John Miller: WTF?! Why did you say you're not leaving?!!!

Amidst various reports of sex scandals, bullying, bankruptcies of small Pinoy entrepreneurs, beleaguered banks (from the bankruptcies), predatory pricing and anti-trust practices from different sectors regarding our favorite imperialistic trans-national corporation (TNC), Nestle, the top broadsheets have reported that according to Nestle Philippines chairman and CEO, John Miller, Nestle is here to stay.

*Insert favorite expletive here*!!!! Damn! Double Damn!!

A common defense of used by TNCs such as Nestle in spite of their highly imperialistic practices is to try to hold a developing country's balls by threatening, subtly or otherwise, that they will be stopping or withdrawing their purported investments in that particular country. Sometimes, it works; most of the time, though, it does not, most especially for our favorite TNC. In fact, these TNCs should be encouraged to leave! Here's why:

1. Nestle is one of the primary causes of inflation. Insiders in their marketing department have said that they have been encouraged by their mother company to incorporate as many price increases in their brands as possible. Look at Nescafe, a rough computation of the price index in 2001 versus 2010 reveals that the prices have grown to as much as 70% depending on the variant! Compare this to a developed country where the price increase is as low as 4% to a high 14% in the same period. Consider also the supply side of coffee. It is widely documented that in Vietnam, one of the world's largest producers (if not the largest already), farmers have even resulted to destroying some of their produce as their over supply has caused prices to drop! Supply cost has been low at most times yet price increases continue to hound our poor country. All of this, of course, is at the name of profit! Geesh! Talk about squeezing blood from a stone!!! Our poor country is a victim of this TNC's greed. Damn! Double damn!

2. Nestle's products are commodities. Coffee, milk, non-dairy creamer, chocolate are products that are easily replaceable by a competent manufacturer and there is no glut of these! San Miguel, URC, Alaska, Kopiko, Columbia, etc. can easily fill up a purported vacuum that Nestle insiders claim they will leave. The other manufacturers, I bet, were so unhappy about John Miller's announcement today.

3. The economic impact of the loss of exports are mitigated. A third of Nestle Philippines sales (est. PhP30 Billion) are exports to other countries and they are saying that leaving will have a tremendous negative impact in our economy. Hogwash! I say this for several reasons: a. They export their products ONLY to fellow subsidiaries and revenues are posted as merely accounting entries and not actual cash to the country. b. If indeed there was cash remitted to the country, it stays here for just a short while and is then traded in other markets or remitted to the mother company. The company maintains just enough working capital that it needs and places the excess cash to instruments that make more in its idle state! Guess what? The Philippines does not have high paying instruments compared to the rest of the world. So, no the loss of exports are mitigated because they were NEVER HERE IN THE FIRST PLACE.

It should now be clear why Nestle should leave. Our country will not be beholden to arrogant ASSHOLES like you, John Miller. You can fool some people all the time. You can fool all people some of the time. But you can never fool all people all the time.

Lessons from Rosa Henson and Japan: Hey Nestle Philippines, Read This!

A lot of us may have forgotten already but in 1992, when Rosa Henson was already 65 years old, she announced to everyone her World War II experience – known only by two people she held dear –her mother and deceased husband. She was a wartime prostitute by the Japanese Imperial Army. She was a Comfort Woman.

Her public statements gave more than two hundred other Filipinas and countless others in China and Korea to have the courage and come out in the open to say that indeed they were kidnapped, raped and forced to be prostitutes of the Japanese military.

Their plight, as a wartime Japanese soldier described, “The women cried out, but it didn't matter to us whether the women lived or died. We were the emperor's soldiers. Whether in military brothels or in the villages, we raped without reluctance."

One of the women, when she testified in US Congress said, "Many stories have been told about the horrors, brutalities, suffering and starvation of women in Japanese prison camps. But one story was never told, the most shameful story of the worst human rights abuse committed by the Japanese during World War II: The story of the “Comfort Women”, the jugun ianfu, and how these women were forcibly seized against their will, to provide sexual services for the Japanese Imperial Army. In the so-called “Comfort Station” I was systematically beaten and raped day and night. Even the Japanese doctor raped me each time he visited the brothel to examine us for venereal disease."

The Japanese government, immediately after the war, destroyed all documents referring to their creation of their own sex-slave industry and up to 1990 said that it had nothing to do with creation of “Comfort Stations”, insisting that either they do not exist (there was no written evidence according to them!) or if they did, they were run by small scale private enterprise.

