20091223

HARARE (Reuters) - Swiss food company Nestle has suspended operations in Zimbabwe, complaining of harassment after it pulled out of a deal to buy milk from a farm taken over by President Robert Mugabe's family.

Nestle said it received an unannounced visit from government officials and police on December 19 and was forced to accept a milk delivery from non-contracted suppliers. Two of its managers were questioned by police and released without charge the same day.

"Since under such circumstances normal operations and the safety of employees are no longer guaranteed, Nestle decided to temporarily shut down the facility," the world's largest food group said in a statement.

The decision marks a setback for the unity government formed by Mugabe and Prime Minister Morgan Tsvangirai, his old rival, in an effort to persuade foreign investors it is safe to return and help rebuild a state ruined by a decade of decline.

Addressing a joint press conference with Tsvangirai, where the former foes gave an upbeat assessment of the unity government, Mugabe said he did not have details of Nestle's plant closure, before joking: "You like their chocolates?"

Tsvangirai, however, expressed concerns over the development, which he said undermined efforts to rebuild investor confidence.

"It is unfortunate that this is happening at a time when we want to attract investment and create jobs. The (Industry and Commerce) minister is talking to all the directors so it (Nestle) opens and even expands," Tsvangirai said.

"Shutting down a plant is overreaction, which is unnecessary."