• Together with spotlighting
venal local officials, newspaper series reveals extensive lawbreaking,
chicanery and deception by Chiquita in Honduras, Guatemala and Costa
Rica as a matter of preference rather than necessity
• Gannett paper's ongoing
installments could very well detail the full extent of the company's
use of armed goon squads to terrify Honduran and Guatemalan peasants;
its possible links to the Honduran death squad Battalion 316, and to
Contra-era rebel s; its undue influence on the decision of the Clinton
Administration to file a complaint on Chiquita's behalf before the World
Trade Organization against the modest EU quota for Caribbean bananas,
followed by a $500,000 gift the next morning by Chiquita C EO Carl Lindner
to the Democratic Party; full scan on Lindner's multi-million dollar
contributions to both Republicans and Democratic national and local
politicians which likely involved excessive giving
• Honduran Embassy's Minister
Benjamin Zapata's strong defense of Chiquita comes as no surprise because
solid information, including a tape recording, reveals him as an underhanded
Chiquita servitor
• Subordination of Honduran
courts, fake land titles; carefully crafted strategies to break unions
and to avoid paying workers benefits; allegations of an attempted abduction
and a plot to murder the manager of a rival banana marketing company;
quest ionable links to U.S. embassy in Tegucigalpa; payoffs to potential
adversarial witnesses as well as soldiers, police and bureaucrats on
the take, and the routine subordination of Honduran judges and vicious
threats to those few who refused to sell out -- all in a day's work
for Chiquita
• Chiquita's response to
Enquirer's charges are a total evasion
• Chiquita's stock price
has plummeted under Lindner's rule
• Lindner known to be anxious
to sell off company, and is frantically attempting to revive the present
bargain-basement price of Chiquita's shares, only now he faces major
new lawsuits. He can expect to hear from irate shareholders at the 10
A.M., Ma y 13 annual meeting of Chiquita investors in Cincinnati's Netherland
Plaza Hotel. At the gathering he will insist that Chiquita's poor profits
reflect the fact that the company has, as of yet, not benefited from
last year's favorable WTO ruling. But Lindn er is using that claim to
cover up bad management practices on his part, because at most, Chiquita's
profits would increase only 3% from new sales in Europe.
For almost one year, the Council
on Hemispheric Affairs has issued a series of lengthy documents and
short memorandum, as well as staging a National Press Club press conference,
detailing an astonishing string of charges against the banana conglomerate
Ch iquita Brands. Involved are such allegations as abduction with the
probable intent to kill, the bribery or the attempted bribery of a series
of judges involved in Chiquita-associated cases, the illegal backfiling
of documents, the utilization of local law yers such as Leonel Medrano
Irias whose moral turpitude is all but self-evident, and the later retraction
of anti-Chiquita depositions undoubtedly due to acts of venality.
Most extraordinary is the case
where the Clinton White House permitted U.S. Trade Representative Mickey
Kantor to sell a foreign policy position to Chiquita CEO Carl Lindner
in exchange for a $500,000 contribution to a series of Democratic State
Committee s the morning after he had filed a complaint before the World
Trade Organization over a modest quota granted by the EU, under the
terms of the Lome Convention. This enabled, among others, English-speaking
Caribbean Islands, with half of their work force in volved in banana
cultivation, to sell their crops Europe, rather than be forced to enter
the drug trades. While Kantor admits that he met with Lindner on at
least three occasions, he insists that, "Lindner didn't get everything
that he wanted," an d that it was his USTR staff who urged him
to press on with the WTO complaint. The Enquirer research may very well
have established that Kantor was not only able to obtain the hefty contribution
to the Democratic Party, but that it was Chiquita's l awyers who actually
drafted the WTO complaint, and not those of the USTR.
Passing by a Great Story
The highly regarded Spanish
news agency EFE was savvy enough to run several Chiquita stories with
devastating impact back in Honduras and elsewhere in Latin America,
Even Newsday and Chiquita's hometown newspapers, the Cincinnati Post
and Enquirer also occasionally ran stories, yet no other print or electronic
media bothered to even explore the story, perhaps because of Chiquita's
advertising clout, or due to the story's complexity, or perhaps due
to the "who cares?" syndrome.