In spite of Japan’s statements, the United Nations conducted their own research of what had happened and discovered through a series of eyewitness investigations that indeed the then Japanese government systemically created the “Comfort Stations” in response to the request of their military to keep up the morale of their troops.

Japan, eventually relented and finally admitted their systemic fault for the creation of these brothels during the war.

Rosa Henson died in 1997 but not before she received Japan’s formal apology and getting the atonement recompense.

I was not there when she passed away but I can imagine that she did so in peace.

***

There are several comments close to home that come to mind after reading the above:

Does the existence of an incident depend on the availability of written evidence? Apparently, Japan – the third biggest economy in the world – thought so. Hmmm. Sounds familiar.

Japan is one of the most progressive countries and has actually given a lot aid, economic and otherwise, to a lot of third world countries especially after the war. Do their current actions absolve them of the prostitution atrocities they committed in the past? Hmmm. Sounds familiar again.

It doesn't take a genius to know what the answers are. Unfortunately, there are really idiots and morons around especially in THAT company. Tsk, tsk.

NESTLE PHILIPPINES: SHAME ON YOU! - Repost from Ducky Paredes, Malaya, January 14 2009

A Battle of Dragons

“’Apparent Authority’ is a term used in the law of agency to describe a situation in which a principal leads a third party to believe that an agent has authority to bind the principal, even where the agent lacks the actual authority to do so.”

by Ducky Paredes

In the Chinese calendar, 2010 is the year of the metal tiger, when we should focus on certain character traits that will ensure prosperity and success for the whole year round. The qualities associated with the metal tiger are persistence, strength, and determination.

These are what friends who have gotten a raw deal at the hands of a contentious multinational need to eventually get their due.

You all know this company by now — it manufactures and markets a wide range of mass consumer products and, I’ve written about these problems several times.

Apparently, finally, after years of enduring abuse at the hands of this multinational, a number of its Central Luzon distributors have organized themselves and are now poised to fight back. Perhaps the year of the metal tiger has finally inspired them to stand up against a supposed corporate bully — a “Crouching Tiger”, ready to pounce on its tormentor and defend itself.

Based on reports, the last straw for these outraged – and mostly debt-ridden – distributors came when an internal scandal broke out that caused them to lose tens of millions of pesos individually. Unfortunately, after repeated attempts to air their grievances to the multinational, the response they got has allegedly been the formal equivalent of a shrug and an eye-roll.

Their troubles s began when the multinational’s Regional Sales Manager (RSM) for Central Luzon instructed her distributors to give an unheard-of discount (purportedly 10% to 12%) to one particular company. Since distributors are only allotted a 4% discount, some questioned how they could possibly still stay in business, losing 6% to 8% at each transaction. (A funny supposedly Chinese quote is: “Hindi bale malugi sa bawat benta basta kita sa lahat.”)

The answer to their conundrum came when Ms. RSM allegedly wrote them letters – using the multinational’s official letterhead, no less – promising that the multinational would definitely reimburse the difference. Given this directive and the document to back it up, the Central Luzon distributors had to comply.

The extremely fortunate recipient of these massive discounts was now in a position where it can undersell all other distributors, which it did, except those in Central Luzon, from where its cheap goods were coming. This privileged company apparently did just that, targeting Metro Manila wholesalers. Eventually, the multinational’s Metro Manila distributors began crying foul, wondering how a distributor from another area could possibly be selling the goods at such low prices. When they asked company officials to explain this puzzle, the multinational’s clarification supposedly went something like this: “I don’t know how that company does it, all I know is that they are able to do it. If your sales are suffering because you can’t find a way to match their price, then that’s your problem, not ours”.

Because of this, and faced with an illogical situation, a number of Metro Manila distributors had to absorb their losses; the smarter ones stopped dealing with this multinational

Meanwhile, over at Central Luzon, things began heating up when not a single distributor received the promised reimbursements from the mother company. This reached a bitter climax when the checks issued by the discount-privileged customer even started to bounce. Lo and behold – upon further investigation, it was discovered that the person running the company was the husband of Ms. RSM! Can you say “conflict of interest”?

Adding insult to injury (or lawsuit to malice) was the fact the checks that bounced were under the bank account of Ms. RSM herself.

At present, Ms. RSM is nowhere to be found, and is presumably in hiding with her husband. In their wake, they left behind total losses (from both Central Luzon and Metro Manila distributors) reportedly amounting to approximately P1 billion. More tangibly, hundreds of jobs and financial futures were ruined because of this purported scam.

The multinational – let’s call this the “hidden dragon” because of the way it presents itself as a family-oriented, wholesome company while, in reality, practically a criminal enterprise – seems to have washed its hands of the situation. Perhaps what they don’t realize is that under the legal principle of “Apparent Authority”, this multi may be in a real bind.

