Case Report: Blood Bananas: Chiquita in Colombia
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Chiquita Brands international was founded in 1899 after the merger of United Fruit Company and the Boston Fruit Company. As bananas be came more of a staple in every home so do Chiquita Bananas. Bananas are know to mainly grown in tropical places like Central America, Africa and Southeast Asia. Chiquita decided to have operations out of Colombia. During this time there was turmoil in Colombia and different terror groups form “against the government” & other wealthy people in the country. Some of these groups settled in the areas where Chiquita had facilities.
Chiquita run into problems with theses groups around 1997, mainly with FARC (Revolution Armed Forced of Columbia) and AUC. They began to kidnap and kill employees of this company. The terrorist groups began asking for money in turn they would stop harming their employees. For Chiquita this decision to pay the AUC seem to be an easy one because or the lack for government and the lack of laws in place.
There are many key issues that lead Chiquita Banana’s decision to pay the terrorist groups the FARC & the AUC. One key issues the increasing demand for bananas in new countries like Russia, China and other countries in the Middle East. Chiquita felt as if it had pressure to obtain and grow in these markets. Along with those new markets, Chiquita had their current demand in established markets like the United States and Europe. On average US consumes 27 pounds of bananas per person per year. In Europe its about 20 pounds per person per year. Chiquita also had issues in it Corporate Governance Mechanisms.
At least three of Chiquita’s top executives had a part in the decision to pay the AUC. One key individual in Chiquita’s choice to pay the AUC was Roderick Hill; he was the head of the Board of Directors Audit committee. Another was the then CEO Cyrus Friedheim. Last there is Robert Olson who was the Senior Vice President and the General Counsel for Chiquita. These men were only concern with company growth and performance, since they were getting compensated for on the metrics.
Another important cause to Chiquita’s actions in this country is the employees. The company felt, as it was their duty to protect their employees. If it did not pay the AUC, the AUC would have attacked or even kill its employees, that work and lived in that region of Colombia. Chiquita thought if they didn’t protect their employees that the nation and other countries have heard these stories and begin to question them, on the value they have for their employees.
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.
After all this is Chiquita has to move forward. Its current CEO Fernando Aguirre should acknowledge its wrongs but also reinforce its already established ethical code of conduct. This code should be one that top management upholds themselves. The top management set the example for all of its employees. It should uphold corporate social responsibility internationally as well as nationally. Even though Chiquita thought it was just protecting it facilities and employees it actually was taking a stand against the Colombian government, by aiding/ funding the AUC.
Although, companies shouldn’t usually get in political affairs, Chiquita it should look into having relationships with different non-for profit companies that promote the safety and well being of people in areas when it has operations. This could help improve its image not only in the company but also all over the world. Similarly to having relationships with different nonprofits, it should look into improving it relationships with local growers. This will change its companies image to one that cares for the countries it does business in.
Actions taken by Chiquita and its Colombian subsidiary, Banadex S.A. were not the best ethically there is not way it a can remain in the past. To avoid another scandal top management has to be committed to the ethical code it has in place. It can do this by having mandatory ethics training for employees; encourage reporting of possible problems; having consistent audits that are given by people who don’t have financial gain or motives; ensuring violation will be handled appropriately. Chiquita should do know what it should have done in the beginning, which was focus on its core company values