Andreas Schotter Mary Teagarden
Blood Bananas: Chiquita in Colombia
No one laughs at the banana in its areas of origin. It is too serious a business, on which jobs and lives depend. Peter Chapman, Author of Jungle Capitalists.
For Chiquita Brands International, a pioneer in the globalization of the banana industry, bananas are not only serious business, they represent an array of economic, social, environmental, political, and legal hassles. Since its founding more than a hundred years ago as United Fruit Company, Chiquita has been involved in paying bribes to Latin American government officials in exchange for preferential treatment, encouraging or supporting U.S. coups ...view middle of the document...
At the same time, investigators in Bogota and on Capitol Hill were looking at other U.S. companies that may have engaged in similar practices, dealing with terrorists as part of the conduct of business. With this in mind, Fernando Aguirre, Chiquita’s CEO since 2004, reflected on how the company had arrived at this point, and what had been done to correct the course so far. He faced major challenges to the company’s competitive position in this dynamic industry. What would it take to position the company on a more positive competitive trajectory? Would this even be possible in this industry and in the business climate Chiquita faced?
Chiquita Brands International: Defendant
The atmosphere in the Washington D.C. courtroom on September 17, 2007, was testy, with the lawyers on both sides pointing fingers at each other. The defendant, Chiquita Brands International Inc., had already signed a plea agreement that included a US$25 million fine and a five-year probation period. In addition, Chiquita was required to hire a permanent compliance officer. The plea did not stop Assistant U.S. Attorney Jonathan Malis from taking a shot at Chiquita. He accused the company of making millions in profits while paying off Colombian right-wing terrorist groups, including the AUC (United Self Defense Forces of Colombia), for almost seven years. He said the almost US$2 million in payments made by Chiquita “fueled violence” and “paid for weapons and ammunition to kill innocent people.”3
Copyright © 2010 Thunderbird School of Global Management. All rights reserved. This case was prepared by Professors Andreas Schotter and Mary Teagarden, with the assistance of Monika Stoeffl, for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.
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Chiquita’s lead defense attorney, Eric Holder Jr., snapped back, accusing Malis of shading the facts, of “being a little too cute and a little too crafty,” as well as “a little deceptive.” Holder told the judge that the government was partly to blame for the company’s predicament. In 2001, the U.S. Secretary of State, Colin Powell, added Colombia’s AUC to the list of “specially designated foreign terrorist organizations” in company with mostly Middle East-based groups like Al Qaeda and Hamas. Holder argued that in 2003 Chiquita asked the U.S. Department of Justice if it should stop the payments to the terrorists. Holder said, “All the government had to do was, ‘yes, stop the payments,’ just say yes, but they never did.”
Bananas are Serious Business
As one of the first tropical fruits to be internationally traded, bananas are a cheap way to bring “the tropics” to North America and Europe. Over the years, bananas have become such a common, inexpensive grocery item that we often forget where they come from and how they get to us. Bananas flourish in tropical regions, such as the Caribbean and...