The
AGRIBUSINESS
EXAMINER
December 27, 2002   #212
Monitoring Corporate Agribusiness
From a Public Interest Perspective

EDITOR\PUBLISHER: A.V. Krebs
ADDRESS: PO. Box 2201, Everett, Washington 98203-0201
E-MAIL: avkrebs@earthlink.net
WEB SITE: http://www.ea1.com/CARP/
TO RECEIVE: Name and e-mail address
CONTRIBUTION$ WELCOME !!!
 

NESTLE CORP. WITH $5.5 BILLION IN PROFITS
DEMANDING FAMINE-RAVAGED ETHIOPIA,
THE WORLD'S POOREST STATE,
PAY $6 MILLION IN COMPENSATION

CHARLOTTE DENNY, THE GUARDIAN: The multinational coffee corporation, Nestle, is demanding a $6 million (3.7m) payment from the government of the world's poorest state, Ethiopia, as the country struggles to combat its worst famine for nearly 20 years. The money is compensation for an Ethiopian business which the previous military government nationalised in 1975. It could feed one million people for a month, according to Oxfam.

The cash-strapped Ethiopian government has offered to pay $1.5m to settle the claim, but . . .  Nestle, which bought the firm's German parent company in 1986, was standing by its demand, insisting it was a "matter of principle."

"In the interest of continued flows of foreign direct investment which is critical for developing countries, it is highly desirable that conflicts are resolved according to international law and in a spirit of fairness," a spokesman for the company said.

Nestle's chief executive, Peter Brabeck-Letmathe, acknowledged three years ago that the company had responsibilities beyond its bottom line. "We are going to be asked: what have you done to fight hunger in developing countries?" he said.

Last month Ethiopia's prime minister Meles Zenawi said that six million people in his country needed emergency food aid and that the number could rise to 15 million within months.

The famine, brought on by the failure of rains for the third year in a row has been intensified by a collapse in the price of coffee which supports a quarter of the country's population. Nestle, the world's largest coffee processor made $5.5 billion in profits last year.

Aid agencies have reacted furiously to the company's demand.

"At the very least Nestle ought to be accepting the settlement offered by the Ethiopian government," said Sophia Tickell, a policy analyst at Oxfam. "But frankly they should be thinking about how the money could be spent on famine relief and drop the claim altogether."

Ethiopia has the lowest income per head in the world, with the average person surviving on $100 a year. More than a tenth of its children die before their first birthday. Aid agencies are worried that the crisis could be even worse than the 1984 disaster in which a million people died.

"Drought is threatening many farmers with the prospect of famine," Ms Tickell said. "Nestle, by contrast continues to thrive. The company does not need $6 million. It is a highly profitable company which could easily live up to its commitment to `help fight hunger in developing countries' by writing off this claim."

The World Bank has stepped in to negotiate, but there were few signs .. . .  that the company was preparing to back down. "This is a question of principle. The negotiations are ongoing and it would be rash to predict an outcome at the moment," Francois Perroud of Nestle said.

In 1986 Nestle bought a German company, Schweisfurth Group which had a majority share in the Ethiopian Livestock Development Company (Elidco) seized by the Ethiopian government more than 25 years ago. The government sold Elidco to a local firm for $8.7 million four years ago.

Although the exact size of Schweisfurth's share in Elidco is uncertain, the Ethiopian government is willing to pay $1.5 million --- just over half the value of the company at the time of nationalisation including interest. But Nestle is insisting it convert the payment at 1975 exchange rates, adding a further $4.5 million to the bill.  "It is perfectly appropriate to try and find a solution to a conflict which has existed since 1975," Mr Perroud said. "We are the owners of a claim against the Ethiopian government."
 

NESTLE CEO PETER BRABECK:
GOVERNMENTS MUST "DEMONSTRATE CAPACITY
TO COMPLY WITH INTERNATIONAL LAW, "
BUT COMPANY WILL MAKE $1.6 MILLION
IMMEDIATELY "AVAILABLE" FOR FAMINE RELIEF

Last Wednesday morning [December 18] , our Nestle United Kingdom headquarters was confronted by a surprise demonstration at its front door. The demonstrators charged that Nestle was pressuring the Ethiopian government for US $6 million in compensation for a business owned by Nestle Germany that had been seized by a previous regime in Ethiopia (we are one of many companies involved in the case). The point of the demonstration was that this was a heartless act at a time when Ethiopia, a very poor country, is in a state of famine.

