Chiquita Brands

International
Assignment

Overview
Chiquita Brands is a case about the politics of trade
and the practices of protectionism. Beginning with the
historical record of Chiquitas predecessor, the United
Fruit Company, it also presents a classic story of
foreign investment and the political impact it can have.
The case begins with a description of the situation
facing Keith Linder, Chiquittas president and their
operating officer
in 1994. Over the past three years the company has
suffered consecutive and devasting losses. By 1994,
the stock has tumbled tp $13 down from a peak of $40
in 1991.

Contd.
Chiquitas problems come from a range of
sources. But central to its ills, the foremost in
Linders mind, are recent trade policy
developments in the European Union ( EU).
As part of its movement towards a single
market, the EU implemented in 1993 a
banana import regime that significantly
restricts Chiquita s activities in the $3 billion
European market. Linder must decide how to
respond to this policy and the market threat
it represents.

THE CHIQUITA BRAND

 Chiquita Banana
The trademark logo mascot, Chiquita
Banana, was created byDik Browne, who is
best known for hisHgar the Horrible
comic strip. 1940s vocalistPatti Claytonwas
the original 1944 voice of Chiquita Banana,
followed
byElsa Miranda,June Valliand
Monica Lewis. Advertisements featured the
banana character wearing afruit hat. The
banana was changed into a woman in 1987.

Data

Type Public
Industry:
Founded:
Headquarters :

Key people:
Products:
Revenue:
Net income :
Employees:

:(NYSE:CQB)
Agriculture
1871
Downtown Cincinnati
Cincinnati, Ohio
Fernando Aguirre, President & CEO
Food,Bananas
$4.663 BillionUSD(2007)
-$49 MillionUSD(2007)
10,000 (2007 est)

Contd.
Chiquita Brands International Inc.(NYSE:CQB) is a producer
and distributor ofbananasand otherproduce, under a variety of
subsidiarybrand names, collectively known asChiquita. Other
brands include Fresh Express salads, which it purchased from
Performance Food Groupin 2005. Its headquarters is located in
DowntownCincinnati, Ohio.Chiquita is the successor to the
United Fruit Companyand is the leading distributor of bananas
in the United States. The company also owns a German produce
distribution company,Atlanta AG, which it acquired in 2003.
Chiquita was formerly controlled by Cincinnati businessman
Carl H. Lindner, Jr., whose majority ownership of the company
ended as a result of Chiquita Brands International exiting a
prepackaged Chapter 11 bankruptcy on March 19, 2002. The
enterprise changed its name to Chiquita Brands and operates
with that name to this day.

History
Chiquita Brands International Inc. was formed in 1871 by U.S. railroad entrepreneur
Henry Meiggsas theUnited Fruit Company. It was reformed in part by an Italian
entrepreneur in Boston when the company changed its shipping practices. In 1970 it
became the United Brands Company when it was purchased byEli Black. He outbid
two other conglomerates,Zapata CorporationandTextron, for a controlling interest in
the company. Black would take his own life over a scandal in 1975. In 1985 the
company became Chiquita Brands International.
In 1928, thousands of workers were murdered by military forces inCinaga(Colombia
). The workers were protesting against the bad working conditions in the company
plantations. This episode is known in the history of Colombia as theMasacre de las
Bananeras(Banana massacre).Gabriel Garca Mrquezdescribes
in
his
novel
One Hundred Years of Solitudethe inhuman impact that the company had inColombia
.
In 1975, an SEC investigation revealed that the company had bribedHonduran
PresidentOswaldo Lpez Arellanoand Italian officials. The scandal was named
Bananagate.
In the 1980s, the company (then known as United Brands Company) was involved in
a leadingCompetition Lawcase when they were found to abuse their dominant
position in the banana and fruit supply markets by theEuropean Commission.

