Chiquita Brands International, Inc.

Chiquita Brands International, Inc. is a Cincinnati, Ohio-based producer, marketer, and distributor of bananas and other produce under a variety of brand names, collectively known as Chiquita. It is one of the world's largest banana producers, the largest supplier of bananas in Europe, and a major supplier in North America with 39% of the US market share. Approximately 43% of Chiquita’s sales are attributed to bananas. In 2007, Chiquita brought in $4.66 billion in revenue from operations in more than 70 countries around the world.

Company History

Chiquita is the successor to the United Fruit Company, which began in 1899 as a merger between the Boston Fruit Company and railroad companies owned by Minor Keith in Costa Rica. The United Fruit Company operated throughout Latin America and the Caribbean, including Costa Rica, Honduras, Cuba, Nicaragua, Colombia, Panama, Guatemala, and Ecuador. The United Fruit Company was often the technological vanguard in terms of banana production and transport, instituting refrigerated shipping for fresh produce. (United Fruit’s ships were dubbed The Great White Fleet due to the use of white paint to deflect the sun and the sheer size of the fleet), cardboard boxing of bananas, early initiation of radio communications between operations in the United States and Latin America, and research on disease-resistant varieties of bananas.

In 1984, Carl H. Lindner, Jr., the Cincinnati billionaire, bought out two of United Fruit’s principal shareholders and named himself the CEO of the company. He streamlined activities and moved the company’s headquarters to Cincinnatti. In 1947, “Chiquita” had been registered as a trademark in the United States, and was, as of 1990, used as the company name. After several acquisitions in fruit and vegetable processing companies and produce distributors, Chiquita expanded beyond banana sales to marketing of other fresh and processed fruits and vegetables. Chiquita’s banana business suffered through much of the 1990s, in part due to quotas enacted by Europe giving preference to bananas originating in islands that were former European colonies, striking a blow to Chiquita bananas which were largely grown in Central and South America.

Political and Public Influence

Several of Chiquita’s former directors and legal advisors are tightly linked to the U.S. federal government. Roderick Hills, the former director and head of Chiquita’s audit committee, previously served as a legal advisor to President Gerald Ford and as President of the Board of the Securities and Exchange Commission between 1975 and 1977. Joseph Whitehouse Hagin, Vice President of Chiquita from 1991-2000, served as Deputy Campaign Manager in George W. Bush’s 2000 campaign and Deputy Chief of Staff at the White House for George W. Bush from 2001-2008.

Eric H. Holder Jr., President-Elect Barack Obama’s nominee for U.S. Attorney General and deputy attorney general in the Clinton administration, was the lead defense attorney for Chiquita Brands during the Department of Justice’s indictment of the company for making payments to terrorist groups in Colombia as well as in several lawsuits filed against Chiquita for alleged human rights violations committed in Colombia by Chiquita-financed terrorist groups.

Carl H. Lindner Jr., President of the Board from 1984 to 2002 and CEO of the company from 1984 to 2001, is a major Republican donor; according to Mother Jones, between 2000 and 2004, Lindner donated more to PACs, individual candidates, and parties than any other American individual. In particular, Lindner was a major donor and fund-raiser for the 2008 McCain campaign and the Republican Party.

Chiquita Brands’ lobbying expenses totaled approximately $140,000 in 2007, paid largely to the firms Covington & Burling and McDermott, Will & Emery.

Corporate Accountability

Labor and Human Rights

Chiquita has long had significant controversy surrounding its labor relations and human rights record. In perhaps the company’s earliest highly publicized labor controversy, United Fruit banana workers in Colombia performed a series of strikes aimed largely at getting United Fruit to formally recognize them as workers (rather than subcontracting) and to pay them in cash rather than in vouchers to be used at United Fruit’s commissaries. These strikes ended violently in the early morning of December 6, 1928, when the Colombian army, under the command of General Carlos Cortés Vargas, opened fire on strikers in the town of Ciénaga, killing and wounding many strikers. The number of strikers reported killed and wounded ranges from 9 to over 3000 and remains a source of vigorous debate. These events were later famously fictionalized in Gabriel García Márquez’s 100 Years of Solitude.

United Fruit has also been named as an influence in the 1954 ouster of democratically elected president of Guatemala Jacobo Arbenz, which is widely attributed to orchestration by the CIA after Arbenz facilitated the passage of land reform legislation which affected United Fruit’s land holdings in Guatemala. For more detail on the coup and its relationship to United Fruit, see the book Bitter Fruit.

The contemporary version of the relationship between labor relations, banana production, and violence is highlighted in the more recent developments surrounding Chiquita’s 2007 guilty plea to the U.S. Department of Justice that it had made payments (through its wholly-owned subsidiary Banadex) from 1997 to 2004 to the Colombian paramilitary organization Autodefensas Unidas de Colombia (AUC), designated by the U.S. government as a foreign terrorist organization. Chiquita continued to make these payments after having confessed to the Department of Justice and received explicit orders to discontinue payments. In November 2007, Chiquita agreed to pay a fine of $25 million. No individual directors or officers were named in the DOJ suit against Chiquita.

On the heels of Chiquita’s confession, several suits were filed in U.S. courts by private Colombian citizens, with the help of U.S. non-governmental organizations, firms, and other lawyers, for human rights violations committed by the AUC during the time period when Chiquita was funding the organization. These suits were filed under the Alien Tort Statute, a 1789 U.S. law which permits foreign nationals to file suits for human rights abuses committed abroad. The Colombian citizens filing suits include the family members of labor union leaders and other individuals assassinated or tortured by the AUC, individuals personally harmed by the AUC, and the family members of five missionaries who were kidnapped and murdered by the AUC. In addition to funding the AUC, some claim that Chiquita also allowed its Colombian facilities to be used to traffic arms.