We in Switzerland were also taken by surprise, as the charges were simultaneously spread in a pre-planned media campaign before we were given any opportunity whatsoever to investigate and discuss the situation with the NGO involved. This made things especially difficult for us to respond immediately, as an external Ethiopian lawyer engaged by a small subsidiary of Nestle Germany is handling the sporadic negotiations and with whom neither we in Switzerland nor in the UK have any direct contact.

In immediate response, our reaction was to issue statements that focused on the chronological history and legal aspects of the issue. Now that we have had time to consider the issue more fully, I want to personally communicate the Company's position so as to leave no doubt as to where we stand.

First, 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.

We will therefore devote any money received from this settlement to both public and private efforts to relieve hunger in Ethiopia. This will take the form of both short-term relief aid and longer term food security.

As the Ethiopian government has already offered US $1.6 million, we will immediately make this sum available upon receipt for famine relief in  Ethiopia. We will do the same with any additional sums resulting from a final settlement. We have recently initiated inquiries with the representatives of the International Federation of the Red Cross/Red Crescent Societies (IFRC) as to how best to direct these funds (Nestle has a relationship with the IFRC through being the founding corporate sponsor of the IFRC Africa Health Initiative, aimed at fighting HIV and other life-threatening diseases in Africa).

We regret that this issue resulted in hasty communications and misperceptions about Nestle, but a positive benefit may be that it has focused attention on Ethiopia.

Of course, we and our employees were shocked and stung by the surprise campaign, and believe that actions which blind-side others are not in keeping with the common good. This is especially relevant where companies, including Nestle, have demonstrated that we are willing, at the senior level, to openly discuss issues concerning our operations around the world.

But at this Christmas time, our thoughts turn to the billions of the earth's people who go to bed hungry. This is especially true of the people of Ethiopia, and we hope our commitment will bring the possibility of helping a significant number of people there.

Peter Brabeck, CEO
Nestle S.A.
December 23, 2002
 

RESPONDING TO NESTLE CEO:
ONE OF THE WORLD'S LEADING
FOOD PRODUCERS "CAN AFFORD
TO DO MORE --- MUCH MORE --- TO HELP
WHILE PROTECTING ITS PUBLIC IMAGE"

Mr. Peter Brabeck-Letmathe CEO
Nestle S. A.

Dear Mr. Brabeck-Lemathe:

Receiving your recent news release was much welcomed. Especially your closing words: " . . . at this Christmas time, our thoughts turn to the billions of the earth's people who go to bed hungry. This is especially true of the people of Ethiopia and we hope our commitment will bring the possibility of helping a significant number of people there."

As to the comments of a pre-planned media campaign, (and before Nestle had any opportunity to respond) I, for one, never took part, holding back informing any of my personal news contacts. I would point out that this was a time (December 22) when the New York Times ran a nine-page Internet length article on Ethiopia's AIDS orphan plight, http://www.nytimes.com/2002/12/22/magazine/22ADOPTION.html
and thus with this exposure of the issue your next day letter certainly averted unnecessary international harm to Nestle image.

I think that background to this issue also needs repeating --- at least for what I am writing to you about in this letter. For according to Oxfam, a major relief organization, $6 million can feed a million children for a month; 100,000 for a year. This means as little as $72 million dollars can avert much of the presently looming crisis. Ethiopia is the very poorest
country in the world, where the average Ethiopian survives on as little as $100 a year--- why in Ethiopia US dollars stretch so extraordinarily far --- more than almost anywhere else.

Ethiopia now faces the worst pandemic in the last 20 years --- partly due to three-year-straight rainfall shortages and thus poor coffee crops that normally would support a quarter of the population's sustenance. According to Prime Minister Meles Zenawi, as result of this agricultural disaster as many as 15 million may need emergency food within months.

And with this devastating, country-wide hunger naturally comes disease. Thus there's a vast HIV problem. Ethiopia already has an estimated one million AIDS orphans needing medical help --- and without which they will die. Most of the orphans further have lost both parents. And lastly, of course, each is a precious soul. As Mark Rosenberg (Executive Director of the Task Force for Child Survival and Development) states in the
New York Times report:

"This is t-h-e most devastating pandemic to sweep the earth for many centuries." The New York Times article further elucidates . . . "He [Rosenberg] compares the moral imperative to stop the epidemic [HIV] .. . . to the era of the Holocaust and imagines that future generations will ask, `What did you do to help?'"

In America there are a small number of HIV-positive-born children (200 per year)and they generally lead normal lives due to effective medical treatment. But in Ethiopia, there are a million or more so infected children, and 75% will die by the age of two, and the rest will mostly not make it to their 11th birthday.

