Case Study:
Chiquita in Colombia: Funding Paramilitary Groups to Protect Business and Employees
Presented by: Valerie Reese
Case Summary:
United Fruit Company, a company that grows bananas in Central America and exports them to North America and Europe, became Chiquita Brands International in 1984 through a series of mergers and control changes (Maurer, 2012, p. 485). Chiquita Brands relocated its headquarters to Cincinnati, Ohio, and began to expand its holdings in land and shipping (Maurer, 2012, p. 485).
Chiquita Banadex planation, located in Colombia, seemed to operate as a model facility by subscribing to international standards set by international non-governmental organizations (NGOs) on worker
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488). According to Maurer, criminal charges were filed against Chiquita under the U.S. antiterrorist law in March, 2007 (Maurer, 2012, p. 488). Chiquita plead guilty and paid a $25 million fine (Maurer, 2012, p. 488).
Link to Course: Chiquita suffered both legal costs and reputation costs. The company unintentionally acted unethically by working with AUC, not realizing that it had been placed on the FTO list. However, Chiquita acted intentionally unethical by continuing with the payments to AUC after they did realize that AUC was on the FTO list and that it was illegal to continue to make the payments. Chiquita had a Code of Conduct that emphasized employee health and safety, among other things, yet they allowed their employees to be brutally killed by the same groups they were paying to protect them.
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The company could have closed down and sold its banana plantation in Colombia, but Chiquita let the atrocities continue for years. Perhaps Chiquita was following the analytical framework of utilitarianism. Chiquita may have thought that making these payments to paramilitary groups was protecting more workers than it was harming; therefore, it was the right thing to do.
Knowing that paramilitary groups had murdered Chiquita workers, one would assume continuing to make payments to these groups would be wrong. When Chiquita continued making payments and workers were still being massacred, one should consider stopping the payments and selling the farmland. Perhaps Chiquita could even relocate the banana plantation and help relocate the workers to a more secure area.
Chiquita faced legal challenges by doing business in a politically unstable foreign environment. A lesson learned from this case is to keep up with and always abide by the laws set in the foreign country, as well as one’s own country. Following the laws and making sure one knows the laws is good advice for any firm starting a business in a similarly volatile
ETHICAL ISSUE STATEMENT: Did Burlington allow one individual, Marvin Brown, to make an unethical business decision to retaliate against employee Sheila White?
Another corporation that operated unethically was Ford Motor Company with the production of the Ford Pinto. To compete with international competition and achieve Lee’s goal of producing the Pinto within a small time frame led to designing and manufacturing flaws. This resulted in a fuel tank design that would put the Pinto in a combustible situation should rear end accidents penetrate the poorly designed fuel tank. Realizing the design malfunction and deciding how to fix the fuel tank
I first went to the Spanish Fork Chiro for it was closer to my work. After some treatment, I felt I was not improving because the pain was the same. The massage helped me however when it comes to a chiropractor treatment, I felt sore. After some research and found Ohana Chiropractor, the x-ray gave more insight of my injuries and matches the services I needed which the Spanish Fork chiropractor lacks.
Chiquita, the oldest banana transnational in Latin America was the primary target of banana worker rights and environmental activists until 2001. The company has since teamed up with the Rainforest Alliance to roll out the Alliance’s standards to its banana farms in Latin America.6 Chiquita prides itself on its recent changes, which have involved revamping the company to promote “The Chiquita Difference”; this includes a philosophy of social responsibility, sustainability, community involvement and food safety.7 These changes arose from the use of political activism by consumers in response to poor workers rights, thus exemplifying the fact that people do realize where their food is coming from and are willing to fight for those who create it. This shows that the process of defetishization has begun for many. Production
It seems that in going through Chiquita’s company background, that they have been somewhat of a shady brand since its origin. Eli Black, CEO in 1970, paid a US$1.25 million bribe to Honduran official in return for them reducing taxes on the company’s banana exports. He then proceeded to kill himself. The next CEO, Carl Linder, was know for ‘bottom fishing’ and led the company into bankrupty in 2002. Next in line to assume the title was Agguire.
I see historians as painters because everyone sees, and takes in things differently. There are many historians out there that hear information, and turn it into their version. By way of illustration, paintings of Noah’s Ark. If I were to look up Noah’s Ark in Google Images, I would get multiple different paintings of it. This is because there is no photographic evidence of what the ark looks like so the question is: why are they all different? That is because each artist sees the ark in a different light. Some imagine it longer, shorter, taller, smaller, etc. No one sees it exactly the same, and that is why historians are like painters. They paint history the way they picture it from the information they gather. The thing is historians are
* Free movement of capital is intended to allow investment of properties between countries, something that could help banana growers since they can look for more fertile land in neighboring countries.
