Published: 7:30AM BST 27 Sep 2009
The Swiss food giant buys up to a million litres a year from Gushungo Dairy Estate, controlled by Mrs Mugabe since, according to other dairymen, the previous white owner was forced by a campaign of violence to sell his property to the authorities for a knock-down price.
Under the European Union and American targeted sanctions against members of Mr Mugabe's network, it is illegal to transfer money or make transactions respectively with Mrs Mugabe.
Switzerland has its own set of sanctions, similar to the EU measures, which also target Mrs Mugabe and which prohibit providing funds to her or putting them 'directly or indirectly', at her disposition. Nestlé denies that it has broken Swiss law.
A Nestlé spokesman confirmed that at the end of last year, after eight of its 16 suppliers in Zimbabwe went out of business, Nestlé Zimbabwe - its subsidiary in the country - started buying milk on the open market, some of it from Gushungo Dairy Estate.
At first it bought it through a third party, but has been buying it directly since February, he said. "Nestlé does not provide any support, financial or otherwise, to the Gushungo Dairy Estate or to any political party in Zimbabwe," he said. "Nestlé is a truly global company which operates in almost all countries in the world, and therefore its products are found in widely diverse political settings."
The spokesman said Nestlé had "absolutely not" broken Swiss law.
"The legislation is internal to Switzerland," he said. "In any case, Nestlé Zimbabwe and any commercial transactions it engages in within Zimbabwe are subjet to Zimbabwean law."
Georgette Gagnon, the Africa director of Human Rights Watch, called for international investigation. "The set of sanctions that exist now are very important and must be maintained in the face of the continuing dire human rights situation in Zimbabwe.
"If these reports of this company buying things in violation of sanctions are true then obviously the Swiss government and the EU need to take action on this. They need to close this breach of sanctions."
If the evidence was "clear and unequivocal", she added, a consumer boycott was "one tool to let companies know that consumers are very concerned about their behaviour and won't tolerate it".
Amy Barry, spokesman for the anti-corruption NGO Global Witness, said: "Nestlé should ensure that it is not either directly or indirectly propping up illegitimate or brutal regimes.
"If it's true it's gravely serious and we would think it's something the European Commission and the Swiss would want to look into."