With all of this, indeed, can any of us stand by idly?

Nestle is the world's premier coffee processor with sales of $85 Billion, and EBIT of ten billion and market capitalization of .1 of a trillion dollars! To my knowledge, only Coca Cola rivals this high level of capitalization among all U.S. food corporations. It is thus beyond doubt, in my mind, that Nestle being one of the leading food producers in the world can afford to do more --- much more --- to help...and while protecting its public image.

Unfortunately the prior public statements of Francois Perroud of Nestle, including his demand for $6 million, was at first stated as "a question of principle . . . we are the owners of a claim against the Ethiopian government." While part of this property-rights claim has validity under international law, it also turned out to be insensitive to the human context and thus engendered public image harm.

Now and most significantly, to undo this recent harm, and entirely so, plus to effectively make Nestle shine. . . . and to also move to a far higher moral ground on this Christmas day, would it not make sense that Nestle further comes out with a release that it is no longer at all a reactive, passive, or insignificant player on the international humanitarian scene --- and "hoping for the best" and that "our commitment will bring the possibility of helping a significant number of people there" --- but rather that Nestle is the proactive l-e-a-d-e-r --- thus offering to contribute a minimum $6 million dollars to hunger organizations (independent of any settlement on the above issue).

If Bill Gates can donate $100 million dollars to help Indian HIV projects and to avert a disaster there, Nestle can likewise come up to the silver plate. $6 million dollars represents just .7 x 1/1000th of 1% of its EBIT and even $60 million --- given the prospect of save millions upon millions of lives, mostly desperate, wasting and dying children --- is only .7 x 1/100th of 1% of its EBIT.

For what the company now spends on its worldwide marketing and public relations budget, and to maintain its number one asset --- its public image --- and were dollars can stretch only so far normally --- this is relatively less than a small sum. Actually this issue could easily be turned around as a public relations coup and bonanza --- an opportunity of unparalleled proportions --- the reverse of the negative dollar for dollar spent.

Of course Nestle supports farming operations around the world, and naturally has an extended responsibility. Therefore I am reminded of when John Deere during the 30's Depression engaged in humanitarian acts. John Deere during that time, rather than foreclose on its delinquent farm equipment notes, and as they too had valid property rights to repossess ---plus to help their immediate bottom line --- they instead exhibited immense vision. They extended terms so that farmers could survive. It was the single most important act in John Deere's history. Seventy years later a tractor in America is a John Deere --- having so fully and completely gained the allegiance and confidence of its customers.

In addressing the above more stirring issue --- and on this Christmas day ---  the ball is thus in your court.

Nathan Batalion
Binghamton University
 

FOLLOWUP NOTE TO NESTLE CEO BRABECK:
COMPANY BEING INTEGRALLY INVOLVED
IN A DEPENDENT CASH CROP ECONOMY
"NEEDS TO COME TO THE PLATE,
TIME IS OF THE ESSENCE"

Peter Brabeck CEO Nestle

I just want to correct a slight error in my previous Christmas-day correspondence. Nestle's profits for last year (before taxes, interest, etc.) were approximately ten billion. Thus donating, for example, 60 million to save ten million lives, the present Ethiopian holocaust, would represent only 6/10th of one percent of those net profits. Donating $100 million would represent one percent of profits. I think something of this kind, following Bill Gates example, would go immensely far to promote Nestle's international humanitarian image --- more than anything imaginable. Addressing this represents probably close to half the entire starvation plight of the African continent.

Also just abandoning Nestle's property rights claim does not really come across as humane. I am sure the company wastes, in the nirmal course of business, and for relatively ineffective marketing --- at least that much if not more --- while the proposed initiative would dramatically improve the world's impression of Nestle.

When I was just a child, I met a man named Joel Brandt. He had been dating my mother. He had the distinction of having met with Adolf Eichman, a general serving under Hitler --- and having with him bargained for the life of one million Jews . . . in exchange for money, trucks and equipment! Joel came to the U.S. in the 1940's to raise the needed money. But hardly anyone believed such a thing was possible and thus he failed. Yet this story was true as was brought out by the Eichman trials in Israel. Here a vast opportunity presents itself and Nestle's being integrally involved in a dependent cash crop economy . . . needs to come up to the plate. Time is of the essence.