“Apparent Authority” is a term used in the law of agency to describe a situation in which a principal leads a third party to believe that an agent has authority to bind the principal, even where the agent lacks the actual authority to do so. In such circumstances, the law holds the principal liable for the acts of the agent, out of fairness to the third party.

Considering that the multinational had every chance (and the obligation to do so, since the RSM was apparently up to no good and it was the multinational’s duty to stop her) to correct the anomaly during its early stages (but instead chose to pursue their sales targets), this “hidden dragon” may soon be forced out of its cave and tamed in a court of law.

Hopefully.

Keep it Coming!

Thanks for the words of encouragement! Now, it's time to up the ante. Some of you may already know how to get in touch with FRR (that's Fight for Right). To the others who still do not know how to do this, I am now opening the floodgates.

Please send anything you may want to post to fight.for.right88@gmail.com.

Please be assured that your identity will remain anonymous unless you want it specifically stated.

As always, all post requests will be subject to my review and may or may not be posted.

THANK YOU AGAIN FOR THE CONTRIBUTIONS AND THE WORDS!

Happy New Decade to All!

A Pattern of Bullying

* * *

Several months ago, I wrote about this food multinational corporation that was bullying one of its Filipino distributors. Considered the world’s largest food and drink company, this multinational had terminated its contract with a distributor and had threatened to do the same with another distributor. The reason stated was conflict of interest.

The alleged conflict of interest was based on Distributor 1’s shareholders’ discovery that one of its executives, a married man, was having an affair with a sales executive of the multinational. The relationship led to double the amount of discounts on the multinational’s goods given to retailers (such as groceries) by the executive. This led to brisk sales, but at a loss to the distributor.

The multinational made money all right because it sold its brands, and their executive got recognition and financial incentives because of her performance. However, all these were at the distributor’s expense. Even more disturbing, an independent audit showed that there were “phantom deliveries” of products to the distributor, non-existent goods, but still paid for because of the connivance between the parties to the illicit affair.

* * *

When the distributor brought up the illicit relationship to the multinational executive’s superiors, they shrugged it off as an affair between two consenting adults. This was despite the company’s Corporate Code of Ethics that enjoins its management and employees to “avoid even the appearance of impropriety in its business relationships on behalf of the company.” In the code, there is also a provison that says “sanctions will be applied in the event of misconduct or abuse of established corporate standards.”

Well, sanctions were applied all right, but to the wrong party—my gulay, to the distributor!

Eventually, the multinational had a dialog with the distributor to settle their differences. Nothing came out of it.

As it turned out, this was not an isolated case. Another sales employee of the multinational coerced five Filipino distributors of the company in Central Luzon to pass on goods to Metro Manila wholesalers at 8 to 10 percent discount.

Manila distributors like Distributor 2 could not compete with such low prices, but because the multinational forced it to “hit targets at all costs,” it had no choice. In the process, it lost money.

* * *

My gulay, the distributors later found out that the customer offering preferential discounts was the executive’s husband. They discovered this when the checks they were given by the customer bounced. Upon investigation, the checks were traced to the executive’s account. And the distributors were not the only ones left holding the bag. Just when the couple’s scam was discovered, the executive’s husband got cash advances from the Metro Manila wholesalers for goods they never got. One of them even lost P22 million.

When the distributor approached the multinational for redress, the company did not accept any responsibility and instead offered to help only as far as paying for the distributors’ legal expense to sue. However, independent lawyers say the executive, by her verbal or written orders, some in documents with the multinational’s letterhead, bound the company to take responsibility by virtue of the doctrine of “apparent authority.”

What do you do with a bully who runs roughshod over its distributors? You take him to court!