Labor disputes have also occurred in other countries such as Honduras, where in 1996 Chiquita evicted 100 banana workers and their families from their homes and bulldozed homes, churches, and crops after shutting down a banana plantation. Human Rights Watch, in a 2002 report, also claimed that Chiquita workers (along with Dole and Del Monte workers) were forced to drink unclean water, handle toxic chemicals, and work as young as the age of eight, with children earning on average $3.50 a day. Ecuadorian banana workers were also fired and intimidated when attempting to organize and strike.

In 1998, the Cincinnatti Enquirer published a series of investigative articles on Chiquita’s activities in Latin America, claiming Chiquita suppressed union activity on its farms, used toxic pesticides banned in the U.S., Canada, and the E.U., and bribed government officials, among other claims of misconduct on the part of the company. The paper later published a formal apology, citing illegally obtained voicemail messages used in the production of the investigative series. The reporter responsible for the series was terminated, and the paper also paid Chiquita a settlement of over $10 million.

Environment

Chiquita workers in Nicaragua, Costa Rica, Honduras, and elsewhere have accused the company of using toxic agro-chemicals, including pesticides outlawed in other countries including the U.S., in the production of their bananas. In 2002, a Nicaraguan court sentenced Chiquita, Dole, and Dow to pay $489 million in damages to Nicaraguan workers suffering from injuries incurred from contact with the pesticide Nemagon, also known as DBCP, which was banned in the US decades before after it was proven to cause severe health effects, including vision loss, organ damage, infertility, cancer, birth defects, and miscarriages. The companies, however, refused to appear in Nicaraguan court or pay the fine, leading the workers to file suit in the U.S. in 2003. Thousands of Costa Rican banana workers followed suit in 2004. Filipino workers had also filed similar claims in U.S. courts as early as 1997. One of the leaders of the banana workers organizing around similar cases filed in Honduras was shot and killed by two unknown men after the Honduran ruling.

Anti-Trust and Tax Practices

The European Antitrust Commission targeted Chiquita, along with other key market players, with allegations that they violated antitrust and competition laws, finding in 2008 that Chiquita and other companies fixed prices in eight EU states. Chiquita avoided an 83 million euro fine, as it applied for immunity as a whistle-blower and provided the EU with information necessary for the investigation.

Produce purchasers and consumers also filed several class action suits in Florida alleging that four of the world’s largest banana producers and marketers – Chiquita, Dole, Del Monte, and Noboa – engaged in price fixing on bananas and conspired to fix banana prices.

Social Responsibility Initiatives

Rainforest Alliance contacted Chiquita in 1992 and began a relationship which produced the Better Banana project standards, which focus on the reduction of negative environmental impacts and the improvement of working conditions for banana workers. One hundred percent of the farms actually owned by Chiquita are certified by Rainforest Alliance. In 2005, Chiquita announced that 100% of the farms it owns in Latin America were certified to the SA8000 international labor standard.

Chiquita’s Code of Conduct was also expanded in 2000 to include social responsibilities and permit union organizing. Chiquita was widely criticized for not including labor unions in the development of the changes in the Code.

Chiquita also signed a joint agreement with the Latin American Coordination of Banana Workers Unions (COLSIBA) and the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) in 2001 which affirms workers’ rights to organize and bargain collectively, after several years of heavy campaigning against Chiquita regarding workers’ rights.

Chiquita has won awards for social responsibility from the Organization of American States and The Trust for the Americas.

Business Scope

Chiquita’s annual reports, SEC filings, and stock quotes are available on the following website: http://phx.corporate-ir.net/phoenix.zhtml?c=119836&p=irol-irhome

Governance

A list of the members of Chiquita’s Board of Directors is available on the following website: http://phx.corporate-ir.net/phoenix.zhtml?c=119836&p=irol-govBoard

A list of Chiquita’s managers is available on the following website: http://phx.corporate-ir.net/phoenix.zhtml?c=119836&p=irol-govManage

Contact Information

Corporate Headquarters: Chiquita Brands International, Inc. 250 East Fifth Street Cincinnati, OH 45202 USA +513-784-8000

Articles and Resources

Selected Books and Articles on the Company

• Marcelo Bucheli, Bananas & Business: The United Fruit Company in Colombia, 1899-2000
• Steve Striffler & Mark Moberg, Banana Wars: Power, Production, and History in the Americas
• Catherine LeGrand, El Conflicto de las Bananeras
• Gabriel Fonnegra, Las bananeras: un testimonio vivo
• Avi Chomsky, Globalization, Labor, and Violence in Colombia’s Banana Zone, International Labor and Working Class History (November 2007)
• Judith White, Historia de una ignominia
• Judith White, The United Fruit Company in the Santa Marta Banana Zone: Conflicts of the 20s
• Stacy May, The United Fruit Company in Latin America
• Schlesinger & Stephen Kinzer, Bitter Fruit: The Story of the American Coup in Guatemala
• Frederick Upham Adams, Conquest of the Tropics
• Gabriel García Márquez, Cien Años de Soledad
• 60 Minutes, The Price of Bananas, http://www.cbsnews.com/stories/2008/05/08/60minutes/main4080920.shtml