Nathan Batalion
Binghamton University
 

1996 SALE OF DEL MONTE
WAS RIGGED, SOLD CHEAP,
INVESTORS CHARGE IN LAWSUIT

ANTHONY DePALMA WITH DIANA B. HENRIQUES, NEW YORK TIMES:
Early in 1996, a Mexican investment group with ties to the government received several preliminary bids, some worth more than $250 million, to acquire the equity of Fresh Del Monte Produce, the global grower of bananas, pineapples and other fruit and vegetables.

But just as the investors who had taken control after their original chairman had become a fugitive were about to close a deal, the group's board abruptly sold Del Monte for a much lower price to a little-known company run by Palestinians. The terms were so unfavorable, a number of minority investors thought at the time, that they tried, unsuccessfully, to block the sale.

A lawsuit filed in a Miami court yesterday [December 18] by seven private and corporate minority investors includes allegations that may shed light on why Del Monte was sold for so much less than it seemed to be worth. The suit accuses Mohammad Abu-Ghazaleh and his company, the IAT Group, of bribing Eduardo R. Bours, a powerful Mexican politician who was chairman of the investment group and an important member of the country's ruling party, to rig the sale in their favor.

The lawsuit is based in part on the affidavit of an executive who worked closely with Mr. Bours and who has evidence of a curious payment of $321,000 that ended up in Mr. Bours's bank account after the sale was completed. The suit contends that the amount represents just a portion of a payoff that Mr. Bours received to help the Abu-Ghazalehs buy Del Monte at bargain rates.

In a telephone interview from his home state, Sonora, Mr. Bours denied taking any bribe and defended the sale to IAT as the best deal at the time. Lawyers for Del Monte in New York called the accusations "utterly baseless."

Still, the allegations of bribery and fraud may cause trouble for Fresh Del Monte Produce, which is incorporated in the Cayman Islands and listed on the New York Stock Exchange. Last month, rumors about another suit challenging the 1996 sale as fraudulent were enough to batter Del Monte stock. Trading was halted for an afternoon after the stock tumbled by more than $5, to $20.75 a share. The stock stabilized after the company rebutted the allegations, but it has languished below $20.

And while there is no evidence against him, the questions could also prove awkward for Marvin P. Bush, a younger brother of the president, who has been on Del Monte's board since 1998. Marvin Bush is not mentioned in the suit, and he had no links to the company at the time of the 1996 sale. He did not return several phone calls seeking comment.

Most of all, the suit opens a new chapter in the bizarre recent history of Del Monte, dating to the days before its acquisition in 1992 by Carlos Cabal Peniche, the fugitive chairman. At that time, associates say, Mr. Cabal turned to a spiritual adviser to come up with a unique bid that invoked the Mayan spirits of southern Mexico. The adviser, the Rev. Jacques Charveriet, urged Mr. Cabal to make an offer with as many fives as possible because that number is a figure of fortune in Mayan legend.

His associates say Mr. Cabal was ecstatic when the seller accepted his preliminary bid of $555,555,555.55 for Del Monte, one of the world's most recognizable brand names. The purchase fit right into the plans of President Carlos Salinas de Gortari, who was busy trying to modernize Mexico's economy and reform its agricultural sector. Buying Del Monte was seen as a way to give Mexican produce instant global recognition.

The government provided special financing to a group of 150 Mexican investors led by Mr. Cabal, a shrimp exporter who had already purchased two Mexican banks with government support.

The Del Monte operations already had a rocky past. The Del Monte Corporation was purchased in 1979 by R. J. Reynolds, which later acquired Nabisco Brands. After Kohlberg Kravis Roberts arranged its notorious leveraged buyout of RJR Nabisco in late 1988, Del Monte was split into three divisions canned fruit and vegetables, international canned foods and fresh produce and the divisions were sold separately.

The fresh produce division was purchased in 1989 by Polly Peck International, a conglomerate run by Asil Nadir, a financier. But allegations of fraud and financial irregularities caused Polly Peck to collapse, and Del Monte Produce was put up for sale again in 1992. But in 1994, Mr. Cabal, bleeding cash, was charged with bank fraud. When he fled Mexico, the government seized the company.

After Mr. Cabal became a fugitive, the investors' group Grupo Empresarial Agr'cultura Mexicano, or G.E.A.M. took control of Del Monte. Mr. Bours, the head of a Mexican national business council, was named chairman and quickly hired Lehman Brothers as an adviser on selling Del Monte.

The investors' suit, to support their claim that the Abu-Ghazalehs were able to buy Del Monte for far less than it was worth, cites a letter from Christopher B. Harned, a Lehman executive, to Mr. Bours on March 28, 1996.