By Emil Jurado, Manila Standard

Another Journalist Giving His View

Left in the lurch

WHEN the regional sales manager, sporting the rank of vice president in a multinational company, engages in malpractice in the market, can the latter be held liable? Apparently not in the view of this giant European multinational company whose RSM in Central Luzon and her husband have allegedly duped six wholesalers or major distributors into losing millions in a clever discount scheme. The RSM had been doing great, surpassing the MNC’s sales targets for which Central Luzon bagged the “Best Area Award” in 2007 and 2008. Why she suddenly went missing in the third quarter of 2009 have been recently uncovered. It was discovered that the RSM had instructed distributors under her to give eight-percent to 12-percent discount to a particular client, it turned out connected to her husband. As the distributors themselves were entitled to only a four-percent discount, they stood to lose six-to-eight percent. So they balked but eventually agreed on the RSM’s written assurance — on MNC letterhead — of a refund. Thus, the serial bulk repeat orders for the MNC’s consumer products by the husband-favored customer who, it was soon found out, touted the same discount scheme to Metro Manila wholesalers — enabling them to undersell the MNC’s metropolitan distributors. Talk of a conjugal sting operation, Jose, not to mention that soon enough the checks issued by the husband-favored customer to Central Luzon distributors started to bounce and, worse yet, bounced right back to the missing RSM’s bank account. As even the most shrewdly plan of mouse and man, to paraphrase the adage, has gone woefully awry — the RSM-supervised and gypped CL distributors have had to desperately turn to the European MNC for restitution. No dice, Jose. Aside from token assistance to defray the legal fees, the MNC has abdicated its duty to be its RSM’s keeper, leaving the CL distributors in a lurch. The MNC is renowned for its virtually incalculable resources. Reports say that its 2008 profit from global operation is in the neighborhood of $16 billion. Its products, by the way, include coffee, milk (powder and liquid), coffee creamer, chocolate, ice cream, food and beverage. So, in the Yuletide spirit that hopefully also animates corporate social responsibility, I believe the situation isn’t as forlorn as it seems. A lawyer-friend, 42 years in corporate and criminal law practice, agrees that the MNC properly approached could be persuaded to feel bound by the acts of its missing rogue RSM. Indubitably, he says, the RSM’s dealings with the distributors in Central Luzon were for and in behalf of her employer, given the authority that the MNC has given her. Thus, in light of what has befallen the distributors, it might not have happened if the MNC had counter-checked its RSM’s conduct in the market. Why shouldn’t the MNC be liable for the distributors’ losses if due to its negligence? Paging the Department of Trade and Industry and Securities and Exchange Commission legal departments.

The Squishing of the Lowly Pinoy Entrepreneur by the Giant Multinational

Throwing One's Weight at its Best!

'Manlolokong' multinational firm by Al Pedroche, December 19, Pilipino Star

ISANG multinational firm ang dawit sa kontrobersya. Isang babaeng regional sales manager (RSM) nito sa Central Luzon ang “nang-onse” ng mga distributors. Ang kompanya ay gumagawa ng dairy products. Umaabot sa US$16-billion ang tinubo nito para lang sa taong 2008.

Lima sa anim na distributors nito ang natangayan ng “daang-milyong piso.” Sa marketing setup ng kom panya, ang mga regional sales manager (RSM) nito ay nag-utos sa mga distributors na magbigay ng discount sa mga customers.

Inutusan ng lady RSM ang mga Central Luzon distributors na magbigay ng walo hanggang sampung por syentong diskuwento sa isang “espesyal na customer” na malakihan kung humango ng produkto. Nangako ang lady RSM na ibabalik sa distributors ang sobrang discount. Kaugnay nito, may written commitment ang lady RSM na nakasulat sa letterhead ng multinational firm. Ang mga produktong hinango ng favored customer mula sa Central Luzon ay binayaran ng tseke sa mga distributors. Tapos, ibinebenta ang mga produkto sa mga wholesalers sa Metro Manila.

Noong Hulyo ay nagtalbugan ang mga tsekeng inisyu ng favored customer na ibinayad sa limang distributors. At ang grabeng nangyari, hindi nai-deliver ang mga produkto sa mga wholesalers na nagbayad ng cash advance. Umaabot daw sa P30 milyong halaga ang nata ngay sa isa sa mga distributors. Samantala, hindi naman malaman ng isang wholesaler kung papaano mababalik sa kanya ang P22 milyong ibinigay niya sa favored customer bilang advance payment. Kaya pala, ang asawa ng lady RSM ang nagpapatakbo sa negosyo ng favored customer. Malinaw ang anggulong sabwatan.

Agad namang ipina si yasat ng multinational firm ang pangyayari pero sina bing wala silang sa gu tin sa ginawa ng lady RSM. Wala yatang corporate ethics ito. Kasalanan ng kanilang top executive sa bansa eh ayaw nilang panagutan? Grabe iyan!

The Miserly Swiss - Nestle

THIS is a re-telling of a fairy tale that did not end happily ever after. You read about it in this column before. It is about the biggest food multinational (MNC) in the world and one of its Filipino distributors.

It began thus: Once a upon a time this MNC known for producing milk, cereals, coffee and a Chocó drink that supposedly energized young people, appointed FDI Forefront I1 Trading Corp. (FD12) and Service Edge Distribution (SEDI) as two of its many distributors.