The Cincinnati Enquirer controversy

On May 3, 1998,The Cincinnati Enquirerpublished an eighteen-page

section,[4]"Chiquita Secrets Revealed" byEnquirerinvestigative reporters
Michael GallagherandCameron McWhirter. The articles accused the
company of mistreating the workers on itsCentral Americanplantations,
polluting the environment, allowingcocaineto be brought to the United
States on its ships, bribing foreign officials, evading foreign nations' laws
on land ownership, forcibly preventing its workers from unionizing, and a
host of other misdeeds.
Chiquita denied all the allegations, and sued after it was revealed that
Gallagher had repeatedly hacked into Chiquita's voice-mail system. (No
evidence ever indicated that McWhirter was aware of Gallagher's crime or
a participant.) A special prosecutor was appointed to investigate, because
the elected prosecutor at the time had ties toCarl Lindner, Jr.On June 28,
1998, theEnquirerretracted the entire series of stories, published a frontpage apology, and paid the company a multi-million-dollarsettlement.The
Columbia Journalism Reviewreported both $14 million and $50 million for
the amountChiquita's Annual Report mentions 'a cash settlement in excess
of $10 million'. One of the reporters, Gallagher, was fired and prosecuted
and the paper's editor,Lawrence K. Beaupre, was transferred to the
Gannett's headquarters amid allegations that he ignored the paper's usual
procedures on fact-checking in order to win aPulitzer Prize. Chiquita has

Payments to paramilitary groups

On March 14, 2007, Chiquita Brands was fined $25 million as part of a
settlement with theUnited States Justice Departmentfor having ties to
Colombian paramilitarygroups. According to court documents, between
1997 and 2004, officers of a Chiquita subsidiary paid approximately $1.7
million to the right-wingUnited Self-Defense Forces of Colombia(AUC), in
exchange for local, employee protection in Colombia's volatile banana
harvesting zone. Similar payments were also made to the
Revolutionary Armed Forces of Colombia(FARC),
as
well
as
the
National Liberation Army(ELN) from 1989 to 1997, both left-wing
organizations.[5][6]All three of these groups are on the U.S. State
Department's list ofForeign Terrorist Organizations.
Chiquita currently faces serious charges in a lawsuit issued in June 2007.
According to the attorney of 173 family members of victims of the AUC
militia this could be the biggest terrorist case in history and may put
Chiquita out of business. Terry Collingsworth, a lawyer with International
Rights Advocates who is involved with the multi-million dollar litigation,
said: "This is a landmark case, maybe the biggest terrorism case in history.
In terms of casualties, it's the size of three World Trade Center attacks."[7]

Contd.
Despite reaching a deal with US prosecutors, Chiquita Brands
International still may have to face criminal charges in Colombia, which
could even include the extradition of some of its current and former
board members. Specifically, on December 7, 2007, "the 29th
Specialized District Attorney's Office in Medelln called the board
members of Chiquita [] to make statements concerning charges for
conspiracy to commit an aggravated crime and financing illegal armed
groups. The court order mentions Robert Fisher, Steven G. Wars, Carl H.
Linder, Durk Jaguer, Jeffrey Benjamin, Morten Amtzen, Roderick Hills
(former committee director of Chiquita), Cyrus F. Freidheim (former
general director and most recently president and CEO of a large media
group), and Robert Olson, former legal counsel. The nine of them,
according to the initial data obtained by the Attorney General's Office,
knew of the illegal operation through which 1.7 million dollars were
transferred to the AUC, a charge to which Chiquita has already admitted
and for which the US justice system fined it 25 million dollars

Alleged continuing workers' rights violations

In May 2007, the Frenchnon-governmental organization

(NGO) "Peuples Solidaires" publicly accused the Compaia
Bananera Atlntica Limitada (COBAL), a Chiquita subsidiary,
of knowingly violating what the NGO describes as "its
workers' basic rights" and endangering their families' health
and their own. Allegedly, the banana firm has carelessly
exposed labourers at the Coyol plantation inCosta Ricato
highly toxic pesticides on multiple occasions. Additionally,
the human rights group accuses the company of using a
private militia to intimidate workers. Finally, Peuples
Solidaires claims that Chiquita, despite a regional
agreement between the company and local unions requiring
prompt investigation of grievances, has ignored certain
union complaints for more than a year

Human rights violations in literature

Several authors have denounced human rights violations
committed by the United Fruit Company (now Chiquita).
The
most
important
ones
are
One Hundred Years of Solitudeby
Gabriel
Garca
Mrquez,Green PopebyMiguel ngel Asturias,La Casa
GrandebyAlvaro Cepeda Samudio,
andthe poem
United Fruit CompanybyPablo Neruda, included in his epic
workCanto General. Garcia Marquez, Asturias, and Neruda
were awarded with the Nobel Prize in Literature. According
to some studies, the workNostromobyJoseph Conradwas
also inspired by theUnited Fruit Company. Another author
in Costa Rica, Carlos Luis Fallas, wroteMamita Yunai(
Spanish:Yunaimeans "united").

Assignment questions
What role has politics played in the
history of Chiquita Brands and its
predecessor?
What role has protectionism played
in the global banana market?
What should Linder do about the
EUs banana policy? How should Bob
Dole respond to Linders request?