The letter indicated that two bids, for $250 million and $275 million, had been received for the equity of Fresh Del Monte Produce and a transportation company, Global Reefer Carriers, that it owned. Beyond that, the bidders who have not been publicly identified agreed to assume $300 million in debt.

But the lawsuit claims that their bids became moot as soon as the IAT Group entered the picture. IAT, the third-largest fruit exporter in Chile, was controlled by the Abu-Ghazaleh family, Palestinians from Jerusalem with business interests in the Middle East. Mohammad Abu-Ghazaleh, the current chairman of Fresh Del Monte Produce, had planted the family's flag in Chile in the 1980's, taking advantage of Chile's seasonal counterbalance to North America.

In May 1996, Mr. Bours traveled to Chile to see Mr. Abu-Ghazaleh. The next month, he signed a letter of intent to sell Del Monte to IAT. In contrast with the earlier bids for at least $250 million, the Abu-Ghazalehs offered about $120 million. The offer consisted of $22 million in cash; $43 million borrowed from Rabobank, the investment bank that helped package the deal; and $55 million in seller financing from the Mexican government.

It proved to be an exceptionally good deal. Only ten months after the purchase closed in December 1996, IAT sold 35% of Del Monte in an initial public offering for $255 million, putting a value on the company of about $730 million.

The lawsuit contends that one reason IAT could purchase Del Monte so cheaply was because of a write-off of nearly $139 million that G.E.A.M. took after Mr. Bours's trip to Chile. That helped bring the apparent value of the company in line with the offer. But the lawsuit says the write-off does not explain why the other bidders were still willing to pay more. Moreover, it came as a surprise to other investors in G.E.A.M., which had
rejected an earlier suggestion from Coopers & Lybrand that it write down $56 million in assets.

Mr. Bours defended the terms of the sale, saying that when Lehman investigated the other bids more fully, it found that they lacked sufficient financial backing. "By far the best proposal was the one we had from IAT," he said. Lehman Brothers, which eventually signed off on the deal, did not return phone calls seeking comment.

But from inside the highest ranks of G.E.A.M., the transaction was looked on as doubtful. Edgardo Valencia, then coordinator general of the group and a member of its board, said in a recent interview that he had been troubled by the deal but had done nothing to stop it. About four months later, however, a mysterious note raised his suspicions again, he said.

The note, on Del Monte letterhead, instructed G.E.A.M. to pay Del Monte $321,000 "in repayment of certain debts and related expenses." Mr. Valencia, who in his position had to approve all payments of $5,000 or more, thought the note was odd because it came four months after the sale and lacked detail. He asked Mr. Bours about it. "Bours instructed me to just sign it," Mr. Valencia said. "I didn't understand, but I knew that if I am instructed to do anything, I have to do it."

Mr. Valencia said in an affidavit and an interview that Mr. Bours later told him that the money had been intended to cover his personal taxes. Following instructions, Mr. Valencia arranged for Del Monte now under IAT's control to transfer the $321,000 into Mr. Bours's personal account at Bank One in Tucson.

In a strongly worded letter almost a year later, Coopers & Lybrand refused to approve G.E.A.M.'s 1997 audit until it found sufficient documentation authorizing the payment. The dispute was not mentioned in the October 1997 public offering.

It took another eight months before Coopers & Lybrand finally released the audit. Lawyers for Del Monte say it was all just a misunderstanding. They produced records showing that on November 26, 1998, long after the $321,000 payment, G.E.A.M.'s shareholders approved a resolution ratifying the payment to compensate Mr. Bours for work he had done as chairman of the group, and, briefly, of Del Monte. Mr. Bours said the payment had indeed been for taxes, as laid out in his contract. He said he did not recall any problems with the Coopers audit.

Mr. Valencia, however, questioned why a big company like Del Monte would allow itself to be used to make such an unusual paymentunless there had been a prior agreement between IAT and Mr. Bours. "Any evidence of the big bribe, I don't have," he said. "But I do have evidence of something I consider to be illegal."

Mr. Bours said, "I didn't receive a penny" in bribes, and he denied all the accusations in the lawsuit. A Mexican senator, he is now a candidate for governor in Sonora.

In 1999, Mr. Valencia sued G.E.A.M. and Mr. Bours in Mexican courts to recover some $2 million in profit sharing and bonuses that he claims he and five other former employees were owed. He made similar accusations against Mr. Bours at the time. Robert T. Greig, a lawyer with Cleary, Gottlieb, Steen & Hamilton in New York, which represents Del Monte, called the accusations in the lawsuit "nothing new" and said all aspects of the 1996 transaction had been done according to law.