Gannett's Cincinnati Enquirer
deserves to be congratulated for having the institutional courage to
take on one of its hometown's richest families and exhaustively portray,
at a reputed cost of upwards of $2 million, the extraordinary story
of how a major corporation like Chiquita, under the maladroit leadership
of its CEO Carl Lindner, and to its stockholders' great distress, managed
to reduce their equity value in the company by more than 2/3 in a period
of scarcely one year, largely because he was carrying out something
akin to a racketeering operation in Honduras and elsewhere in Central
America with the active cooperation of some U.S. and Honduran officials.
With many more installments to
come in the Enquirer series, the newspaper's venture is a natural contender
for a Pulitzer Prize. Even though the material was there to be plumbed
for years, neither the New York Times, the Wall Street Journ al, Washington
Post, Chicago Tribune or the Los Angeles Times, with much greater resources,
saw fit to commit their correspondents to investigate it. Only the Enquirer
was willing to risk the ire of Cincinnati's iconic Mand arin and patron,
Carl Lindner, one of America's richest men, while the rest of the media
remained on bended knees, or slouched in indolence, as one of the year's
great stories passed them by.
The response of Chiquita Brands
International to the immense array of serious, well-researched charges
made by crack Gannett investigative reporters Mike Gallagher and Cameron
McWhirter of the multinational's hometown newspaper, the (which Lindner
once owned), was to have its hired hands attempt to brush off the story
with ineptitudes. But its managers will be deluding themselves if they
believe that the bad press is temporary and will simply burn off on
the morrow. This will no t happen because too many individuals in different
countries and from all walks of life despise Lindner for his arch hypocrisy
in such actions as donating $5 million to the University of Cincinnati
and insisting on giving a speech on "ethics," while at th
e same time turning the screws of poverty on local peasants whenever
he can shave one lempira or colon off the cost of labor, or sanctioning
the use of cost effective, but dangerous pesticides on his field hands.
Just as with the giant tobacco companies, Chiquita, at this late date,
will have to confess all and pay up to its many victims, or continue
to lie and shoot its way out of the tightening web now surrounding it.
Zapata, Chiquita's Man
at the Embassy
Not so surprising are the actions
of Minister counselor Benjamin Zapata who immediately leapt to Chiquita's
defense, even though he admitted he had not read the extremely damaging
articles in the Enquirer. For Zapata, "Honduras considers Chiquita
a good company, they have g ood relations with the government, because
it is an important provider of jobs. They have legally established their
presence in Honduras. They are a Honduran company." Zapata's words
were hardly those of an objective analysis. The fact is that COHA has
for some time known that he was an active servitor of Chiquita, and
was part of a messenger ring running documents to Chiquita's Washington,
D.C. lawyers, which, in at least one instance, COHA supplied to him
on good faith. COHA will shortly release a memorandum backed up by a
tape recording, showing how much of a Banana Republic Honduras is, and
that its embassy in Washington is little more than a sucursal for Chiquita's
Washington operations. By so passionately describing Chiquita as "Honduran,"
he has proven himself as a traitor t o his own people who demonstrably
have suffered at its hands and who have always been treated with contempt
by the company. If President Flores has any integrity, he will immediately
see to it that Zapata is recalled, and that he be directly transferred
to Chiquita's payroll.
Even now, while more than 300
delegates from 44 different countries are meeting in Brussels, Belgium
for the International Banana Conference, Chiquita is strangely absent.
Just as conspicuous an absence is that of the U.S. Trade Representative,
due to rep orted scheduling conflicts. The conference brings together
producers, environmentalists, governments and union groups to discuss
topics affecting the industry, including, corporate codes of conduct,
of which Chiquita apparently has not enough to bother to warrant its
attendance.