FDI2 and SED1 had common minority shareholders.

Since MNC was one of the most desired companies because its products sold like the proverbial hot cakes, FD12 and SEDI were ecstatic.

They were assured of adequate advertising and promotions support, in-house financing to acquire the goods they would resell to retailers like groceries and supermarkets, and products whose cute ads made them fly off the shelves. In return, while boosting the MNC’s sales, they would make for themselves a handsome profit. Clearly, it seemed to them, to be a win-win situation.

FD12 won MNC’s Distributor of the Year in 2005 and 2006 and the MNC’s Area Sales Manager (ASM) assigned to coordinate with FD12 won company awards and corresponding incentives and bonuses.

But along the way, the MNC prince turned into a beast. MNC increased the sales targets or quotas of goods that FD12 and SEDI had to sell even as MNC reduced its marketing and promotional support. Then it forced these two outfits to service additional retailers that had established reputations of being poor payers or had long outstanding receivables. Then sometime in 2006, MNC transferred distributors’ financing to local banks that imposed higher interests rates and a shorter 30-day maturity period.

Yet despite all these limitations, FD12 soldiered on and even won the two awards from MNC. But despite the accolades, the cash flow was miserable and their bottom line was shrinking.

There was a reason for this. Eventually, an independent audit disclosed collusion between the MNC’s Area Sales Manager and the FD12 operations manager. FDI2 was giving retailers discounts way above what FDI2 allowed, in effect practically giving the goods away. Why? Apparently, they were carrying on an illicit affair since the FD12 manager was married.

When FD12 brought this loss – and the reasons behind it – to MNC’s attention, citing conflict of interest, the Pinoy distributor was told that the company considered the affair as one between two consenting adults. This is despite the fact its Corporate Code of Ethics requires its management and employees to "avoid even the appearance of impropriety in its business relationships on behalf of the company." And, what about the Pinoy’s losses?

To add insult to injury, the MNC illegally and, without warning, terminated its distributorship four days before Christmas of 2007 resulting in 100 employees being laid off.

Not content with this bullying, when FD12 went back to get outstanding claims worth P11 million, it was coerced into signing a Release and Quit Claim on future legitimate claims based on a proposed joint audit by the MNC and FD12 of the latter’s financial records. FD12 signed under duress, believing the promise of the MNC lawyer that the company would honor good-faith claims made against it. Of course, the MNC lawyer later denied making such a ridiculous promise.

I wrote about this evil MNC in April and May this year. Under the glare of publicity, MNC initiated talks with FD12 to settle their differences, but, of course, when one is dealing with legendary Swiss misers, nothing came of the talks.

In fact, it gets worse for the MNC’s distributors. Apparently, five of MNC’s six distributors in Central Luzon were also victimized by one of the company’s employees, a Regional Sales Manager who ordered the distributors to give preferential discounts of 10 to 12% to a particular customer who, in turn, sold the discounted goods to Metro Manila (MM) wholesalers at 8 to 10% off. Manila distributors like SEDI and FD12 could not compete with these in-house cut-throat competitors even as they were being bullied to "hit target at all costs." Everyone – in central Luzon and in Metro Manilas ended up losing more money, even as MNC and its managers were hitting their targets and more.

Things eventually came to a head when the checks that the five CL distributors received from the Metro Manila customer to whom they were giving the preferential discount bounced. The bad checks turned out to be from the joint account of the MNC’s Regional Sales manager who, it turned out to be was the wife of the preferred customer!

When the conspiracy surfaced, the manager’s husband got cash advances from the MM wholesalers, one of which forked out P22M for goods he never got. Apparently this MNC manager became one because she was constantly hitting or exceeding her sales targets and under her watch, Central Luzon won Best Area Award in 2007 and 2008.

What did MNC have to say about this financial brouhaha? Again, they dismissed it as the product of a rogue individual, and will only pay for the legal fees of the distributors when they sue the manager who has absconded with the cash and whose whereabouts are now unknown.

However, according to independent lawyers, the MNC manager by her verbal and written orders (some on MNC official letterhead) bound the company through the doctrine of Apparent Authority. The lawyer may be right but trying to get what is due you from the miserly Swiss may be harder than getting blood from a stone.

My advise to the distributors of this MNC: Get together and sue. This MNC should be booted out of this country. This MNC is the moral equivalent of the Ampatuans or the A(H1N1) that victimizes - even kills off -- just about anyone that has dealings with it.

***

Readers who missed a column can access www.duckyparedes.com/blogs. This is updated daily. Your reactions are welcome at duckyparedes@yahoo.com