But Andres Rivero, a lawyer with Sullivan Rivero and Chase in Miami who represents the Mexican investors, stands by the allegations. "Bribe payments to C.E.O.'s in order to commit fraud in the purchase of a public company are always novel and unusual," he said.

Del Monte also faces a threatened suit by Eastbrook Caribe, an offshore investment company owned by Sheik Khalid bin Mahfouz, a Saudi banker who financed many of Mr. Cabal's acquisitions in the late 1980's. In that suit, which set off the market rumors about Del Monte, Eastbrook claims that there was conspiracy and securities fraud that invalidated the 1996 sale.

Del Monte lawyers dismissed Eastbrook's allegations as "frivolous and without merit," saying that Eastbrook lost any standing when it accepted $14.1 million on behalf of itself and Mr. Cabal as a settlement in a previous suit.
 

DOLE FOOD CHAIRMAN DAVID MURDOCK
BUYS REMAINING CORPORATE STOCK
WILL TAKE THE WORLD'S LARGEST PRODUCER
OF FRESH FRUITS AND VEGETABLES PRIVATE

WALL STREET JOURNAL ONLINE NEWS ROUNDUP: Dole Food Co. Chairman David Murdock has agreed to buy the rest of the giant food company and take it private in a deal consisting of $1.44 billion in cash and the assumption of $1.06 billion in debt.

Dole said late Wednesday [December 18] that Mr. Murdock will pay $33.50 a share for the approximately 76% of the company's outstanding common stock he doesn't already own. Mr. Murdock's offer is $4 a share more than the price the self-made billionaire offered in September, when he first proposed to take the world's largest producer of fresh foods and produce private.

Dole's shares surged $4.13, or 15%, to $32.58 each in 4 p.m. composite trading [December 19] on the New York Stock Exchange.

"I believe the company can be better managed as a private company," Mr. Murdock told the Ventura County Star shortly before the deal was announced. "I'm buying it, so I don't think it's a bad deal, but it's not a steal at this price," he added. "It's a very steep price in today's market "

Alexander Roepers, president and fund manager at Atlantic Investment Management Inc., which owns a six percent stake in Dole, said the price should be higher. "But given market conditions and the process the independent committee went through," he said, "this is possibly the best that they could come up with." Mr. Roepers wouldn't say whether he will vote to approve the deal, but he said that the higher price "is a good development."

Mr. Murdock and Dole's board of directors announced the agreement late        Wednesday night, hours before the expiration of his September offer, which already had been extended twice. The transaction still must be approved by Dole shareholders and the Securities and Exchange Commission. Dole said it will summon shareholders to vote on the deal in late February or early March.

The transaction was unanimously approved by Dole's board of directors, with Mr. Murdock abstaining. It also received the unanimous approval of an independent committee that was formed on September 24 to respond to Mr. Murdock's original offer. The committee rejected the original offer in October, and Dole sought other buyers.

Taking the company private will free Mr. Murdock both from having to pursue the wishes of shareholders pushing for higher stock prices and from having to promote Dole to Wall Street analysts, something Mr. Murdock has said he doesn't enjoy. Some observers have complained that his reluctance to sing the company's praises has depressed its stock value.

"I think we've been a well-run, a very, very conservative company," he said Wednesday. "We think that if you run a company well the market should accept it as being well-run ... but they believe it should be touted .... which is not what I've ever believed in doing."

The 79-year-old Mr. Murdock, who dropped out of high school and made his fortune in real estate, also said he has no plans to retire or to quit shopping for companies.

"I know of no reason to retire, and I certainly have no desire to retire," he said. "I've never been sick a day in my life. My father lived almost to 100, and I'm in a lot better shape than he was. So I have no reason to think about retiring. I like building companies."

---- Nick Baker of Dow Jones Newswires contributed to this article.
 

WAL-MART, WORLD'S LARGEST RETAILER,
FOUND GUILTY BY PORTLAND, OREGON JURY
FORCED WORKERS TO WORK UNPAID OVERTIME

STEVEN GREENHOUSE, NEW YORK TIMES: A federal jury in Portland, Oregon, found Wal-Mart Stores, the world's largest retailer, guilty yesterday [December 18] of forcing its employees to work unpaid overtime in the first of 40 such lawsuits to go to trial. In the four-week trial, dozens of Wal-Mart workers testified that under pressure from their managers they frequently clocked out after 40 hours and continued working.