Living with a Bad Decision
In case after case, the Enquirer
account portrays Chiquita desperately trying to redress a staggering
corporate miscalculation that it had made in 1980's to sell off some
of its Honduran land holdings under the mistaken notion that the European
banana mark et would remain stagnant, if not contract.
In fact, due to the break up
of the Soviet bloc a few years later, demand for bananas soared in Eastern
Europe, and Chiquita did not have sufficient Latin American production
capacity to meet the dramatically increasing demand. In the interim,
th e Honduran legislature passed a land reform measure limiting new
individual holdings to a specific acreage and established strategic
zones where foreigners could not own land, although Chiquita's existing
agricultural estates were grandfathered in. It was at this stage that
Chiquita's justifiably ill-reputed band of Honduran and U.S. lawyers
(some of whom have been caught on tape sarcastically outlining their
strategies to dupe Honduran officials and company banana workers), conjured
up a series of subt erfuges that would enable Chiquita, through the
creation of scores of hollow trusts and false titles, and the use of
the names of company-loyal Honduran citizens, to set up legal size farms,
ostensibly owned by third parties, but in reality controlle d by the
banana combine. This tactic provided the additional benefit of also
enabling the company to dispense with the banana unions with which they
had contracts, as well to get out of having to pay meager benefits,
pensions and health coverage for their workers, since the company claimed
to no be longer in the banana cultivation business, when actually it
was.
Trust Fund Scheme Unveiled
Chiquita has institutionalized
its ability to manipulate the legal systems of its host countries and
consistently has exhibited a thinly veiled contempt for the legal norms
of countries where it does its business. As is being highlighted in
the Enquire r stories, Chiquita's operations in Honduras have made a
mockery of that country's judicial system, as the banana giant bends
the law to its liking, or even outrightly ignores it, while at times
taking justice directly into its own hand. Besides the b uying off of
court officials, including members of the country's Supreme Court, the
company cunningly expended almost sinister ingenuity in subverting local
tax and ownership laws meant to regulate foreign companies, making Chiquita,
the exact antithesis of the good corporate citizen, in spite of Minister
Zapata's somewhat unpatriotic and uncous tribute to it.
Not content with dominating banana
production on its own wholly-owned plantations in several Central American
countries, Chiquita, according to the Cincinnati Enquirer went so far
as to create seemingly independent banana entities, but which were r
eally corporate shells, controlled from Cincinnati. With this system
in place, Chiquita could easily protect itself from any land ownership
limitations, but still have direct control over all of its properties.
Chiquita's Long and Tawdry
History
Chiquita's predecessor, United
Fruit Company had a well-earned reputation for corrupting governments
to its bidding, and if the authority of the day refused to cooperate,
it could always call in Washington to help. In a similar vein, Chiquit
a's current CEO, Carl Lindner, is renowned for his generosity to both
political parties with his campaign donations, just ask Bob Dole and
Bill Clinton. In fact, Lindner and his many financial ventures were
one of the top donors to Dole in the last presid ential race, including
providing his corporate jet for the GOP candidate to barnstorm during
the primary season.
Chiquita's policy of using bribes
apparently worked even in the U.S. After the European Union (EU) decided
to award a quota of less than 10% to protect small banana-producing
countries in the Caribbean and Africa, Lindner managed to persuade then-U.S.
Tra de Czar Mickey Kantor, that the policy was unfair to his company
and harmful to the U.S. Despite the fact that the U.S. produces no bananas
and no U.S. jobs were at stake due to EU policy, Kantor nevertheless
was persuaded to lodge a formal complaint befo re the World Trade Organization
over its Lome quota.
David and Goliath
With Chiquita securely entrenched
in Central America, several of the region's governments -- which especially
has been the case with Honduras -- are little more than fawning sycophants
to its Cincinnati headquarters -- well earning that country its unfortunate
reputation as being the most perfected Banana Republic in the world,
with a craven bureaucracy addicted to bribes and other perks. Highlighting
this "if the price is right" situation is the treatment accorded
to Ernst "Otto" Stalinski and his 8-year Job-like struggle
to obtain justice in the Byzantine-like Chiquita Republic of Honduras
Banana. In a series of memorandum and occasional papers issued over
the past year, much of whose content are expected to be corroborated
by the ongoing Enquirer series, COHA has cha rged that since 1990, Chiquita
had unmercifully hounded the German national and longtime Honduran resident,
up to the point of endangering his life.
