direction of a company that is highlighted by its core values. And based on that there is the code of conduct by which all company actions and undertakings will be guided by.

And that bring us to Nestle Philippines Inc.

The Swiss-based company has products that are deemed an indispensible part of people’s everyday lives. In order to get their products and services across, they rely on a chain of distributors who are assigned certain areas of operations to supply and sell their wares.

The distributors aren’t Nestle employees. However, they report to Area Sales Managers (who are employed by Nestle) who take care of the needs of their distributors.

In this particular instance, the ASM – Elisa Lupena -- took care more than just her company’s needs.

In our journalistic quest for interesting business stories to report for a local broadsheet, we came across some public documents regarding the methodical destruction of a distributor by a bullying multinational that thinks it can get away with anything it wants. And much of the damage done to the distributor is due to collusion and an illicit and sexual relationship between an ASM and the distributor’s own President/Operations Manager.

But that’s jumping the story right into bed and this is supposed to be a wholesome story.

Somehow it is never wholesome even if it involves Nestle Philippines Inc.

FDI 2 entered into a distributorship agreement with Nestle in 2003 to sell and distribute the corporation’s production in a pre-agreed area. The multinational promised support in terms of marketing and promotions in the area. The relationship, the business was so successful that Nestle awarded FDI 2 as its Metro Manila Distributor of the Year for 2005 and 2006. That’s two years running and if ever, is a clear illustration that they were doing their jobs and complying with agreements.

However, unknown to the owners of FDI 2, one reason for their success was that Nestle’s Area Sales Manager Elisa Lupena was exerting undue pressure on its distributor to meet increasing sales targets. That meant that FDI 2 would have to buy more products from Nestle to sell. Whether this makes money or not is not Nestle’s concern. The bottom line for them is to hit their sales targets.

Lupena was able to accomplish this also through an illicit affair with FDI 2’s Operations Manager/President Mark de Vega. Although she was not an employee of FDI 2, she went overstepped her bounds by threatening the distributor’s employees with their businesses’ termination from Nestle if they did not meet sales targets. FDI 2 was forced to put in more money to save the business but were still not knowledgeable about the true problem.

This was only discovered by accident in 2007 when de Vega borrowed a mobile phone from a FDI 2’s owner and switched SIM cards. However, when de Vega returned the phone, he left some messages in the phone’s sent box.

The text messages hit the owner like a ton of bricks. And it gave some clarity into their sudden massive deficits and losses incurred in meeting the demands of Nestle.

The owners of FDI 2 brought this situation to the attention of Nestle that in turn callously brushed aside the affair as “the personal affair of two consenting adults” while disregarding the obvious conflict of interest. Furthermore, Lupena went about her duties for two more months before anything was done.

If a company hears of rumors that one of its employees was doing something wrong, isn’t it only natural that they will investigate?

And in complete and utter disregard for their client – FDI 2 – Nestle demanded that FDI resign. FDI didn’t resign, and was subsequently terminated. As part of the turnover, nestle demanded that FDI return inventory that they had already been paid for, as part of their “processes;” anyway, they would pay for it in cash immediately. And with veiled threats made against the continued existence of FDI 2’s brother company as a distributor, it was forced to agree to return PhP 11,070,773.00 representing the inventory taken back by Nestle.

Doesn’t this strike you as odd? You buy Nestle products and technically they already belong to the distributor not the company. Yet they took it back.

Our conclusion here is, Lupena’s bullying tactics are known by Nestle’s top people. You know? Nothing goes down with out their knowledge.

Again another scene in Jerry Maguire comes to mind…

“Show me the money!”

That’s the bottom line of all of this. We want your money and to the hell with your business.