Bananas were the first tropical fruit to be internationally traded. They were brought the tropics to North America and Europe. They grow best in tropical regions such as Central America and the Caribbean. Of the 300 different varieties of bananas worldwide, 20 are grown commercially in Africa, Asia, and Latin America. In 2010, bananas were ranked third on the list of foods eaten routinely in the world.
Founded in 1989, Chiquita was the successor of the United Fruit Company. For many years, Chiquita was the largest employer to be located in Latin America. They are known for revolutionizing the banana trade by using refrigerated ships for the first time. Bananas represent a collection of economic, environmental, social, political, and legal hassles. The rewards of doing business abroad are huge, but the risk can be massive. This case study questions the ethics and morals of Chiquita while doing business abroad.
For more than a hundred years, the company now known as Chiquita has been paying bribes to Latin American government officials to receive preferential treatment, building an abusive monopoly, encouraging or supporting U.S. coups against smaller nations, exploiting local workers, putting in place dictatorships in Central America’s, and now doing business with terrorists. Doing business in Columbia has proven to be a major hazard since the country is just emerging from a deadly civil war and dealing with the effects of narco-terrorism. From 1997 to 2004, Chiquita made protection payments to the AUC terrorist groups. They were advised in 2003 to stop making protection payments, but continued to make the protection payments to prevent employees from being killed. The company had already lost fifty employees to death at the hands of the terrorist.
In the year of 2004, Chiquita admitted to criminal responsibility to the U.S. Justice Department. This admission told of one of their Columbian banana subsidiaries had been making protection payments since 2007 to AUC, the terrorist group. The voluntary admission of the criminal act brought about a high-profile investigation and a legal trial followed. Chiquita entered a plea agreement in 2007 to resolve criminal prosecution. The plea agreement included a five-year probation period, hiring a permanent compliance officer, and a fine of US$25 million. Chiquita became the first major U.S. Company to be convicted of dealing with terrorist.
Fernando Aguirre, Chiquita’s CEO since 2004, was still struggling with the issues the company experienced by dealing with the terrorist. He believes that he understands Chiquita’s journey from the inception to now. Aguirre continues to position the company on a more positive path and avoid the negative legacy that continues to follow the company. Bananas remain the key to Chiquita’s future with sales representing 43 percent of the sales.