"The company's witnesses said this absolutely never happens at Wal-Mart, and the jury didn't believe them," said Shane Youtz, one of the lawyers for the plaintiffs. "Our witnesses said, `What happens at Wal-Mart is, if you want to work there a long time, you have to work off the clock' It's part of the culture there."

In the lawsuit, 400 current and former employees from 18 stores in Oregon accused the company of violating federal and state wage laws by systematically pressuring them to work unpaid overtime.

After deliberating for four days, the jury concluded that Wal-Mart had  shown a pattern of widespread and unwavering violations. Damages are to be decided in a separate trial.

Bill Wertz, a spokesman for Wal-Mart, which employs more than one million workers in its 3,300 stores nationwide, said the company was disappointed by the verdict. "We tried to demonstrate to the jury that we have a strong policy against requiring our workers, our associates, to work off the clock, and that any violations were scattered and infrequent. We apparently did not make our case well enough."

Lawyers for the plaintiffs said Wal-Mart lost credibility when it put more  than 50 managers on the stand to testify that they had never seen employees work off the clock.

The Oregon suit was not a class action. Instead it involved a mailing sent out to 15,000 current and former Wal-Mart employees in Oregon that invited individuals to join the lawsuit. Lawyers have sued Wal-Mart in more than three dozen states, seeking to gain class-action status in asserting that the company squeezes tens of millions of dollars of free work out of its employees each year by pressuring or encouraging them to work off the clock.

"This case is about people working for free for America's largest employer," the plaintiffs' main lawyer, James Piotrowski, said in his closing argument last Friday. "It's about managers who learned how to put the pressure on."

Carolyn Thiebes, the lead plaintiff who worked as a personnel manager at stores in Salem and Dallas, Oregon, said in an interview that Wal-Mart frequently piled on too much work for 40 hours, so she often put in five to 15 extra hours off the clock each week. She said she feared that she would get in trouble if she put in for overtime or if she was seen as not finishing her assigned responsibilities within 40 hours.

Ms. Thiebes testified that several Wal-Mart employees had formed what she called "the Over-40 Club," in which members worked more than 40 hours a week and then asked managers to subtract hours from their time cards so the cards showed that the employees worked only 40 hours.

She also testified that Wal-Mart was so averse to paying overtime that her bosses sometimes asked her to use her computer to erase hours from employees' time records to help hold down costs, especially overtime costs. Federal law required that workers be paid time-and-a-half for all hours over 40.

"This verdict is great," Ms. Thiebes said. "I feel like somebody finally listened to me. I'm hoping that this sends a message to all Wal-Mart associates to come forward and speak up."

Mr. Wertz and other Wal-Mart executives said the instances of off-the-clock work were isolated. "Our policy calls for disciplinary action to be taken against any manager who requires or even tolerates off-the-clock work," he said.

Daniel Corey, a former lawn and garden manager for Wal-Mart in Pendleton, Oregon, testified that he feared he would lose his job if he took more than 40 hours a week to finish his job and then put in for overtime. "Because it's such a small community, jobs aren't that good there," Mr.  Corey testified. "You held on to your job. I feared losing my job. I feared getting fired."

In a class-action lawsuit in Colorado, Wal-Mart reportedly paid $50 million two years ago to settle a case involving 69,000 workers in that state. In another case, it agreed to pay $500,000 to settle a case covering 120 workers at one store, in Gallup, New Mexico.
 

AMIDST BIOTECH DIVISION LOSING STEAM,
STOCK DEPRECIATING IN VALUE BY 50%
DURING PAST YEAR, MONSATO CEO RESIGNS

SCOTT KILMAN, THE WALL STREET JOURNAL: Hendrik A. Verfaillie        resigned as chief executive and president of Monsanto Co., signaling more upheaval at the St. Louis crop-biotechnology company, which is struggling against consumer unease with genetically modified food.

A successor hasn't been named for Mr. Verfaillie, 57 years old, whose surprise departure was disclosed in a terse statement after a regular meeting of Monsanto's directors. Monsanto Chairman Frank V. AtLee, a longtime chemicals-industry executive, is serving as interim CEO while the board searches for a successor for Mr. Verfaillie, a chemist from Belgium who rose up through the ranks to become chief executive in February 2000.

Mr. Verfaillie was put in charge of Monsanto after the company, weakened by a spending spree on crop-biotechnology and seed companies, was acquired by Pharmacia Corp. The drug company kept Monsanto's highly profitable pharmaceuticals business and finished spitting out the agricultural operations in August. Monsanto's crop-biotechnology business, which swept across the American farm belt in the late 1990s, has since lost steam as consumers and regulators in important markets such as the European Union and Brazil put up barriers to using Monsanto's genetically modified seeds.