Stalinski's travails began in
1990, when he became the resident manager for Fyffes, Ltd., an Irish
fruit export company seeking to boost its corporate presence in the
region. Since Stalinski was offering a better price for the fruit, several
of Chiquita's key independent suppliers soon switched to Fyffes.
The "Banana Wars"
With its suppliers defecting
to Fyffes, Chiquita saw its already shrunken Honduran operations, begin
to enter into a further decline, just as the East European market was
enlarging. Infuriated that Fyffes was buying into a limited banana supply,
Chiquita initiated the "Banana Wars," a six-month period in
the first half of 1990. Through the use of its own security forces,
a series of corrupted judges, counterfeit depositions, and venal police
officials, Chiquita was able to destroy ten million dollars worth of
perishable bananas awaiting shipment on a Fyffes-chartered ship, at
a time when Chiquita was waging an all out campaign to hinder Fyffes
efforts to establish itself in the Honduran market. Its tactics included
illegally confiscating and destroying Fyffes' shipments, as well as
detaining Fyffes' ships in port through a counterfeit detention order
validated by a corrupted Chiquita judge. Even though some of these ships
were loaded with the perishable crop and ready to set sail, they were
u nable to leave the dock in Puerto Cortes unless a bribe amounting
to $150,000 was paid, which allegedly, according to a taped telephone
call, would be passed along to three participating Supreme Court Judges.
Events came to a head when Chiquita used a fal sified arrest warrant
as justification for an attempted kidnapping of Stalinski at his hotel,
from which the latter narrowly escaped.
Stalinski the Giant Killer
As a result of this attempted
abduction, Stalinski at first sought justice in Honduran criminal courts.
However, due to the banana giant's plenary influence over what is considered
the most corrupt judiciary in all of Latin America, a series of events
tra nspired in Honduran courts, that would seem to have been more suitable
for some made-for-TV movie, rather than a proper fate for a law-abiding
man who had devoted the last two decades of his life's work to his horticultural
profession and furniture busine ss. To a very large extent, what happened
to Otto Stalinski personifies Chiquita's preferred modus operandi and
is a cynosure of the history of the giant corporation's oppressive corporate
style under its present management. . Stalinski's David versus Goliath
confrontation with Chiquita may very well end up with him being transformed
into Otto the Chiquita Killer. This is because Chiquita could not have
anticipated that Stalinski, like all of its prior adversaries, could
not be neutralized, bought off or cowed by the multinational's vast
wealth and influence. Stalinski's suit has suffered many setbacks including
witnesses who initially had filed affidavits verifying Stalinski's version
of events, later switching sides for rea sons of both financial gain
and personal security, as well as documents relating to his suit being
removed and tampered and one tainted judge after another, a fact recently
attested to by the country's attorney general. As a result, it was no
surprise whe n the presiding judge dismissed Stalinski's case in Honduras,
but a civil case has been filed before a Cincinnati Federal court bench.
A few weeks ago, Stalinski's closest Honduran confidant, Carlos Escobar,
as well as being a key witness in his case against Ch iquita, was unaccountably
gunned down by four assailants in a case which was officially termed
a political assassination by the examining physicians. In any event,
his unfortunate death was a godsend for Chiquita.
