focus on ETHICS Chiquitas Slippery Situation For many people the little blue Chiquita sticker is

QUESTION

focus on ETHICSChiquitas Slippery SituationFor many people, the little blue Chiquita sticker is as familiar as a bananas yellow peel. One of the worlds two largest banana companies (along with Dole Food Co.), Cincinnati-based Chiquita is a global business with operations on six continents. Chiquita sources its bananas from Latin America, operating banana farms stretching from Mexico to Ecuador. Chiquita is so heavily invested in the region that, for a time, it was the largest employer in Latin America.Bananas are not the only item in Chiquitas product line, but they are by far the most important, representing over 50 percent of the companys sales. Because the banana industry is highly competitive, Chiquitas relationships in Latin America are vital to its success. This is reflected in the following statement from the companys 2009 Annual Report: To compete successfully, we must be able to source bananas of uniformly high quality at a competitive cost, maintain strong customer relationships, and quickly and reliably transport and distribute products to worldwide markets.Unfortunately, some of the countries where Chiquita operates are unsafe and unstable. A prime example is Colombia, where militant organizations, such as the United Self-Defense Forces of Colombia (AUC), wield a considerable amount of power.In 1997, Chiquita received threats to its facilities and employees and, through its Colombian subsidiary, began making payments to the AUC in exchange for protection. Although the extortion payments were not technically illegal when Chiquita first started making them, they posed an ethical challenge. The legality of the payments changed in 2001 when the U.S. State Department identified the AUC as a specially designated foreign terrorist organization, making it illegal for Chiquita to do business with them.In 2003, Chiquita sought guidance from the U.S. Justice Department and admitted to paying millions of dollars to the AUC. The payments finally stopped in 2004 when Chiquita sold its Colombian banana operations to a local company. Chiquita settled its case with the U.S. Justice Department in 2007 by pleading guilty to a single felony count and agreeing to pay a $25 million fine. This gave Chiquita the dubious distinction of becoming the first U.S. corporation ever convicted of financial dealings with terrorists.Chiquita saw their options in Colombia as (a) pay extortion to a terrorist organization or (b) put their employees safety at risk. Is it ethical to break the law in an effort to save lives?What, if anything, do you think Chiquita should have done differently?

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