A number of recent missteps by Mr. Verfaillie's team have angered Wall Street investors, who have seen their Monsanto stock fall by half of its value during the past year. Monsanto, the world's biggest crop-biotechnology firm, had to slash its earnings outlook twice this year due to, among other things, a weak economy in Argentina and a Midwest drought that depressed farmer demand for its Roundup weed killer.

In October, a forecast released by Monsanto indicated a raft of charges will probably result in a net loss of roughly $1.7 billion for 2002. At the start of the year, Monsanto's management thought the company would probably earn about $2.25 a share, excluding any charges.

In a sign of the directors' displeasure with Mr. Verfaillie, who reaped $1.2 million last year in salary and bonus, the company announced that it will seek its next CEO from outside Monsanto, passing over logical candidates from within the company such as 44-year-old Chief Operating Officer Hugh Grant, who oversees Monsanto's world-wide business operations.

Messrs. Verfaillie and AtLee didn't return phone calls seeking comment. A statement released by Monsanto twp and one-half hours after its initial announcement indicated the board doesn't intend to make any big changes to Monsanto's strategy of selling around the world a handful of genetically engineered seed, including corn, soybeans, cotton, and eventually wheat.

"Hendrik and the board agreed that the company's performance during the past two years has been disappointing," said Mr. AtLee in the prepared statement.

In 4 p.m. [December 19] New York Stock Exchange composite trading, Monsanto dropped $1.19 to settle at $19.02 a share.

Mr. Verfaillie's departure will likely fan continued takeover speculation about Monsanto, which has a $4.9 billion market capitalization. Some Wall Street analysts say Monsanto stock is trading far below its acquisition value, based on the price of other recently acquired agricultural concerns. During 2001, Monsanto generated net income of $295 million, or $1.12 a share, on sales of $5.5 billion.
 

FOUR SENATORS CHARGE USDA WITHHELD
"IMPORTANT INFORMATION" ABOUT CONAGRA
PLANT SAFETY PROBLEMS, MISLED CONGRESS

RANDY FABI, REUTERS NEWS SERVICE:  Four Democratic lawmakers accused the U.S. Agriculture Department on [December 19] of "misleading Congress" in its investigation of a former ConAgra Foods beef plant, blamed for an E. coli outbreak that sickened dozens of people this summer.

The Greeley, Colorado, plant, which was sold to privately held Swift & Co. in September, recalled nearly 19 million pounds of ground beef from grocery stores in July. At the time, it was the second largest meat recall in U.S. history.

In a letter to U.S. Agriculture Secretary Ann Veneman, the four --- Sen. Richard Durbin of Illinois, California Rep. Henry Waxman, Ohio Rep. Marcy Kaptur and Connecticut Rep. Rosa DeLauro --- said the department omitted "important information about safety problems at the ConAgra plant." The group has repeatedly asked Veneman for full disclosure of the USDA's investigation into the recall.

"This omission had the effect of misleading Congress about the nature of food safety problems at the plant, and USDA's continuing failure to answer our questions perpetuates this misinformation," the letter said.

Alisa Harrison, USDA spokeswoman, said the department had yet to read the letter. "As always, we will take a close look at the letter and respond back to the members of Congress with the information," she said.

The department did reply in September, but the submitted documents were deemed insufficient by Democrats, saying the USDA did not reveal a string of food safety violations at the Colorado plant. Based on news reports, Democrats said USDA inspectors had cited the plant 31 times from July 1, 2001 to Aug. 27, 2002 for contaminated meat.

"We urge you to provide an immediate and complete response to the questions we raised in our July 26 and September12 letters," the latest letter said.

Last month, USDA inspectors closed the Colorado plant for four days because of animal feces contamination. The E. coli bacteria is carried by feces, which can spill onto other parts of an animal carcass during slaughter.

The plant is one of the largest slaughtering operations in the country, averaging about 5,500 head of cattle daily. The plant is controlled by a partnership that is majority-owned by a private investor group led by Hicks Muse Tate & Furst and minority-owned by foodmaker ConAgra. Beef at the plant was linked to at least 28 illnesses in seven states last summer.

Some of the beef was contaminated with E. coli O157:H7 bacteria. E. coli causes bloody diarrhea, vomiting and cramps. In severe cases, usually involving small children and the elderly, it can lead to kidney failure and death.

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