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BLOOD BANANAS: CHIQUITA IN COLOMBIA

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Afl Sdk

on 3 December 2014

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Transcript of BLOOD BANANAS: CHIQUITA IN COLOMBIA

From 1997 to 2007
Geography & Politics
History & Competitors
Would you still purchase Chiquita's products?
The events
Chiquita Brands International
Colombia
Successor of the
United Fruit Company
(founded in 1899)
1990: became Chiquita Brands Int.
2007
: leading distributor of bananas in the US ($4.7 billion revenues)

Core values:
Integrity
Respect
Opportunity
Responsibility

Added-value chain in Colombia
:
Production
Transportation
Distribution
The Big Three:
Population:
48 million people
Capital:
Bogota

2006: Agriculture represents 1/5 of Colombia's employment

$1.25
December 3, 2014
Lingjun Li, Linh Luong, Anfal Seddik
US appeals court says Colombians cannot sue Chiquita
Victims of Terrorists Cannot Sue Chiquita
Rights approach, Social Justice & Utilitarianism
Ethical analysis
BLOOD
BANANAS: CHIQUITA IN COLOMBIA
Outline
Civil war since the 1960s

What do
you
think?
Discussion questions
Debate:


2 groups
pro & anti "protection payments"
3 arguments for each group
1 argument include a theory of ethics: virtue ethics, deontologism, consequentialism, etc.
Market plan:


Groups of 4-5
1.Rebuild the company’s image
2.Eliminate the negative influence of the lawsuits against Chiquita
60% of the global banana trade
The Original Commercial
2001
2003
2007
2004
2000
1997
US government puts AUC on International Terrorist Organization's List
Executive decision making
Feb. 21, 2003
:

Kirkland & Ellis
, outside counsel, tell top executives they "must stop payments to AUC."
Chiquita officially stops payments
March 2004:
US Attorney general officially launches formal investigation

Chiquita stops payments

June 2004:
Banadex SA sold for
$43.5 million
Investigation process and criminal charges
March 2007:
Chiquita admits criminal plea of:
paying $1.7 million to AUC between 1997-2004
$825,000 of which was after AUC was listed as a terrorist group

Fined $25 million + 5 year probation
Begin payments to AUC
Chief Executives learn of payments
Payments were to "protect" Colombian workers and defend Chiquita against left-wing para-militaries like FARC
AUC was not designated as a "terrorist group"


April 24, 2003:
Chiquita
board of executives
and
general counsel
meet with Assistant Attorney General to disclose Chiquita's "protection payments" to the AUC
May 5, 2003:
Chiquita top management instructs Banadex to
continue payments
No top level managers indicted
Fine reduced to $25 million because of self-disclosure
Banadex SA
Check to third Party
Employee's income
AUC
Cash payment
Cash payment
AUC threatens Chiquita's property and employees
Military groups had already
killed

50 employees
Chiquita's executives claimed they were not aware until Feb. 2003
Chiquita seeks guidance from US Justice Department
Outside counsel
Kirkland & Ellis
Head of Audit Committee
R. Hills
General counsel
R. Olson
Assistant Attorney General
M. Chertoff
Gap in investigations
Key players
Chiquita Brands International
Cyrus Jr. FREIDHEIM
: CEO (2002-2004)
Robet OLSON
: senior Vice President & General Counsel
Roderick HILLS
: Director & Head of Audit Committee
Justice Department
Michael CHERTOFF
: Assistant Attorney General for the Criminal Division
David NAHMIAS
: Attorney for the Criminal Justice
Kenneth Wainstein
: Assistant Attorney General for National Security
US Attorney's Office
Roscoe Jr. HOWARD
: US Attorney
John ASHCROFT
: US Attorney General
Jonathan MALIS
: Assistant US Attorney
AUC (United Self-Defense Forces in Colombia)
Banadex SA
Chiquita's subsidiary in Colombia
Chiquita's outside counsel
tug-of-war
Benefit the employees and reserve their basic human rights and dignity
Payments Ethical
Payments Unethical
Ethical
Framework
Rights Approach
Contribute negatively to human well being even if results are economically beneficial
Social Justice
Any procedure producing an unfavorable outcome should be subject to review and change
Utilitarianism
"Greatest common good and number of people": workers are saved but the rest of the country is endangered
Most important of all is the reduction of human suffering
The affected banana land
2010
4,000 Colombian families of victims file a mass lawsuit
2011
Internal documents released by NSA strongly indicate:

"
Chiquita’s claims of extortion are false and that the company hired paramilitaries
"
June 2014
Chiquita aggressively
lobbying against
a 9/11 victims bill that would make it
easier to sue financial backers of terrorist groups
July 2014
Class action lawsuit dismissed by the US Appeals Court:

"
federal courts have no jurisdiction over the Colombian claims
"
What happened next?
CEO Freidheim left in 2003

Vice President Olson retires in 2006

Head of Audit Committee Hills left in 2007
Involved top executives got away
Hypothetical strategic recommendations
Annual Ethics training for all top-level management

Engage in annual assessment & reporting on efforts in Ethical conduct

Hold summits every couple of years to partner with other corporations who deal with international trade and distribution to improve safety regulations
I. Colombia: geography & political situation
II. Chiquita Brands International
III. Timeline of events
IV. Ethical analysis
V. Strategic recommendations
VI. Conclusion
Timeline of events
Thank you!
deep investigation & discussion
shifting personnel
tug-of-war
Reflexion on the case
Several shadow areas:
Why the US government remained silent?
Why no managers were indicted?
If AUC extorted Chiquita, why they did not retaliate when payments stopped?
Full transcript