Nowhere Left to Hide
With the release of the first
phases of the Enquirer's investigation, the international spotlight
is finally shining on Chiquita, and the company will be hard pressed
to come up with credible answers to an increasing barrage of tough questions
that the public may now begin to ask. These include blatant safety and
health risks posed to its workers -- including knowingly placing them
in the way of hazardous pesticides -- contract violations, and anti-union
practices aimed at denying workers basic ri ghts and wages, drawn the
ire of international labor organizations. Already, Glenys Kinnock, a
member of the European Parliament from Wales, has called on an EU commission
to investigate Chiquita. Additionally, the French and Costa Rican g
overnments are beginning their own investigations, and the head of the
Honduran Banana workers is weighing a strike call against Chiquita which
could spread throughout Central America.
Back in the U.S., Rev. Thomas
Gumbleton, a Detroit-area Catholic bishop, has called on all Catholic
churches and institutions to reject any donation coming from Chiquita,
labeling it, "blood money earned off the backs of the poor peasants
of Central Ameri ca." Gumbleton's lambasting of Chiquita is but
one sign of a change in attitude towards a corporation that assiduously
passes itself off as being a good member of the community when it actually
resembles a voracious Mafia-like operation that routinely rol ls over
the rights of the poor and weak.
Carl Lindner, and other Chiquita
officers, have been charged in a shareholder suit for interntional reckless
breaches of their fiduciary duties, wasteful spending "not due
to an honest error of judgement, but rather...due to the individual
defendants' abu se of their positions as directors of Chiquita,"
as well as a demand for indemnification. Included in the shareholder
complaint is the statement that, "Chiquita secretly controls dozens
of suppo sedly independent banana companies in Honduras and other parts
of Latin America in order to eliminate labor unions, skirt laws in Latin
America that restrict foreign ownership, and buy land in security-sensitive
areas near borders." The aggrieved sharehol der also contended
that the suit was brought about because of the "individual defendants'
failure to take reasonable and adequate steps to preclude, investigate
or correct the occurrence of the improper and illegal practices."
With the Enquirer's bombshell
articles dropping squarely into Chiquita's lap, years of damage control
and misleading information, and the tampering and suppression of the
facts as well as the gunning down of innocent campesinos are becoming
unglued. In the glare of what is sure to be constant publicity, the
company will find it can no longer snuff out critics or buy its way
out of trouble by giving the odd Honduran district judge a Mercedes.
Hopefully, at long last, the truth behind Chiquita 's network of hidden
trusts, secret accounts and multiple subsidiaries aimed at evading Honduras'
and other countries' land use regulations, as well as its other major
and minor violations, will see the light of day. Perhaps a new generation
of Honduran o fficials will staff its embassies abroad who are not in
Chiquita's pocket, and who unlike the tawdry Zapata, have the interests
of ordinary Hondurans at heart and not fat cat U.s. multinationals who
could not care less about a country like Honduras. This, greedy U.S.
corporation which has brought shame and grief to the country, leaving
i t the second poorest in Latin America, whose annual budget may be
less than CEO Lindner's personal assets.
For those interested in pursuing
the Chiquita story, COHA has a substantial holding of documentation
on a number of aspects concerning Chiquita and the Stalinski case, mainly
concentrating on Stalinski's court battles, corruption and venality
in the Hondu ran military, the judiciary, government and the police
force, as well as the fact that the Honduran Embassy and its staff in
Washington D.C. are little more than a Chiquita facility, befitting
the very status of a banana republic which its leaders so heat edly
have denied. Moreover, COHA director Larry Birns has listened to a tape
recording belonging to an investigative reporter, detailing how a batch
of legal documents promised in good faith by COHA personally to the
Honduran Foreign Minister, the Ambassador and the embassy's economic
affairs offic er Benjamin Zapata, as a result of a Saturday morning
breakfast meeting in Washington D.C., within minutes after being handed
over to Zapata had been delivered to Chiquita's Washington lawyers for
photocopying.
The Council on Hemispheric Affairs, founded
in 1975, is an independent, non-profit, non-partisan, tax-exempt research
and information organization. It has been described on the Senate floor
as being “one of the nation’s most respected bodies of scholars and
policy makers.” For more information, please see our web page at www.coha.org;
or contact our Washington offices by phone (202) 216-9261, fax (202)
223-6035, or email coha@coha.org