It is at this first stage of production at the plantation where the most exploitation of workers takes place. As an article about workers’ rights in Ecuador says, “people are not seen as being as important as the final product” (Astorga 2). Because a lot of banana exporting countries have monoculture economies, most of the countries depend on jobs and income from banana producers. Most of these jobs are contracts too resulting in only temporary work. Not surprisingly, 10 cents of every dollar spent on Chiquita bananas stays in the production process (Wiley 71). Banana workers are notorious for being paid dismal wages; it should be no surprise that profits benefit the powerfully rich fruit companies not plantation workers. Ecuador , in particular, is known for paying the lowest wages because there are few unions. The average daily wage in Ecuador is $2 in contrast to $9 in Costa Rica (STITCH), allowing Ecuador to sell boxes of bananas for cheaper. With no unions, Chiquita does not pay health insurance, overtime pay or money for education. For most banana workers the threat of being fired triumphs the promises of unions, simply because Chiquita would not be profitable without cheap labor. For banana workers they must work under strenuous working conditions, often working twelve hour days, carrying heavy bunches of bananas cut from the banana trunk.
The company felt as if it had it arm-twisted behind its back but in actuality it didn’t. Its choice to pay the AUC was a decision that could have been adverted. Alternative actions could have been taken. For example it they could have hired security or move out of Colombia. Even though both of these are risky and high costing decisions, they still were decisions that were over looked just for financial gain. The company probably felt as if paying the AUC was cheaper than hiring its own personal to insure employee safety.
Prior to 1994, Europe accounted for nearly 40% of world banana imports by volume, of which roughly 60% came from Latin America, the primary location of Chiquita Brand International’s banana production. However, in 1993, a common banana import policy, council Regulation (EEC) 404/93, became effective four
In the book, Banana: The Fate of the Fruit That Changed the World (2008), Dan Koeppel talks about the historical background of banana. He also talks about its’ importance to African farmers and its’ importance to Latin America and Asia in economic terms. He describes that a disease called blight has caused serious threats to banana crops, as it is rapidly destroying the banana crops around the world (Koeppel, 2008). In this book, the author describes the role of two mega companies; Dole and Chiquita. They are committing massacres in the name of producing cheap banana. In Latin, America Chiquita is exploiting the labor. It also supports
For example, in 1998 Chiquita fell a victim of an undercover investigation into dangerous and illegal business practices. The Cincinnati Enquirer, a paper based in Kentucky, accused the company guilty of “labour, human rights, environmental and political violations” in central America, leaving an “unsavoury impression of our company” according to Jeff Zalla, current corporate responsibility officer at Chiquita. (Luthans, F., & P. Doh, J. 2012).
Coca Cola had been accused of unethical practices in some of its locations overseas, in particular its Colombian location. Coca Cola had seen initial success, but had no idea what was about to hit them. The country had a past of violent uprisings, as the government has been relatively unstable in the past few generations. As such, there is a heightened political nature of many of the citizens there, who often fight hard for workers rights. The company was accused of showing "complicity in the murders of union leaders in Colombia" (Lane, 2012, 37-1). In Urabรก, a particularly violent and politically active city in Colombia, Isidro Gil, a major union leader, was reportedly apprehended and murdered on location at one of the company's bottling plants in Colombia. Union leaders had been bringing allegations of Coca Cola breaking the Alien Tort Claims Act and the Torture Victims Protection Act. Many of these efforts were in the midst of a major anti-globalization trend that was occurring in Colombia.
Chiquita Brands International seems to have an autocratic leadership style locally but laissez-faire at headquarter level. In the 1960s, the Revolutionary Armed Forces of Colombia (FARC) and National Liberation Army (ELN) was founded and this cause guerrilla warfare. The FARC was against “the United States influences in Colombia, neoimperialism, monopolization of natural resources by multinational corporations, and paramilitary/government violence” (Schotter & Teagarden, 2010). They was aware of problems involving “farm workers labored long hours in dangerous conditions, agrochemical runoff contaminated water, and tropical forests were cleared for expansion” (Schotter & Teagarden, 2010). Furthermore, the drug cartels were within the country and providing illegal drug trades; which is when the United States backed the War on Drugs. Somewhere between late 1980’s and beginning of 1990’s, Chiquita paid “taxes” to the illegal drug trade while hoping to keep employees safe. No changes were made until 1992 when Dave McLaughlin, Managing Director and
There is a fine line between what is ethically right or wrong with an action committed by an organization. According to Audi, “sometimes ethics is compromised without dishonesty but by deficiencies in clarity or candor or both” (Audi, 2009). Being dishonest and not telling the entire truth are examples of ethical dilemmas.